Over the past two years, Alibaba has increased its pressence in traditional retail spaces. With its Hema groceries brand, it offers a service that is part online and part offline shopping.
IGD, a regional research firm, sees the move is one more in BABA‘s bet in capturing a big market share in China‘s online food market – forecasted to be worth $180 billion in close to 2 years. The overall grocery market in China is valued at over $1.2 trillion – edged out only by the United States market, as per the research company.
Intime Retail was acquired for $2.6 billion earlier in 2017 – bringing 29 department stores and 17 shopping malls in China into the tech giant‘s fold. It also owns a 20% stage in Suning Commerce Group – an electronics retailer. The move was valued at $4.6 billion in 2015.
Alibaba‘s move seems to emulate Amazon‘s acquisition of massive U.S. grocery chain Whole Foods, earlier this year in an operation valued at $13.7 billion.
Following news of the Alibaba purchase of stake, stock for Sun Art Retail dropped an important 13.6% in Hong Kong morning trading. The dip was likely caused because the price Alibaba will pay for the company is roughly 6.5 HK Dollars ($.083) per share, far less than the closing price the stock had on Friday – 8.6 HK dollars.
That’s because the price Alibaba is paying works out at just 6.5 Hong Kong dollars ($0.83) per share, far lower than the stock’s Friday closing price of 8.6 Hong Kong dollars.