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Walmart China has launched a blockchain platform that will enable the retailer to track food throughout its supply chain.
French grocery retailer Carrefour has signed an agreement to sell 80% stake of its China operations to Suning.com in a deal worth about US$700m.
The transaction is expected to close by the end of 2019, subject to regulatory approval. Carrefour will retain a 20% stake in the business and two out of seven seats on Carrefour China’s Supervisory Board. However, the agreement allows Carrefour to sell the remaining 20% of its stake, suggesting an interest to exit the market entirely.
Suning is a Chinese electronics retailer and ecommerce player. It operates more than 8,881 stores in more than 700 cities and one of the country’s largest B2C ecommerce platform. Suning said yesterday in filing to Shenzhen stock exchange, “the stake acquisition will allow Suning.com to strengthen its brand, as well as boosting its marketing capabilities, food quality control and supply chain management in the fast-moving sector”.
Carrefour has been in China since 1995 but it has been struggling to grow in recent years amid fierce local competition and the rise of ecommerce channel. The retailer operates 210 hypermarkets and 24 convenience stores.
Keep up-to-date with the latest retail developments from Asia.
JD.com and Alibaba reported record breaking results for the 18-day campaign, with sales value up by +26%YoY.
6.18 shopping festival, created by JD.com, now joined by Alibaba, has become a midyear event that can match the scale of the 11.11 global shopping festival.
The total sales transaction reached a new high this year of US$29.2bn, up by +26%YoY. Around 200,000 brands took part and more than 110 brands each generated sales in excess of CYN100mn (US$14.5mn).
There are four key learnings from this year’s event, which are summarised below.
There has been a steadily rising demand from consumers in lower tier cities for quality products. With an increase in discretionary income, consumers in less developed areas are quickly becoming a main consumption engine and really drove this year’s 6.18 festival:
This year’s event saw an array of innovative ways to reach customers and build engagement. The highlights are:
Alibaba’s group buying platform Juhuasuan drew 300 million new customers. The platform has been repositioned recently for those looking for quality goods at competitive prices. Group buying via WeChat was also available in Hong Kong during this year’s event.
Technology played a key role during the event to improve customer experience and exceed their expectations. JD.com’s smart customer service robot dealt with more than 32 million inquires, freeing up human services for more complicated inquires. 91% of orders from JD.com’s fulfilment centres were delivered on the same day or next day.
Costco Wholesale Corp. is set to open its first bricks-and-mortar warehouse in China this August.
After setting up an online store on Alibaba’s Tmall five years ago, the U.S wholesaling giant is to open its first physical warehouse in Shanghai’s Minhang district on the 27th of August.
Costco’s model in North America has been based on families buying bargain products in bulk, transporting them in their cars and then storing them at home. Its business success is based on building a loyal shopper base through its paid membership program with low price items. Costco pledges refunds even after the goods are consumed. The firm’s membership strategy has been largely successful in most markets, with 88% renewal rate globally.
Costco China will offer two types of memberships – one for families and the other for corporation, both with an annual price of US$43. Customers have been able to apply for memberships since April.
Costco will have strong competition from Walmart China’s Sam’s Club, also a membership-only retail club chain.
Sam’s Club has the advantage of entering the China market 20 years earlier and cumulated a wealth of knowledge and experience of the market. During that 20 years, Sam’s Club has gradually shifted its target to high end and upscale market and focuses more on quality premium products than low price. The retailer has been accelerating store expansion the last two years and plan to have 40 stores by end of 2020.
Expansion into China has many benefits for Costco, alleviating over reliance on North America being one of them. The question is whether Costco will change its strategy in China.
Costco currently runs a total of 770 warehouses worldwide, including 12 each in Taiwan and South Korea and 26 in Japan.
High profile CFO Maggie Wu takes on new role in strategic investments.
Wu will take over from Executive Vice Chairman Joe Tsai and oversee the firm’s strategic acquisition and investments unit, as part of a business and management reshuffle at the ecommerce giant. Joe Tsai will support Wu in her expanded role.
“To guarantee innovation, invest in our future, Alibaba is undertaking an organisational upgrade,” the company said in the statement, signed by Chief Executive Officer Daniel Zhang, who will become chairman when Jack Ma retires on the 10th September 2019.
Maggie Wu has been Alibaba’s CFO since 2013 and was listed as one of Forbes’ 50 Asia Power Businesswomen in 2015.
The announcement marks the first significant reshuffle since the company’s co-founder Jack Ma last year announced he would step down.
Alibaba has been investing in new business lines such as cloud computing as a boom in its core ecommerce has peaked and revenue growth slows. Expanding Wu’s remit is aimed at more tightly integrating Alibaba’s investments into its overall ecosystem.
In the same statement, Alibaba also announced that its supermarket division Freshippo, also known as Hema in China and now has 160 stores, will become a standalone business, and enterprise software unit DingTalk will be merged into the firm’s cloud unit.
These changes come ahead of a planned IPO in Hong Kong later this year which could raise as much as US$20 billion in fresh capital for expansion via investment.
This in-depth guide to China explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.
Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in China.