Technology

Alibaba Group Holding Ltd (NYSE:BABA) Using Brick-And-Mortar To Drive ‘New Retail’ Strategy

In 2014, Alibaba Group Holding Ltd (NYSE:BABA) launched a new strategy that could stamp its authority as the leading player in the retail sector. This was to be achieved through acquisition of several mid-level retail stores.

Alibaba’s Chain of acquisitions

In 2014, Alibaba acquired a stake in Intime Retail Group, a department store chain and mall operator. This was followed by the acquisition of 20% stake in Sunning for a sum of $4.6 billion. Sunning is a retailer of electronics with 1,600 outlets. Alibaba went ahead to purchase a 36% stake in Sun Art Retail which is based in Hong Kong for a sum of $2.9 billion. Sun Art Retail is China’s largest operator of supermarkets and has a total of 446 stores spread in 224 cities. At the start of this year, the retail giant acquired the remaining stake in Intime for a sum of $2.6 billion.

Construction of own brick-and-mortar supermarkets

In addition to the acquisition offensive, Alibaba also launched the construction of its own chain of chain of brick-and-mortar supermarkets referred to as Hema. Alibaba has also announced plans to launch a shop exclusively for private-label consumer goods. The shop will be managed its subsidiary Taobao, an online marketplace. Alibaba is largely counting on its experience in financial and information technology to make the launch of the shop successful.

Alibaba has had a lot of success in its online shopping network. The company is working hard to reinvest a lot of money in new initiatives in the face of increasing competition.

Alibaba recorded a net profit of $10 billion which represent a 47% increase for the year ended March. The number of its online consumers in China rose by 22% to 552 million people. This immensely contributed to the increase in the company’s earnings.

The company’s retail segment recorded an increase in sales to 15.7 billion yuan. The retail segment is a combination of both the virtual and real world.

In a statement, Alibaba CEO Daniel Zhang said the company is rolling out its new strategy which is expected to transform the e-commerce platform into a global leading retail infrastructure.