Alibaba takes $2.9 billion stake in food retailer

China's largest e-commerce platform has invested heavily in recent years to connect its online and offline portfolio of businesses, taking stakes in several Chinese grocers, shopping malls and department stores. (AFP / Mike Clarke)

Alibaba said on Monday it would take a major stake in one of China's top food sellers for US$2.9 billion as the e-commerce giant expands further into the retail world.

China's largest e-commerce platform has invested heavily in recent years to connect its online and offline portfolio of businesses, taking stakes in several Chinese grocers, shopping malls, and department stores.

Alibaba will buy a 36 per cent stake in Sun Art Retail Group from Taiwanese conglomerate Ruentex Group, leaving Alibaba and French firm Auchan Retail with roughly equal stakes in Sun Art's 446 hypermarkets that sell everything from groceries to clothes.

Sun Art also operates smaller superstores and is building a line of unmanned stores.

Hangzhou-based Alibaba has bet its future on uniting online and offline selling, executing the strategy well before U.S.-based Amazon made its first major purchase of bricks and mortar grocer Whole Foods earlier this year.

"Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation," chief executive Daniel Zhang said in a statement.

Sun Art is one of Auchan's major bets on the Chinese market and the chain of stores has been a boon for its business. The Alibaba investment will integrate Sun Art's bricks and mortar stores with the online selling giant's platform, the companies said in a press release.

"Bringing together the leaders of in-store retail and of online retail will allow us to serve hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience," said Wilhelm Hubner, chief executive of Auchan Retail, which will slightly raise its stake in Sun Art as part of the deal.