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Suning.com to pay cash for 80-percent Carrefour China stake
Published on: 2019-06-26
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031Shoppers at a Carrefour store in Beijing. The French retailer’s 210 hypermarkets in China suffered a 0.3 percentage point erosion in market share to 2.8 per cent at the end of the first quarter on year.

Suning.com said it has signed an agreement on Sunday to pay 4.8 billion yuan (US$695.7 million) in cash for an 80-percent stake in Carrefour China as it seeks to strengthen its foothold in the fast-evolving retail market.
 

The acquisition is expected to be completed by the end of 2019, pending regulatory approvals. Carrefour Group will retain a 20-percent stake in its China business and two seats out of seven on Carrefour China’s Supervisory Board.

032Carrefour China reported net sales of 28.47 billion yuan in 2018, adding 5.9 percent from a year ago. It now operates a total of 210 hypermarkets and 24 convenience stores since the launch in China in 1995.
 

Suning operates a network of over 8,881 stores in more than 700 cities and boasts the country’s third-largest B2C e-commerce platform.
 

The local retailer said it hopes to complement offline retailing and merchandising with Carrefour's capability and to strengthen the consumer goods sector.

030The Nanjing-headquartered retailer, which started off by selling home appliances, has been strengthening its brick-and-mortar neighborhood store called Suning Xiaodian, or "small stores," targeting household consumption of daily goods and groceries mostly in lower-tier cities.
 

The integration of more than 6,000 Suning Xiaodian will allow Carrefour China's groceries and consumer goods to be dispatched to more local households.
 

Earlier this year Suning said it had acquired 37 Wanda department stores to combine them with its own existing offerings.
 

Carrefour was among the earliest multinational operators to adopt a smart retailing and a model store for WeChat payment for consumers.
 

It is, however, unclear how Carrefour China will handle its partnership with WeChat and Gome's shop-within-shop tie-up, which allows Gome to sell home appliances, smart devices and other consumer electronics to Carrefour shoppers.

033Consumer goods sales through smaller format physical stores have been a bright spot in the overall flat market.
 

The latest China Shopper Report from Bain & Company and Kantar Worldpanel suggest that offline stores may be poised to regain their momentum with smaller and more flexible formats as out-of-home consumption for food and beverages were especially strong for groceries and convenience stores.
 

Integration among retailers has spread from online-offline alliances toward tie-up between offline chain stores.

034Previous investments in this area were by Alibaba which acquired Hangzhou-headquartered InTime Retail Group and Tencent's investments in a number of supermarket chain stores including Yonghui.
 

Various efforts have been made by department store operators to upgrade the store facilities, the refinement of merchandise and services, supply chain optimization and restructuring of business models.

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