Strategy differs from that of U.S. counterparts, which are moving at a more modest pace. The biggest online retailers in China are buying, building and refurbishing big portfolios of convenience stores, supermarkets and department stores, embracing a much more expansive bricks-and-mortar strategy than their U.S. counterparts.
By contrast, in China, e-commerce giants Alibaba Group Holding Ltd and JD.com Inc. own or have signed sales and data deals with thousands of convenience stores, supermarkets and department stores across the country, including in the countryside.
Hangzhou-based Alibaba last year acquired retail property owner Intime Retail (Group) Co., which currently has 32 department stores and 30 shopping malls in China. It has also been acquiring stakes in retailers such as consumer-electronics seller Suning Commerce Group and home-improvement chain Beijing Easyhome Investment Holdings Group Co.
To expand its grocery business in China, Alibaba now operates 57 Hema supermarkets, a high-end chain with a hippopotamus logo. It also has purchased interests in grocery-store and hypermart operators Lianhua Supermarket Holdings and Sun Art Retail Group , which operate thousands of stores between them.
“In retail, we’re anticipating changing consumer behavior and the increasing expectations of quality and convenience, whether these consumers shop online or in offline stores,” said Joseph Tsai, executive vice chairman of Alibaba, during the company’s earnings call in May.
In China, the glut is concentrated in more affluent areas and regions in which local governments and developers churned out new shopping centers in anticipation of rising offline shopper demand that never materialized. Many regions remain underserved by bricks-and-mortar retail.
In many parts of China, especially rural areas, e-commerce companies began delivering modern consumer products, like quality baby goods and cleaning products, by bypassing existing shopping centers and malls, which were often located too far away from many consumers and didn’t have the same selections available.
Those e-commerce businesses now want to expand further into rural and suburban areas, in anticipation that household incomes will continue to grow. As part of that expansion strategy, bricks-and-mortar stores are attractive, partly because home deliveries are more expensive in sparsely populated areas.
E-commerce businesses say supply chains can be more efficient by serving both online shoppers and bricks-and-mortar retailers. Retailers and landlords also see benefits from combining and analyzing online and physical-store shopping data together.
