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alibaba has revealed that it will gradually withdraw from traditional retail business.sun art retailit has undoubtedly become a heavy burden for him. visible,alibabathe new retail strategy failed to work.

original@new entropy author丨iman editor丨fern shadow

is alibaba really going to sell rt-mart?

on september 27, according to an announcement issued by sun art retail, the parent company of rt-mart, on the hong kong stock exchange, the company’s shares were temporarily suspended from trading on the stock exchange of hong kong limited at 9:39 a.m. that day, pending compliance with the company’s acquisitions and mergers code. issue announcements containing inside information about the company.

since last year, rt-mart has been rumored to be sold many times. after rumors were circulated and refuted several times, with the emergence of this announcement, rt-mart's fate of being sold seems to be a certainty. there is much speculation about potential acquirers. at present, the buyers rumored in the market include cofco, hillhouse capital, runtai,kkr groupwait.

it is worth noting that at its peak, runtai sold about 70% of sun art retail to alibaba twice. if it buys back sun art retail, it will undoubtedly be a good deal, sell high and collect low.

rt-mart was established in 1996 and is controlled by runtai group. in 2000, runtai group and auchan group established a holding company "sun art retail", with "auchan" and "auchan"rt-mart"the two major brands promote the development of mainland store business.

in 2010, with sales of 40.4 billion yuan, rt-mart surpassed thecarrefour, ranking first in sales volume in chinese supermarkets. in 2011, sun art retail, the parent company of rt-mart, was successfully listed on the hong kong stock exchange and was known as the "most profitable supermarket."

store closing trend and profit dilemma

alibaba invested hk$50 billion twice, directly and indirectly holding 72% of the shares of sun art retail, thereby gaining control of the company. sun art retail's market value has climbed to its peak of 100 billion. by acquiring sun art retail, alibaba can combine its advantages in the e-commerce field with its advantages in the physical retail field, achieve deep online and offline integration, and promote the development of its new retail strategy. from a data point of view, this cooperation did not achieve the expected results.

sun art retail's past financial report data shows that before 2020, sun art retail's total sales revenue hovered between 90 billion and 100 billion yuan, and its net profit has always remained at a level of around 2.8 billion yuan. in the 15-month long financial report from january 1, 2020 to march 31, 2021, operating income soared to 124.3 billion yuan, and net profit reached a historical record of 3.572 billion yuan; but in fiscal year 2022 and 2021 from april 1 to march 31, 2022, sun art retail's net profit fell sharply, directly turning into a loss of 739 million yuan.

this is also the first time it has suffered a loss since its listing in 2011. although in fiscal year 2023, sun art retail's net profit turned a profit, it was only 109 million yuan. in may this year, sun art retail, the parent company of rt-mart, disclosed its performance report for the 2024 fiscal year ending march 31. the report shows that the company achieved revenue of 72.567 billion yuan, a year-on-year decrease of 13.3%; the annual loss was as high as 1.605 billion yuan, compared with 109 million yuan in the same period last year, becoming sun art retail's largest loss since its listing in 2011.

during the reporting period, sun art retail closed 20 hypermarkets. as of the end of march 2024, the company has 472 hypermarkets, 32 medium-sized supermarkets and 3 m member stores. due to large-scale store closures, sun art retail's number of employees has also been significantly reduced. the number of employees of the company has been reduced from 107,785 at the end of march 2023 to 86,226, saving more than 500 million yuan in employee expenses. as of the end of march this year, the company's net cash was 16.504 billion yuan, a significant decline compared with 19.449 billion yuan in the same period last year.

new retail strategy failed to work

alibaba’s acquisition of rt-mart was once regarded as an important milestone in china’s e-commerce industry. before the sale, rt-mart was an unparalleled giant among domestic comprehensive supermarkets, with a record of not closing a store in 19 years. however, in the past year, rt-mart has experienced large-scale store closures.

it now appears that the new retail development strategies of alibaba and rt-mart have failed to come to fruition. since last year, alibaba has almost never stopped making organizational adjustments, personnel changes, capital operations and other aspects. in february this year,tsai chongxinit was revealed that alibaba will gradually withdraw from the traditional retail business, but this will take a certain amount of time, and the specific implementation process will be gradually advanced based on changes in the market environment.

in the first nine months of fiscal year 2024, alibaba has completed us$1.7 billion in non-core asset sales. for the "all other" segment, including sun art retail and other businesses, revenue in fiscal year 2024 decreased by 2% year-on-year to 192.331 billion yuan. due to the oversized organization and mediocre performance, sun art retail has undoubtedly become a heavy burden for alibaba.

rightfor rt-mart, the current solution may lie in returning to the essence of the retail industry. huang mingduan, chairman of sun art retail, also made it clear that "increasing revenue and reducing costs is the top priority, and turning losses into profits is the company's current top priority." he called on the company to stick to its commitment to saving every penny for customers and return to the essence of retail. .

today, rt-mart is facing market structure challenges brought about by fierce competition in the e-commerce industry. no matter which company it is ultimately acquired by, it must keep up with market trends and strive to explore a differentiated development path with its own characteristics.