Alibaba leads bid for re­tail chain

Pretoria News - - INTERNATIONAL -

ALIBABA Group Hold­ing is lead­ing a bid to take depart­ment store chain In­time Re­tail Group pri­vate for as much as $2.6 bil­lion (R35.6bn), as China’s largest on­line re­tailer deep­ens its in­te­gra­tion with brick-and-mor­tar stores.

The deal to buy out In­time adds to Alibaba’s bur­geon­ing foothold in phys­i­cal re­tail as it pur­sues growth be­yond a slow­ing on­line busi­ness.

Con­trol of In­time will also al­low the e-com­merce gi­ant to ex­plore ways to mod­ernise a $4.5 tril­lion in­dus­try that hasn’t adapted well to the grow­ing pop­u­lar­ity of on­line shop­ping.

Bil­lion­aire founder Jack Ma’s goal is to try and up end a splin­tered and bloated Chi­nese re­tail land­scape, strip­ping out lay­ers of mid­dle­men to re­duce costs and im­prove ef­fi­ciency.

Apart from In­time, Alibaba has part­nered with elec­tron­ics chains Sun­ing and Haier in deals that ex­panded its own on­line of­fer­ings and sales and de­liv­ery net­work.

The Hong Kong-listed com­pany’s stock surged 35 per­cent upon re­sum­ing trade af­ter a two-week sus­pen­sion yes­ter­day.

The of­fer val­ues In­time at about 18.7 times Ebitda of 1.39bn yuan ($201 mil­lion) for the 12 months ended June 2016, the lat­est pe­riod avail­able, ac­cord­ing to Bloomberg cal­cu­la­tions.

Depart­ment stores have strug­gled in past years to cope as Chi­nese con­sumers frus­trated with lack­lus­tre, poorly man­aged shop­ping malls mi­grate to on­line bazaars.

Un­like in the US, which is dom­i­nated by a clutch of mega-chains, the Chi­nese re­tail ex­pe­ri­ence is far more frag­mented and in­con­sis­tent.

In­time, one of the bet­ter-known

play­ers, op­er­ated and man­aged just 29 depart­ment stores and 17 shop­ping malls across the coun­try as of end-June last year.

By team­ing up with phys­i­cal re­tail­ers, Alibaba hopes to pioneer a new model of on­line and off­line re­tail.

It sees an op­por­tu­nity in help­ing Chi­nese re­tail­ers use tech­nol­ogy to trans­form in­ven­tory

man­age­ment, while se­cur­ing a phys­i­cal net­work through which it can get goods to its own cus­tomers more ef­fi­ciently, for in­stance via let­ting cus­tomers pick up or­ders from phys­i­cal stores.

Ma has said he sees “tremen­dous chal­lenges” for pure e-com­merce op­er­a­tors as the coun­try’s econ­omy slows.

China’s largest on­line re­tailer

is also en­larg­ing its global foot­print, most no­tably by open­ing its Tmall plat­form to US and other for­eign brands keen to sell to Chi­nese con­sumers.

Ma met with US Pres­i­dent-elect Don­ald Trump on Mon­day to dis­cuss how the in­flu­en­tial Chi­nese com­pany could add US busi­nesses to its plat­form.

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