Sun Art bets on ‘Feiniu Fresh’ delivery strategy

HONG KONG: Sun Art Retail Group Ltd, China’s No. 2 hypermarket operator, said it is betting on a new online delivery strategy to take on e-commerce players as competition heats up in the country’s US$700 billion (RM3 trillion) grocery market.

The retailer, which posted a higher net profit for the first half of the year mainly due to gains from unused prepaid cards, has been slow in the race to go online, with its platform Feiniu falling significantly short versus that of bigger competitors like China Resources and Wal-Mart Stores Inc.

But Sun Art is looking to bridge the gap with its new online delivery service, Feiniu Fresh, that was launched in June and promises to bring grocery to the customer’s doorstep within an hour from when the order is placed.

The Feiniu platform, which Sun Art sees as a key way to reinvent itself and combat declining foot traffic in stores, saw narrower losses in the first half of the year and the company hoped it would break even in 2019, said Peter Huang, an executive director at the retailer.

Feiniu has so far been rolled out to 400 mortar stores and has contributed to a 4.2 per cent rise in operating costs.

Industry experts warn cost pressures would further rise as ecommerce giants such as JD.com and Alibaba set up brick-andmortar stores. Reuters