China’s biggest hypermarket chain Sun Art Retail Group Ltd is taking on Wal-Mart Stores Inc in the booming domestic e-commerce sector as it seeks new ways to maintain its market share in the face of fierce competition.
With promises of farm-fresh produce to a nation obsessed with food safety, online retailers in China have turned grocery shopping into a business with sales valued at 11.5 billion Yuan (US$1.88 billion) this year. A rapidly expanding middle class has also propelled the trend.
Sun Art’s push into e-commerce comes as competition in the hypermarket sector heats up, with a tie-up between Tesco and China Resources Enterprise announced this month potentially posing a challenge to its lead.
Sun Art said it aims to start online shopping and home deliveries to customers in Shanghai in the fourth quarter.
“The products that will be available on our online platform will be way more than what we are selling in the stores,” Executive Director Peter Huang told an earnings briefing yesterday.
“We do not aim to compete in pricing or any cash-burning model,” he said after the company reported a 14.8 percent rise in first-half net profit.
Sun Art, a joint venture between Taiwan conglomerate Ruentex Group and privately held French retailer Groupe Auchan SA, said it had set up Uitox E-commerce (Shanghai) Co, a joint venture with a local company called Excellent First Ltd, to develop its e-commerce business.
“We will also actively explore different business models for e-commerce so as to provide customers with convenient ways in shopping, and to develop future sources of profit for the group,” Sun Art CEO Bruno Mercier said in a statement.
China’s online retail market is expected to almost double in the next two years to 1.15 trillion Yuan, according to data from consumer research firm Euromonitor.
Wal-Mart started selling groceries online in China after buying a stake in leading Chinese e-commerce website Yihaodian in 2011.