Alibaba Group, China's largest e-commerce platform, has been promoting a "new retail" strategy in recent years, trying to create a shopping experience that integrates online and offline. However, the latest news suggests that Alibaba may have to give up some of its investment in department stores, including its owning Intime Retail, an operator with more than 100 stores and shopping malls in China.
According to foreign media reports, Ali has approached several potential buyers to take advantage of the possibility of Yintai Commerce. This news has not yet been officially confirmed by Ali and Yintai, but according to people familiar with the matter, Ali's ** negotiations have been underway for some time, around the time when Tsai Chongxin succeeds Daniel Zhang as Alibaba's chairman of the board in 2023. Just last month, Alibaba approached a company interested in buying Yintai.
Founded in 1998, Intime Retail, formerly known as Intime Department Store, is an Internet department store with a comprehensive cloud architecture, ranking among the top department stores in China's department store retail industry. In 2014, Alibaba acquired nearly two-thirds of Intime Department Store for about US$4 billion** and privatized it. Since then, Alibaba has renamed Intime Department Store as Yintai Retail, and has made it an important part of its new retail strategy, deeply integrating with Alibaba's e-commerce platform, logistics network, and payment system to create a seamless online and offline shopping experience.
However, Yintai Retail's performance did not meet Alibaba's expectations. According to Alibaba's financial report, Yintai Retail's revenue in fiscal 2021 was RMB8.3 billion, down 13% year-on-year, accounting for less than 1% of Alibaba's total revenue. Yintai Retail's loss also reached RMB1.7 billion, up 76% year-on-year. At the same time, Yintai Commerce is facing fierce competition from other e-commerce platforms, social media platforms, live streaming platforms, etc., as well as the challenge of diversification and personalization of consumer needs.
As a result, Alibaba may believe that Intime Commerce is a reasonable choice for Alibaba to focus on its core e-commerce business, as well as relatively new business areas such as cloud computing, digital, and local life. Alibaba's new CEO, Wu Yongming, said in May this year that Alibaba will increase investment in cloud computing, data technology, local life and other fields to achieve long-term sustainable growth.
If Ali does ** Yintai Commercial, then it will mean that Ali will overturn one of the landmark acquisitions of former CEO Daniel Zhang. During his tenure as CEO of Alibaba from 2015 to 2020, Daniel Zhang actively promoted the acquisition of a series of brick-and-mortar chains, including Suning, Lianhua Supermarket, Sun Art Retail, Hema Fresh, etc., in an attempt to create a "new retail" model that connects online with offline. This model was once seen as central to Alibaba's growth strategy, but in recent years, Alibaba executives have talked less about the concept and more emphasis has been placed on the company's technological capabilities and innovation capabilities.
The news of Ali Yintai Commercial has not been officially confirmed, and it is not clear what Yintai retail's valuation and potential buyer identities are. However, some analysts believe that Yintai Retail's valuation may be lower than the US$4 billion in 2017 due to its declining performance and changes in the market environment. Potential buyers may include other department store retailers, commercial real estate developers, investment institutions, etc., who may be interested in Yintai Retail's brand, stores, customers and other resources, and may also want to maintain a certain cooperative relationship with Alibaba.
In any case, the fate of Yintai Commercial will be closely watched by the industry, as it is not only related to the future of Alibaba's new retail strategy, but also to the transformation and development of China's department store retail industry. Whether Yintai Retail can find a new owner, and whether the new owner can lead Yintai Retail out of its predicament, is a question worth looking forward to. List of high-quality authors