Tencent contemplates investment in Carrefour
January 30, 2018 Category Retail, Weekly
Tencent Holdings, China’s biggest internet company, may jointly invest in French retail giant Carrefour’s struggling Chinese operations with supermarket operator Yonghui Superstores, as part of a broader strategic partnership to boost the bricks-and-mortar business through the use of data analysis and mobile payments.
“The potential investment will leverage Carrefour’s global retail knowledge with Tencent’s technological excellence and Yonghui’s operational know-how and in particular its deep knowledge of fresh products,” Carrefour said in a press release, without saying how much the investment will be. Carrefour has also agreed to explore a partnership with Tencent in which the Shenzhen-based company will lend its digital expertise. Carrefour will remain the largest shareholder of the China unit, it said. Tencent said it looked forward to “cooperating with Carrefour in further enriching the retail and services experience” for its users and enhancing Carrefour’s services with Tencent’s technological capabilities such as mobile payment, digital membership programs, customer acquisition and cloud services.
China’s internet giants have been trying to find new growth engines for their business by either partnering with established offline retailers or rolling out their own bricks-and-mortar chains, including unstaffed stores. Tencent’s foray into retail follows an expansion by Alibaba Group and JD.com into physical shopping in what is dubbed “New Retail”, in which online functions such as payments, delivery and logistics management are integrated with shopping in physical stores.
“What Carrefour also wants from the partnership might be the online resources e-commerce giant JD.com has, as Tencent is the biggest shareholder of JD.com.” said Luo Xianfei, Retail Analyst with Northeast Securities. “Now most of China’s retail giants, either foreign or domestic, have all chosen sides with either Alibaba or Tencent. Now we can wait and see which one could win in this fierce war of retailing in China.”
For Carrefour, the investment and partnership is the latest step in its attempts to stem a decline in sales in China, where it operates hypermarkets and convenience stores. Sales declined 5.4% in the fourth quarter amid increasing competition from local chains, the South China Morning Post reports.
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