Chinese social media giant Tencent has agreed to take a financial stake in Carrefour China. The French retailer will get support for its struggling stores, and Tencent will gain the opportunity to expand its WeChat mobile payments service further throughout the country. Yonghui Superstores will join Tencent in its investment. None of the companies disclosed the dollar amount or percentage of the planned investment, but Carrefour will maintain majority control of its division.
Carrefour currently operates more than 200 stores in China; Yonghui operates approximately 600 supermarkets. Worldwide, Carrefour operates more than 12,000 stores in a number of formats, including supermarkets, hypermarkets and convenience stores.
Tencent rival Alibaba Group also has been moving further into physical retail. In November 2017, Alibaba invested $2.88 billion in Sun Art Retail Group, owned by French retailer Auchan and Reuntex. Additionally, Alibaba is seeking to open additional Hema supermarkets, adding 30 locations in Beijing this year.
Both Tencent and Alibaba believe the combination of brick-and-mortar stores with e-Commerce will help increase orders and provide access to purchasing and customer data. Additionally, the storefronts can serve as last-mile fulfillment centers.
“The e-Commerce penetration ration in China is quite high, but the offline retail market is much larger and they want to capture that,” said Naoshi Nema, an analyst at Cantor Fitzgerald LP in Hong Kong quoted in Bloomberg Technology. “They also want to connect traditional commerce with technology.”
Accepting the outside investments is part of a larger transformation plan for Carrefour that has been dubbed Carrefour 2022. One of the plan’s pillars is for Carrefour to create an “omnichannel universe of reference” by investing in its growth formats and becoming the leader in food e-Commerce. Specific goals include:
• Opening 2,000 convenience stores in the next five years in major cities globally;
• Acceleration of the Cash & Carry format with 20 new Atacadão per year in Brazil, conversion of 16 hypermarkets to Maxi in Argentina and the expansion of Promocash in France;
• Digital investments of €2.8 billion by 2022;
• Launch of a single platform in France, Carrefour.fr, in 2018; and
• Reaching the target of €5 billion in food e-Commerce turnover by 2022.
Carrefour CEO Alexandre Bompard said that in order to meet the goal of becoming “the leader of the food transition,” the retailer would need to “revamp our model by simplifying our organization, opening ourselves up to partnerships, improving our operational efficiency, investing in our growth formats, building an efficient omnichannel model and developing our fresh and organic products offer. This is the meaning of the ‘Carrefour 2022’ transformation plan.”