Monday 20 February 2017 6:45 am

Alibaba pursues a tie-up with bricks-and-mortar group Bailian

Alibaba has joined with retail conglomerate Bailian Group in a bid to extend its presence in bricks-and-mortar retail as online growth slows.

The Chinese tech giant, which has an active user base of around 500m, formed the strategic partnership just after purchasing of a stake in retailer Suning Commerce Group and planning to take a controlling stake in Intime Retail Group and privatise it.

There are currently no plans for financial investment, an Alibaba spokesman said.

Bailian Group, which is one of China's largest retailers in terms of sales, operates 4,700 outlets in 200 cities including supermarkets, convenience stores and pharmacies. The Shanghai-based group's subsidiaries' shares jumped on news of the deal – Shanghai Bailian Group surged by the 10 per cent daily limit while Lianhua Supermarket lifted near 10 per cent and Shanghai Material Trading increased five per cent, according to Reuters.

Bailian and Alibaba will initially cooperate on supply chain technology using Alibaba's big data capabilities as well as integrating Alipay payments with Bailian Group's existing membership programme.

Richard Windsor, analyst at Edison Investment Research, said Alibaba is moving into offline retail much more quickly than anticipated.

Windsor said: "Fortunately, as this is a partnership, there will not be much downside risk if it goes wrong which leads us to believe that for Alibaba, this is really about data and pushing Alipay into a new domain.

"If Alibaba can have a deeper understanding of, and relationship with Chinese shoppers then it will be able to more accurately predict their shopping patterns resulting in better purchasing rates and the ability to charge a higher percentage of gross merchandise volume to its merchants. This will translate into better revenue and profit growth as was the case in 2016 where increasing monetisation underpinned a large part of the company’s outperformance."