Alibaba has not yet reached a consensus with potential buyers regarding RT Mart's re sale.
After a suspension of trading for over half a month, the parent company of the chain supermarket brand RT Mart, Gaoxin Retail (06808. HK), announced on the evening of October 15th that it had received a contact letter from an interested bidder on September 27th, stating that they intended to make a voluntary conditional offer with preconditions for all of the company's issued shares.
Currently, discussions between Alibaba, the controlling shareholder of Gaoxin Retail, and potential bidders are underway. Alibaba Group is also in discussions with several other individuals.
Starting from September 27th, Gaoxin Retail temporarily suspended trading on the Hong Kong Stock Exchange, and the latest announcement stated that the company resumed trading on October 16th. Gaoxin Retail did not disclose any information about the intended offeror in the announcement, only stating that the intended offeror has no connection with the company or any related parties of the company, which also excludes relevant entities of the Alibaba Group.
In March of this year, there were media reports that COFCO Group would spend billions to acquire RT Mart. Subsequently, RT Mart denied the acquisition. The buyers in this market rumor are pointing to Hillhouse Capital, Runtai Group, and KKR Group, with Hillhouse Capital being considered the most likely to make a separate move. It is reported that even before Alibaba's investment, Zhang Lei, the founder of Hillhouse Capital, personally held a 5% stake in Gaoxin Retail.
In 2011, RT Mart merged with Auchan Group to set up Gaoxin Retail, which was successfully listed in Hong Kong. At its peak, its market value exceeded 100 billion Hong Kong dollars. In the past two years, traditional hypermarkets have declined, with local supermarket leaders such as BBK, Yonghui, and Renrenle changing hands one after another.
On October 16th, Gaoxin Retail opened at a high of over 20%, and as of midday closing, the increase had fallen to around 14%. Regarding whether the above-mentioned tender offer will affect the company's strategy, Gaoxin Retail responded that "everything is subject to the announcement".
The second time losing to the era
I won all my opponents, but lost to the times. "In 2017, when Sun Yat sen Retail was acquired by Alibaba and founder of RT Mart, Huang Mingduan, resigned from his position as executive director, he sighed with emotion.
At that time, RT Mart was at a turning point from prosperity to decline. On the one hand, the same store sales growth rate of the group's stores has turned from positive to negative since 2014, and its independent e-commerce platform, Feiniu, which has been testing its waters, has also been operating at a loss; On the other hand, in the fiscal years 2016 and 2017, Gaoxin Retail's revenue exceeded 100 billion yuan for two consecutive years, making it the champion of the retail industry in the mainland Chinese market.
As a result, Gaoxin Retail ultimately sold for over HKD 50 billion. Among them, in November 2017, Alibaba invested approximately 2.88 billion US dollars (approximately 22.4 billion Hong Kong dollars), holding a total of 36.16% of the shares in Gaoxin Retail. In October 2020, Alibaba increased its capital by 28 billion Hong Kong dollars, increasing its equity ratio to 72%. The scale of this transaction far exceeds JD's investment in Yonghui Supermarket in 2015.
As of the latest announcement date, Alibaba Group indirectly holds approximately 73.66% of the issued share capital of Gaoxin Retail through its wholly-owned subsidiaries Jixin Holdings Limited and Taobao China Holdings Limited, while another 5.04% is held by investment companies closely related to Alibaba Group.
In fact, Gaoxin Retail, which entered the Alibaba system, began to play the role of the former's new retail testing ground, including applying the Hema model to RT Mart and connecting the supply chains of both parties.
On June 2, 2018, the first store of Hema was put into trial operation, and the project was led by Yuan Bin, COO of RT Mart New Retail at that time; Gaoxin Retail also mentioned in its financial report that the first Hema Fresh store operated by the group opened on September 28, 2018. Starting from August 2018, Gaoxin Retail also handed over the home appliance department of its stores to Suning.com, which is owned by Alibaba, for consignment sales. The stores charged Suning commission fees, which also led to a decrease in its sales revenue. In the same year, Alibaba began renovating RT Mart stores to connect online and B2B customers to the hypermarket.
With Alibaba's intervention, Gaoxin Retail has also accelerated its digital transformation. On February 5, 2018, Feiniu.com underwent a comprehensive redesign as "RT Mart Fresh", a fresh food e-commerce supermarket targeting the C-end and focusing on one hour delivery; At the same time, RT Mart has integrated with Taobao, Ele.me, and Tmall supermarkets, and Alibaba has also provided sufficient traffic to it.
However, Alibaba's new retail transformation has not been able to change the decline of traditional hypermarkets, and RT Mart cannot bear the weight of its new retail transformation, resulting in a continuous decline in the company's performance.
Since 2018, Gaoxin Retail has recorded a decline in revenue for over 5 years. In the mid-2022 fiscal year, Gaoxin Retail experienced its first loss; In the fiscal year 2024, Gaoxin's retail revenue was 72.567 billion yuan, a year-on-year decrease of 13.3%; The net profit attributable to the parent company for the year was 1.668 billion yuan, the largest loss since its listing.
Alibaba pointed out in its quarterly report released in February this year that Gaoxin's retail revenue has declined, its scale has shrunk, and intangible assets have been impaired. During the subsequent earnings conference call, Alibaba Group Chairman Joseph Tsai bluntly stated that there are still some traditional physical retail businesses on the company's balance sheet that are not the core focus of the business, and the company's exit is reasonable.
From the banner of Alibaba to being abandoned, RT Mart lost to the times for the second time.
In the view of senior retail industry expert Wang Guoping, after being acquired by Alibaba, Gaoxin Retail has basically lost its autonomy and is more in line with Alibaba Group's strategy. Nowadays, Alibaba's strategy has changed direction, and market and consumer trends have also changed, making its situation quite awkward. For supermarkets, only by doing a good job in content construction can the value of channels be realized. However, in the past decade, most traditional supermarkets in China have been on the path of scale and new retail
Regarding this tender offer, Wang Guoping also pointed out that the integration between RT Mart and Alibaba is already very deep. Whether the new buyer wants to separate their businesses, how to do so, and how to determine the transaction price are all complex game processes that increase the difficulty of the transaction.
RT Mart has a comeback battle to fight
Traditional supermarkets have suffered a major setback, and Alibaba's new retail strategy has not truly worked. The rising ones are live streaming e-commerce represented by Doukuai, as well as instant retail platforms such as Meituan.
In response to the decline in performance, in the past few years, RT Mart has mainly reduced costs and increased efficiency by closing stores and reducing expenses. According to the financial report, from the fiscal year 2022 (as of March 31, 2022) to the fiscal year 2024 (as of March 31, 2024), the number of employees at Gaoxin Retail has decreased from 122000 to 86200, with a reduction of nearly 30% within two years. In the fiscal years 2023 and 2024, Gaoxin Retail's sales and marketing expenses decreased by 9.1% and 6.4% respectively year-on-year; The year-on-year decrease in administrative expenses is 7.1% and 10.9%, respectively.
However, in March of this year, Lin Xiaohai stepped down as CEO of Sun Yat sen Retail, and Shen Hui, a senior figure at RT Mart, was appointed in a critical situation, which was seen as a positive signal by the outside world. After taking office, Shen Hui focused more on changing the direction of commodity prices. In a previous interview, Shen Hui emphasized that hypermarkets aim to achieve high sales with low profits.
Since the beginning of this year, RT Mart has restarted its own brand of Thumb series, positioning itself as the lowest price in the market for quality above the national standard. Low priced products such as 1.9 yuan dishwashing detergent, 2.7 yuan hand cream, and 5.2 yuan facial cleanser have begun to appear on supermarket shelves.
Shen Hui revealed that the number of customers at RT Mart has stabilized, with an increase in same store sales and positive profits from April to July. "This is a good result for the off-season of the retail industry, and such profits exceed our expectations." In terms of M member stores, on August 31 this year, RT Mart's fifth national M member store opened in Jiaxing. According to Shen Hui, M member stores will focus on the Yangtze River Delta region and seize the lower tier markets such as county-level cities.
Reflected in the data, according to the performance forecast released by Gaoxin Retail on October 15, the company achieved a post tax profit of approximately RMB 150 million to RMB 200 million (unaudited) for the first six months ending September 30, 2025, while a post tax loss of RMB 378 million was recorded for the same period last year. Gaoxin Retail attributed the expected improvement in after tax profit to the stabilization of same store customer numbers and positive growth in same store sales; And the rapid promotion of cost reduction and efficiency improvement has achieved significant results.
Having entered the mainland Chinese market for 27 years, RT Mart experienced the heyday of supermarkets and hypermarkets, becoming the dominant player in the supermarket industry. However, after being impacted by e-commerce and new retail, it gradually fell into decline. Nowadays, the retail industry is undergoing a new channel transformation, with warehouse membership stores, bulk snacks, and other offline market shares. Can RT Mart, which is expected to attract new buyers, recover the missed time?