1. News
June 20, 2016

Wal-Mart to divest Chinese online grocery unit to JD.com

US-based Wal-Mart Stores will divest its Chinese online grocery unit to JD.com, the second-largest online retailer in China after Alibaba.

US-based Wal-Mart Stores will divest its Chinese online grocery unit to JD .com, the second-largest online retailer in China after Alibaba.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

This transaction will see Wal-Mart receiving a 5% stake in JD .com, worth $1.5bn, as well as securing access to JD .com’s delivery network and 150 million users.

It is expected to boost the US firm’s reach in tapping the growing middle-class consumer segment in the world’s second largest economy.

"It is expected to boost the US firm’s reach in tapping the growing middle-class consumer segment in the world’s second largest economy."

In China, Wal-Mart operates more than 400 offline stores.

Wal-Mart paid $760m for acquiring a 49% stake it did not own in Yihaodian online grocery platform last July. Since this acquisition, the supermarket chain has been struggling with tepid sales and closing underperforming stores.

The latest deal with JD .com will intensify competition in the online grocery business, which is expected to reach almost $180bn by 2020 from the current $40bn.

According to the transaction terms, JD .com will issue around 145 million new class-A shares to Wal-Mart.

Although JD .com will acquire ownership of the online grocery platform, it will be operated by Wal-Mart.

Morgan Stanley & Co LLC served as financial adviser and Morrison & Foerster as legal adviser to Wal-Mart.

Orrick Herrington Sutcliffe and Han Kun Law Offices served as legal advisers to JD .com.

Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.