- Alibaba’s “new retail” vision, blending online and offline experiences, is faltering after 6 years.
- The company is forming a committee to sell off non-core physical retail holdings.
- Alibaba is refocusing resources on its core online business.
Alibaba ditching new retail?
Six years after unveiling its vision for “new retail” blending online and offline experiences, Chinese e-commerce titan Alibaba is retreating from the strategy amid changing fortunes in both spheres.
On a recent earnings call, Chairman Joe Tsai said the firm formed a committee to offload “non-core” physical retail holdings like supermarket chains Freshippo and RT-Mart.
The pivot away from new retail marks a stark shift for Alibaba, which once boasted of obliterating distinctions between physical and digital commerce through big data integrations.
A return to its core (online)
But three years of COVID disruptions and swelling cheap online competition have battered China’s offline retail market.
With rival Pinduoduo encroaching further into e-commerce, Alibaba appears renewed in focusing resources on its core online businesses.
The company funneled nearly $10 billion into new retail experiments over the years, which failed to stem shrinking consumer spending.
As part of its strategic reset, Alibaba has already divested $1.7 billion in non-core assets in 2023.
However, Chairman Tsai conceded that shedding more physical stores “will take time given the challenging market conditions.” The end of an era for Alibaba may just be beginning.
