Photo/Zhao Qiao

Dec. 13 (NBD) -- French retail giant Auchan has decided to entrust RT-Mart with the operations of its retail business in mainland China after the board of directors' deliberate discussions, so as to better respond to changes of China's retail market, news outlet Yicai reported on Wednesday citing an informed source. 

In the latest move, Auchan China agreed to transfer the operational rights of its five stores in south China to RT-Mart.  

This was soon viewed as a sign of Auchan's exit from China. 

In a statement released on Wednesday evening via its official Weibo account, Auchan China refuted the withdrawal rumor, stressing that the retail group wouldn't leave the Chinese market and would continue the exploration in the new retail domain in partnership with Tmall. 

RT-Mart has confirmed the takeover saying the Auchan brand will be retained, and RT-Mart will take over Auchan's market operations in the mainland. 

Next, Auchan China's management teams will gradually stay out of business operations, a person close to RT-Mart told Yicai. Instead, RT-Mart's executives will step in and ramp up efforts to connect background systems and conduct centralized procurement, which will be beneficial to boost the development of Sun Art Retail Group Limited, a joint venture set up by Auchan and Ruentex to operate the Auchan and RT-Mart banners in China, the person added. 

In fact, RT-Mart has always been the major contributor to Sun Art Retail's business. 

Shen Jun, senior analyst of the retail industry, said based on great advantages in supply chain resources, procurement and fresh food sale, RT-Mart has been doing a good job in hypermarket management and operation. 

According to Sun Art Retail's interim report, for the January-June period, the hypermarket operator generated around 54.1 million yuan (about 7.9 million U.S. dollars) in unaudited revenue, remaining flat compared with the same period of last year. Unaudited gross profit jumped 2.7 percent year over year to 12.9 million yuan (1.9 million U.S. dollars). However, the contribution of Auchan and RT-Mart to Sun Art Retail's revenue was not specified in the financial report. 

As of June 30, 2018, Auchan has had only 77 hypermarket complexes while RT-Mart has opened 395 across China, the report shows. During the six months ended June 30, Sun Art Retail opened 11 new hypermarket complexes, all of which were under the RT-Mart banner and no stores was opened under the Auchan banner.

With part of its efforts to tap deeper into the new retail area, Auchan has rolled out 270 "Auchan Minute" unmanned convenience boxes till the end of June. Each box offers 300 to 400 SKUs, mainly covering beverage, snacks and dairy. As of August 22, one-fourth of the boxes has achieved or nearly achieved break-even. Auchan is expected to roll out 500 boxes by the end of this year.

Meanwhile, the French retailer is strengthening the cooperation with Tmall to promote new retail. 

Previous media reports reveal Auchan Jiading, a subsidiary of Auchan, entered into an agreement in September this year with Tmall Supply that allows the former to sell consigned products at Tmall Online Supermarket to customers. 

In April, Auchan China signed a pact to purchase products worth no more than 40 million yuan (5.8 million U.S. dollars) from Tmall Supply.

Email: lansuying@nbd.com.cn