(Yicai Global) Jan. 18 -- RT-Mart China is taking full control of He Xiao Ma, a mini grocery store chain which integrates online and offline sales, that it set up with e-commerce giant Alibaba Group Holding in 2018 as the Chinese hypermarket operator puts more emphasis on smaller outlets.

RT-Mart will pay CNY25.5 million (USD3.9 million) for Alibaba’s 51 percent stake in He Xiao Ma, giving it full ownership, parent firm Sun Art Retail Group, which is in fact controlled by Hangzhou-based Alibaba, said on Jan. 15.

"We will speed up the expansion of smaller supermarkets that cover several hundreds of square meters each, as well as standard-sized ones that cover several thousands of square meters, but slow down the opening of large malls of over 10,000 sqm," a company insider told Yicai Global.

“It costs a lot to operate large marts because of the higher rents and extra management needed due to the greater inventory,” senior retail analyst Shen Jun told Yicai Global. "Small outlets cost less to operate, there are more locations to choose from and it is easier to break into community business," he added.

Shanghai-based RT-Mart is also trying out an even smaller ‘RT Mini’ shop that is between just 200 sqm and 500 sqm in size and is located within residential communities.

He Xiao Ma shops are mostly around 800 sqm. Half of this is used to sell fresh produce such as vegetables, frozen foods, meats, dairy products and prepared food.

"There is great potential in the fresh food business amid the pandemic,” Shen said.

Editors: Dou Shicong, Kim Taylor