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Meituan to strengthen grocery offer despite store closures

Chinese food-delivery service Meituan Dianping is working to strengthen its hand in grocery retail respite its recent supermarket closures.

According to a Yahoo News report, the group is “disciplined on capital allocation for our new initiatives” as it takes on competitor Alibaba Group Holding.

“With our clear scale and structural advantages in user base, merchant base and delivery network through long-term investments,” said company co-founder, chairman and CEO Wang Xing, “we have the capability and flexibility to both strengthen our market position and improve our financial performance.”

Meituan racked up a CNY21 billion (US$3.04 billion) loss in the first financial quarter last year, although narrowed that loss this year to CNY1.4 billion ($203 million). The firm’s total revenue increased 70.1 per cent during the period to CNY19.2 billion ($2.8 billion) in keeping with a rise in the number of users and merchants on its platform.

“We believe Meituan has gained market share in the first quarter in both gross merchandise volume and merchants,” read an analysis published last week by research firm Bernstein. “Merchant share gain is more important because it’s the main competitive advantage for Meituan against”

While Meituan closed its self-operating Ella supermarkets in lower-tier cities during the quarter due to lower than expected returns, it will focus on improving the shopping experience and efficiency of its two remaining locations in Beijing.

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