An Intime store in China promoting Singles’ Day.

SHANGHAI — Alibaba Group is upping its stake in a major Chinese department store chain in a move to further develop its omnichannel retailing strategy.

Alibaba Group said Tuesday that one of its subsidiaries and Intime Retail founder Shen Guo Jun’s wholly owned subsidiary are offering to buy out all outstanding shares in Intime and take the department store chain private in a deal that would cost as much as 19.8 Hong Kong dollars, or $2.6 billion.

The two parties are offering 10.00 Hong Kong dollars ($1.29) per share, which Alibaba said represents a premium of approximately 53.59 percent over the average closing price of Intime shares over the last 60 days. Intime, listed on the Hong Kong stock exchange, saw its shares surge 36 percent on Tuesday to close at 9.54 Hong Kong dollars.

Alibaba currently owns approximately 28 percent of Intime thanks to transactions in 2014 and 2016. After the buyout, Alibaba said it would become the controlling shareholder of Intime with a stake of about 74 percent. Alibaba paid $214 million for a 9.9 percent stake in Intime in 2014, which valued the company at $2.16 billion. Since investing in Intime, Alibaba has incorporated the department store into its omnichannel strategy with augmented reality activities within the department stores to coincide with major promotions on Singles’ Day over the past few years, as well as bringing Intime Retail into Alibaba’s m-commerce app infrastructure.

Still, Intime’s physical retail business has continued to contract in terms of same-store sales and total revenue, along with the rest of department store sector in China. The company’s net profit for the six months ended June 30 fell 21.3 percent to 561.1 million renminbi, or $81.1 million. Sales inched down 0.3 percent to 3.05 billion renminbi, or $440.51 million. Intime operates 29 department stores and 17 shopping malls, mainly in first- and second-tier cities in China.

The move to privatize Intime will allow Alibaba to innovate and experiment further in the omnichannel space without limitations or pressures from investors, an Alibaba spokesman said.

“The deal will advance Alibaba’s omnichannel strategy and also enable Intime to explore long-term growth plans free from the pressure of short-term stock market volatility,” he said. “Intime’s shares have been suffering from low liquidity, low valuation and historically low prices. We want to do more innovative things with this company and that’s not necessarily a good thing for the investors.”

Omnichannel has been a major buzzword in China retail circles over the past three years, and Alibaba has been leading the charge into the new space with both its Intime investment, as well as a near 20 percent stake in Suning, a bricks-and-mortar electronics retailer, purchased in 2015 for the princely sum of 28.3 billion renminbi, or $4.63 billion.

“’E-commerce is no longer about shopping in front of a computer at home. Today’s consumers in China engage in commerce activities from anywhere, any time, with the help of a mobile phone. This dynamic shift to mobile has enabled Alibaba Group to work with bricks-and-mortar retailers to integrate online and offline customer data, enhance consumers’ in-store experience as well as achieve improvements in inventory efficiency and sales turnover,” Alibaba said.

Daniel Zhang, Alibaba group chief executive officer, said the e-commerce giant is aiming to find new approaches to retail for consumers.

“China’s total retail sector is a [$4.5 trillion] economy and is growing at 10.7 [percent] a year. Alibaba is working with offline retailers to transform conventional approach, create new consumer shopping experience and use actions to embrace future opportunities under the new retail model,” Zhang said. “We don’t divide the world into real or virtual economies, only the old and the new. Those who cling onto the old ways of retailing will be disrupted, and bricks-and-mortar businesses will be able to create value for consumers if they are integrated with the power of mobile reach, real-time consumer insights and technology capability to improve operating efficiency. Our combination with Intime will enable us to tap into the long-term growth potential of a new form of retail in China powered by Internet technology and data.”

Steven McCord, JLL’s national director and head of research for north China, described Alibaba’s moves to deepen its offline retailing investment as “rather contrarian” on the surface, given few are currently willing to increase their exposure to the long-declining physical department store sector in China.

A recent study from JLL conducted across 30 cities identified over 90 department store closures in these cities over the past five years.

Some of the major retailing trends hurting department stores, according to JLL’s research, are the desire for consumers to shop for brands, rather than categories; less gifting and more personal purchases; price competition from online and fast-fashion retailers, as well as a tendency for Chinese department stores to be poorly integrated into cities’ transport hubs.

“Having said that, the buyer must have a strategy in mind. It is well-recognized that physical retail is not disappearing. There will continue to be a role for flagship stores, showrooms, and other things that provide a brand experience and opportunity to understand what a brand is all about. Brands without any physical presence [find it] harder to establish a clear brand story,” McCord said.

“Online and offline channels feed each other in a virtuous cycle. Furthermore, Alibaba, given its market-leading status in e-commerce, likely has a treasure trove of data on its consumers and what they want and where they buy it,” McCord said. “There will be opportunities to use this information to strategically target customers based on their location to get the full advantage of both channels.”