"Through further integration between offline facility/service and technology empowerment and big data-driven marketing, they hope to help to drive sales for the offline stores. … Most key retailers' position improved as they sought alliances and implemented O2O (online to offline) strategies," he said.

Competitors Alibaba Group Holding and Tencent Holdings, worth a combined $1 trillion, are on a retail-buying binge, making merchants choose sides in a fight for shoppers' digital wallets, Reuters reported.

On Monday, Tencent and JD announced they were teaming up to purchase a stake in China's Better Life Commercial. Better Life operates 592 stores in China.

Since early 2017, Alibaba and Tencent have spent more than $10 billion combined on retail-focused deals.

Cash-rich, the two are looking to win over consumers and store operators to their competing payment, logistics, social media and data services.

Alibaba's Ant Financial leads in mobile payments, which is a nearly $13 trillion battleground with Tencent. Ant operates the top mobile-payment platform, Alipay, while Tencent's system is on its popular Weixin chat app.

Tencent is strong in social media, digital payment and gaming. It also has a stake in JD, as does US retail giant Walmart.

French grocer Carrefour has announced a potential investment from Tencent, which also has invested in Yonghui Superstores, retailers Vipshop Holdings and Heilan Home, mall operator Wanda Commercial and grocer Bubugao.

Alibaba has invested even more heavily in Suning.com, Intime Retail, Sanjiang Shopping Club, Lianhua Supermarket, Wanda Film and home-improvement store Easyhome.

Alibaba invested $486 million in a retail-focused big data firm, saying it could "help brick-and-mortar retailers succeed in the digital age".

"Tie-ups with Alibaba or Tencent can help some of those malls transform themselves faster, providing superior retail experiences," Yu said. "Some of those malls can host Alibaba's new retail experiment Hema Fresh, but in general both Alibaba and Tencent can equip those malls with retail solutions driven by big data and modern retail technology. (Hema Fresh features self-checkout and cashless payments.)

The Hema supermarket has opened 25 outlets in seven Chinese cities, where consumers can shop for groceries and have food cooked under one roof. JD opened its first offline fresh food supermarket in January.

"In the industry reshuffle, new retail, which integrates online with offline shopping and provides a refreshing shopping experience, is taking hold," said Cao Lei, head of China's E-Commerce Research Center.

Alibaba has created a Buy+ app that offers a virtual shopping mall that customers can browse through, clicking on products they like.

"As users continue to engage with the platform in more meaningful ways, we are fostering next-generation consumption features, such as virtual reality, to transcend the overall user experience," Alibaba Chief Marketing Officer Chris Tung said.

Buy+ provides 360-degree views using a VR headset. Shoppers can even have virtual models showcase apparel and accessories on a catwalk.