Why do Global Discount Store Operators
Wal-Mart and Carrefour leave Korea?
Yesterday, Korea’s largest discount store operator, Shinsegae, announced that it will take over the Korean operations of the largest world discount store Wal-Mart. This follows the acquisition of French discount chain Carrefour, the world’s second-largest retailer after Wal-Mart Stores, Inc. Domestic experts believe the reason is because those stores failed to formulate localized strategies, namely, they haven’t understood Korean consumers’ buying styles.
Before introducing themselves in the Korean market, these large discount stores had confidence that they could dominate the Korean market by offering low-priced products to consumers on the basis of their purchasing power and abundant capital. In addition, they were proud of their marketing abilities as global companies by ignoring domestic consumption styles. Global leaders in discount retailing are evacuating Korea as they fail to attract local customers with their “warehouse-style” stores. Carrefour said the sale of its Korean operation is based on a global strategy, while Wal-Mart indicated difficulties in reaching their desired growth in Korea’s current market conditions. A source says that their failure to win Korean customers is because of strategies that would only work overseas.
According to industry sources, Korean discount stores, different from those global dinosaur stores, focused on enlarging fresh fish sections by 45% and adjusting marketing strategies to Korean styles. Much worse is that it was different from Korean consumers’ desire, “Most Koreans want global products over the internationals, and they only focused on selling Korean products, just selling 10%. For Carrefour, it failed to survive in the Japanese market due to the same strategy as in the Korean market."
Whereas, Tesco Home Plus has been successful in the domestic market by adopting Korean-preferred marketing strategies and management in the first stage and by yielding all managing strategies to Korean officials. It is totally different from those stores. Tesco Home Plus is now ranked second in the domestic market. Professor Park Bong-du of Dong-a University said, “It is obvious that global discount stores will fail in the domestic market if they just keep enlarging their chains and standards.”
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 / 입력시간: 2006. 05.25. 09:02
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