Walmart in South Korea

7/30/2019 Walmart in South Korea

1/6

Wal-Mart quitting South KoreaBy Choe Sang-Hun

Published: Monday, May 22, 2006

TWITTER

LINKEDIN

SIGN IN TO E-MAIL

PRINT

SHARE

SEOUL Wal-Mart Stores followed Carrefour on Monday in pulling out of South Korea, the latest global

brand to flounder in trying to break into one of the world's biggest economies - with some of the most

demanding consumers.

Wal-Mart, the largest retailer in the world, said that it had agreed to sell its 16 South Korean outlets to

Shinsegae, a local retailer, for $882 million.

Having failed to adjust to the tastes of South Korean consumers, Wal-Mart added its name to a list of

multinationals, like Nokia, Nestl and Google, that have failed to adjust quickly enough to the tastes of

South Korean consumers.

"Wal-Mart is a typical example of a global giant who has failed to localize its operations in South Korea,"

Na Hong Seok, an analyst at Goodmorning Shinhan Securities in Seoul, said. "It failed to read what South

Korean housewives want when they go shopping."

In the deal announced Monday, Shinsegae, a leading department store and hypermarket chain in South

Korea, willoperate the former Wal-Mart stores under its E-Mart brand.

E-Mart is the biggest discount store chain in South Korea, with 79 outlets.

The French retailer Carrefour, the world's second-largest retailer, sold its 32 South Korean stores to the

local retailer E-Land last month for $1.85 billion.

Analysts said both chains were slow in opening stores - not only to win more customers, but also to build

the kind of market share that would allow them to press suppliers on pricing.

Before the acquisition Monday, the E- Mart chain accounted for 30 percent of the local market, followed

by Homeplus, owned by the British company Tesco, with 17 percent; and Lotte Mart, owned by Lotte
http://www.nytimes.com/2006/05/22/business/worldbusiness/22iht-won.html?pagewanted=printhttp://www.nytimes.com/2006/05/22/business/worldbusiness/22iht-won.htmlhttp://www.nytimes.com/2006/05/22/business/worldbusiness/22iht-won.html?pagewanted=printhttp://www.nytimes.com/2006/05/22/business/worldbusiness/22iht-won.html


2/6

Shopping of South Korea, with 12 percent. Carrefour and Wal-Mart trailed with much smaller market

shares.

"In contrast to Wal-Mart, the British retailer Tesco is a remarkable case of succeeding in localizing," Na

said.

Samsung Tesco is 89 percent owned by the British retail giant but has relied heavily on local managers

from Samsung. It is one of Tesco's biggest overseas success stories, generating a third of its overseas sales.

"Wal-Mart and Carrefour were not aggressive enough in expanding their networks in South Korea," said

Koo Chang Gun at Korea Investment & Securities. "Once they lost the race, they could never catch up."

Wal-Mart and Carrefour said that leaving South Korea would allow them to focus on the retail industry in

China. Analysts estimated South Korea's discount store market at 24 trillion won, or $25.2 billion, last

year.

"As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it

became increasingly clear that in South Korea's current environment it would be difficult for us to reach

the scale we desired," Michael Duke, vice chairman of Wal-Mart, said.

With its lead secured at home, Shinsegae can shift more of its resources to China, where it opened its

seventh outlet this month, its chief executive, Ku Hak Su, said Monday. E-Mart plans to have 34 stores in

China by 2010.

Wal-Mart's arrival in South Korea in 1998 triggered shock among domestic retailers. But its performance

was lackluster. It posted a net loss of 9.9 billion won last year on revenue of 728.7 billion won.

Wal-Mart and Carrefour, which entered the country in 1996, also put off South Korean consumers by

sticking to Western marketing strategies that concentrated on dry goods, from electronics to clothing,

while their local competitors focused on food and beverages - the main segment that experts say attracts

South Koreans to hypermarkets.

The Wal-Mart and Carrefour outlets in South Korea are simpler in appearance than those of E-Mart and

other competitors, which tend to be more stylish and luxurious. Wal-Mart and Carrefour sold products by

the box, while E-Mart and Lotte constructed eye-catching displays and hired sales clerks who hawked

their goods with megaphones and hand-clapping.

Over the years, South Korea has been a graveyard for some of the most competitive global brands. It is

hard to find any Nokia cellphones in South Korea, for example.


3/6

Local giants Samsung and LG, which were quicker to come out with popular clamshell models, dominate

and Nokia, the world's primary cellphone maker, basically stopped promoting its cellphones here in 2004.

Google is hardly a player in the local Web search engine market, which is dominated by the Naver Web

site of the South Korean company NHN and the portal of Daum Communications.

Naver and Daum encourage users to post questions and let others answer them, creating a fast-expanding

Korean-language database that attracts Web surfers.

Nestl, the leading food and beverage company in the world, also failed to make a mark here with its

flagship baby milk segment, also due to tough local competition.


4/6

Wal-Mart Selling Stores and Leaving South Korea

SIGN IN TO E-MAIL THIS

PRINT

REPRINTS

SAVE

By CHOE SANG-HUN, International Herald TribunePublished: May 23, 2006

SEOUL, South Korea, May 22 Wal-Mart Storesfollowed a French rival, Carrefour, in withdrawing from South

Korea on Monday, becoming the latest global brand to flounder in an economy with some of the most demanding

consumers.

Wal-Mart said that it had agreed to sell all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882

million.

With the announcement, Wal-Mart added its name to a list of multinationals, likeNokia,Nestland Google, that

have failed to adjust to the tastes of South Korean consumers.

"Wal-Mart is a typical example of a global giant who has failed to localize its operations in South Korea," Na Hong

Seok, an analyst at Good Morning Shinhan Securities in Seoul, said. "It failed to read what South Korean

housewives want when they go shopping."

In the deal announced on Monday, Shinsegae, a leading department store and hypermarket chain in South Korea,

will operate the Wal-Mart stores under its E-Mart brand. E-Mart is the biggest discount store chain in South Korea,

with 79 outlets.

The French retailer Carrefour, the second-largest retailer after Wal-Mart, sold its 32 South Korean stores to the local

fashion retailer E-Land last month for $1.85 billion.

Analysts said both chains were slow in opening stores, failing not only to win more customers, but also to build the

kind of market share that would allow them to press suppliers on pricing.
http://www.nytimes.com/auth/login?URI=http://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.html?pagewanted=printhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=WMThttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=WMThttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=WMThttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NOKhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NOKhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NSRGFhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NSRGFhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=GOOGhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=GOOGhttp://www.nytimes.com/adx/bin/adx_click.html?type=goto&opzn&page=www.nytimes.com/yr/mo/day/business/worldbusiness&pos=Frame4A&sn2=412ec0b7/95bbcae8&sn1=9c124edb/98aa66c3&camp=FSL2013_ArticleTools_120x60_1849313b_nyt5&ad=Stoker_Dec5_120x60&goto=http%3A%2F%2Fwww%2Efoxsearchlight%2Ecom%2Fstokerhttp://www.nytimes.com/auth/login?URI=http://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.html?pagewanted=printhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.htmlhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=WMThttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NOKhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=NSRGFhttp://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=GOOG


5/6

Before the acquisition Monday, the E-Mart chain of Shinsegae accounted for 30 percent of the local market,

followed by Homeplus, which is owned by the British company Tesco, with 17 percent; and Lotte Mart, owned by

Lotte Shopping of South Korea, with 12 percent. Carrefour and Wal-Mart trailed with smaller market shares.

"In contrast to Wal-Mart, the British retailer Tesco is a remarkable case of succeeding in localizing," Mr. Na said.

Samsung Tesco is 89 percent owned by the British retail giant, but has relied heavily on local managers from

Samsung. It is one of Tesco's biggest overseas success stories, generating a third of its overseas sales.

"Wal-Mart and Carrefour were not aggressive enough in expanding their networks in South Korea," said Koo Chang

Gun at Korea Investment and Securities. "Once they lost the race, they could never catch up."

Wal-Mart and Carrefour said that leaving South Korea would allow them to focus on the retail industry in China.

Analysts estimated South Korea's discount store market at 24 trillion won, or $25.2 billion, last year.

The vice chairman of Wal-Mart, Michael Duke, said, "As we continue to focus our efforts where we can have the

greatest impact on our growth strategy, it became increasingly clear that in South Korea's current environment it

would be difficult for us to reach the scale we desired."

Shinsegae's chief executive, Ku Hak Su, said that with its lead secured at home, the retailer could shift more

resources to China, where it opened its seventh outlet this month.

E-Mart plans to have 34 stores in China by 2010.

Wal-Mart's arrival in South Korea in 1998 shocked domestic retailers, but its performance was lackluster. It posted a

net loss of 9.9 billion won last year on revenue of 728.7 billion won.

Wal-Mart and Carrefour, which entered the country in 1996, put off South Korean consumers by sticking to Western

marketing strategies that concentrated on dry goods, from electronics to clothing, while their local rivals focused on

food and beverages, the segment that specialists say attracts South Koreans to hypermarkets.

The Wal-Mart and Carrefour outlets in South Korea are simpler in appearance than those of E-Mart and other

competitors.

Wal-Mart and Carrefour sold products by the box, while E-Mart and Lotte built eye-catching displays and hired

clerks who hawked their goods with megaphones and hand-clapping.


6/6

Over the years, South Korea has been a graveyard for some of the most competitive global brands. It is hard to find

any Nokia cellphones in South Korea, for example.

Local giants Samsung and LG dominate, and Nokia, the world's primary cellphone maker, basically stopped

promoting its cellphones here in 2004.

Google is a small player in the local Web search engine market, which is dominated by the Naver Web site of the

South Korean company NHN and the portal of Daum Communications.

Naver and Daum encourage users to post questions and let others answer them, creating a fast-expanding Korean-

language database that attracts Web surfers.

Nestl, the food and beverage company, also failed to make a mark with its flagship baby formula segment.

Walmart in South Korea

Documents

Transcript of Walmart in South Korea