‘Walmart’ is one of high revenue companies, it was $469,162,000,000.
There are many Walmart store in USA, Canada, Argentina, Brazil, Chile, Costa
Rica, El Salvador, Guatemala, Honduras, Nicaragua, China, India, Japan, Mexico,
the UK and Africa. Walmart became the largest company in part of retail store.
However, there are two countries where Walmart failed, Korea and Germany.
Especially in Korea, some foreign retail stores wanted to get succeed, but
almost every company failed.
Walmart entered the Korean
market in 1998, when Korea went through the monetary crisis (IMF crisis in
1997). There are three types of Walmart retail stores; discount stores,
supercenters, neighborhood markets and other small store formats. Walmart chose
‘supercenters’ in Korea and it was declaration to domestic retail stores. But
Walmart left Korea in 2006, and they agreed M&A to ‘EMART’, Korean domestic
retail store. Experts pointed out that the biggest reason of Walmart failure
was ‘failure of localization’. First problem was that Walmart decreased the
number of workers and the quality of service instead of low cost. On the other
hand, Korean customers wanted not only low cost but also same quality of
service as a department store. And also Walmart overlooked the fact which
Korean wanted ‘one-stop service’; shopping, eating, entertaining with their
families in one place.
Second problem was that accessibility
to products and preference to fresh food. While people in foreign countries buy
food for one to two weeks and keep this in a freezer, Korean buy small amount
of food at many times and they cook soon. So this eating pattern made Korean to
prefer retail stores which they can buy fresh food and they can go easily. For
example, ‘EMART’ is rare case in the world, it harmonized western retail shop
with traditional market in Korea. In Walmart, many items were displayed in high
shelves, so housewives had to call clerks every time when they wanted to get
their items. Korean neglected Walmart which adhered to layout of stores for
western people.
Third problem was low brand awareness
of ‘Walmart’ in Korea. All Walmart stores in Korea were only 16. Walmart
hesitated to invest in Korea, so they could get only 16 stores because of low
investment. It shows how making quick decision is so important in administering
investment. Besides, some people thought that this came from some prominent
companies’ domination. Wall Street Journal said “Walmart exits
conglomerate-dominated Korea.” It pointed out that some prominent companies
dominated market in Korea so it was so hard for foreign companies to get there.
However there is one example
of successful foreign retail store in Korea. ‘Costco’ is very popular in Korea,
and even Costco in Yangjae(One of Costco in Korea) ranked the highest revenue
among all Costco in the world. There are two secret of Costco; does not have
much margin, and annual fee& refund policy& PB products (Private Brand
products). They stick to the fixed margin rate; the margin rate of general
products is 14%, the margin rate of KIRKLAND’s products (PB products) is 15%. Customers
paid their annual fee gladly. That is because they satisfy with refund policy
and Private Brand products. They can get refund any time (only computers have
limit), and the quality of PB products is very good even though the price of
these is cheaper than others. Through examples of Walmart and Costco, we can
learn that researching and adapting to culture decide company’s fate.
Pictures from : http://blog.naver.com/jmk654/220137712767
http://news.naver.com/main/read.nhn?Code=LSD&mid=sec&sid1=101&oid=001&aid=0001433262
http://terms.naver.com/entry.nhn?docId=1115031
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