Wal-Mart quitting South Korea

By Choe Sang-Hun Published: Monday, May 22, 2006
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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, Nestlé 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

Wal-Mart and Carrefour sold products by the box.7 billion won. while E-Mart and Lotte constructed eye-catching displays and hired sales clerks who hawked their goods with megaphones and hand-clapping. Samsung Tesco is 89 percent owned by the British retail giant but has relied heavily on local managers from Samsung. also put off South Korean consumers by sticking to Western marketing strategies that concentrated on dry goods. generating a third of its overseas sales." Na said. "As we continue to focus our efforts where we can have the greatest impact on our growth strategy. Carrefour and Wal-Mart trailed with much smaller market shares. Ku Hak Su. Shinsegae can shift more of its resources to China. the British retailer Tesco is a remarkable case of succeeding in localizing. from electronics to clothing. it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired. its chief executive. E-Mart plans to have 34 stores in China by 2010.the main segment that experts say attracts South Koreans to hypermarkets. "In contrast to Wal-Mart. while their local competitors focused on food and beverages . which entered the country in 1996. . with 12 percent. "Once they lost the race. which tend to be more stylish and luxurious. vice chairman of Wal-Mart. said. said Monday. It is hard to find any Nokia cellphones in South Korea. they could never catch up. With its lead secured at home. Over the years. It posted a net loss of 9.Shopping of South Korea." said Koo Chang Gun at Korea Investment & Securities. Wal-Mart and Carrefour. "Wal-Mart and Carrefour were not aggressive enough in expanding their networks in South Korea. last year. or $25. Wal-Mart's arrival in South Korea in 1998 triggered shock among domestic retailers. But its performance was lackluster. The Wal-Mart and Carrefour outlets in South Korea are simpler in appearance than those of E-Mart and other competitors. where it opened its seventh outlet this month.2 billion. Analysts estimated South Korea's discount store market at 24 trillion won.9 billion won last year on revenue of 728. It is one of Tesco's biggest overseas success stories. for example." Wal-Mart and Carrefour said that leaving South Korea would allow them to focus on the retail industry in China. South Korea has been a graveyard for some of the most competitive global brands." Michael Duke.

Local giants Samsung and LG. creating a fast-expanding Korean-language database that attracts Web surfers. Naver and Daum encourage users to post questions and let others answer them. which were quicker to come out with popular clamshell models. . also due to tough local competition. which is dominated by the Naver Web site of the South Korean company NHN and the portal of Daum Communications. also failed to make a mark here with its flagship baby milk segment. basically stopped promoting its cellphones here in 2004. the world's primary cellphone maker. Google is hardly a player in the local Web search engine market. Nestlé. dominate and Nokia. the leading food and beverage company in the world.

a leading department store and hypermarket chain in South Korea. The French retailer Carrefour. Wal-Mart said that it had agreed to sell all 16 of its South Korean outlets to Shinsegae.Nestlé and Google. becoming the latest global brand to flounder in an economy with some of the most demanding consumers. International Herald Tribune Published: May 23. will operate the Wal-Mart stores under its E-Mart brand.Wal-Mart Selling Stores and Leaving South Korea • • • • SIGN IN TO E-MAIL THIS PRINT REPRINTS SAVE By CHOE SANG-HUN. Analysts said both chains were slow in opening stores. With the announcement. that have failed to adjust to the tastes of South Korean consumers. but also to build the kind of market share that would allow them to press suppliers on pricing. failing not only to win more customers." In the deal announced on Monday. E-Mart is the biggest discount store chain in South Korea. for $882 million. "It failed to read what South Korean housewives want when they go shopping. . South Korea. in withdrawing from South Korea on Monday. Wal-Mart added its name to a list of multinationals. Shinsegae. "Wal-Mart is a typical example of a global giant who has failed to localize its operations in South Korea. a local retailer. 2006 SEOUL.85 billion. an analyst at Good Morning Shinhan Securities in Seoul. with 79 outlets. Carrefour. May 22 — Wal-Mart Stores followed a French rival. sold its 32 South Korean stores to the local fashion retailer E-Land last month for $1. said." Na Hong Seok. like Nokia. the second-largest retailer after Wal-Mart.

owned by Lotte Shopping of South Korea. with 17 percent. the British retailer Tesco is a remarkable case of succeeding in localizing. from electronics to clothing. "As we continue to focus our efforts where we can have the greatest impact on our growth strategy. It is one of Tesco's biggest overseas success stories. It posted a net loss of 9.2 billion." said Koo Chang Gun at Korea Investment and Securities. "In contrast to Wal-Mart. said. The Wal-Mart and Carrefour outlets in South Korea are simpler in appearance than those of E-Mart and other competitors. Carrefour and Wal-Mart trailed with smaller market shares. while their local rivals focused on food and beverages. Wal-Mart and Carrefour.Before the acquisition Monday. Na said. they could never catch up. while E-Mart and Lotte built eye-catching displays and hired clerks who hawked their goods with megaphones and hand-clapping.9 billion won last year on revenue of 728. with 12 percent. The vice chairman of Wal-Mart. but has relied heavily on local managers from Samsung. Wal-Mart and Carrefour sold products by the box. Analysts estimated South Korea's discount store market at 24 trillion won." Wal-Mart and Carrefour said that leaving South Korea would allow them to focus on the retail industry in China. said that with its lead secured at home. Wal-Mart's arrival in South Korea in 1998 shocked domestic retailers. generating a third of its overseas sales.7 billion won. but its performance was lackluster. or $25. E-Mart plans to have 34 stores in China by 2010. which is owned by the British company Tesco. the E-Mart chain of Shinsegae accounted for 30 percent of the local market. the retailer could shift more resources to China. and Lotte Mart. followed by Homeplus. "Once they lost the race. Samsung Tesco is 89 percent owned by the British retail giant." Shinsegae's chief executive. which entered the country in 1996. last year. where it opened its seventh outlet this month. put off South Korean consumers by sticking to Western marketing strategies that concentrated on dry goods. Michael Duke." Mr. Ku Hak Su. . "Wal-Mart and Carrefour were not aggressive enough in expanding their networks in South Korea. the segment that specialists say attracts South Koreans to hypermarkets. it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired.

Nestlé.Over the years. and Nokia. Naver and Daum encourage users to post questions and let others answer them. also failed to make a mark with its flagship baby formula segment. creating a fast-expanding Koreanlanguage database that attracts Web surfers. . the world's primary cellphone maker. Local giants Samsung and LG dominate. the food and beverage company. for example. which is dominated by the Naver Web site of the South Korean company NHN and the portal of Daum Communications. Google is a small player in the local Web search engine market. 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. basically stopped promoting its cellphones here in 2004.

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