Carrefour's Exit from South Korea
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Case Details:
Case Code : BSTR241 Case Length : 19 Pages Period : 1995-2006 Organization : Carrefour Pub Date : 2006 Teaching Note :Not Available Countries : South Korea Industry : Retailing
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
What went Wrong?
Despite its experience elsewhere, Carrefour failed to localize its stores to a
sufficient extent, as per the preferences of South Korean customers. Instead it
tried to introduce its global practices and strategies in the country.
Carrefour's stores layout, ambience, products, location, etc. failed to attract
customers. The company wanted to attract the customers by providing them high
quality products in bulk at low prices. Its stores were styled like warehouses
and were simple in appearance compared to the stores of its competitors.
Initially, customers in South Korea were enthusiastic about the warehouse style
of Carrefour stores, but most of them were not bulk purchasers.
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In several other countries in which Carrefour operated, the
customers were more concerned about the price of the products and not much
attention was given to the ambience. But in contrast, South Korean customers
especially housewives, preferred a clean and sophisticated atmosphere along with
low prices and turned to retailers like E-Mart which offered both...
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The Road Ahead
When Carrefour announced its decision to withdraw from the Korean
market, the decision surprised analysts. Despite its problems they
believed that the company was on the verge of success and had made an
unnecessarily hasty retreat. They pointed out that the country was just
recovering from credit card related personal debt problems and there was
a marked improvement in consumer confidence, and retail spending had
been registering continuous growth. Other factors like the stable job
market and increasing incomes were also helping consumer spending... |
Exhibits
Exhibit I: Carrefour South Korea - Profile of the Competitors Exhibit II: Carrefour - Store Formats Exhibit III: Carrefour - Consolidated Store Network (December 2005)* Exhibit IV: Carrefour - Consolidated Net Sales per Format/Region (2005) Exhibit V: Overview of the South Korean Economy Exhibit VI: Retail Industry in South Korea
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