Dear Mr Ken,

Welcome to HomePlus! We sincerely hope you enjoy your new challenge and achieve great
success with Tesco – HomePlus and with us.
I have prepared a consolidated report that provide to you the information with the following key
points (overview of the HomePlus business, its opportunities, challenges and strategic approach).
That include:
1. HomePlus business overview: Here are the key factors of success and growth drivers that
have contributed to our business.
2. HomePlus opportunities and challenges: Its include a consolidated report of market
opportunities, as well as the major issue that influence to our business
3. The solution that our team has discussed based on previous lesson learn and best
practical.
Please take a look at the report and I believe that is the excellent resources for your approach in
the Korean market. We will have a weekly meeting at Friday next week, I have involved you in
the meeting request, so I hope you will take the time to meet with our team, which includes
myself and our Director Manager for catch up and update the business.
If you have any questions or issue, please feel free to contact me.
Thank you and best regards,
Seung- Han Lee,
CEO, HomePlus.
HOMEPLUS – Achievements and Challenges

Contents
HOMEPLUS – Achievements and Challenges ......................................................................................... 2
Executive Summary .................................................................................................................................... 2
Introduction ................................................................................................................................................. 2
HomePlus Business Achievement .............................................................................................................. 3
The Challenges and The Strategic Solutions ............................................................................................ 3
Key Factors To Success .............................................................................................................................. 4
Conclusion ................................................................................................................................................... 5
EXHIBIT ...................................................................................................................................................... 6

Executive Summary
Tesco, the multinational retailing giant, chose a joint venture with the Samsung Group as its
market entry strategy into South Korea in 1999, and launched a new brand, Homeplus. We was
the only company under foreign majority ownership that managed to establish itself as the
second largest retailer in South Korea (Korea).

HomePlus initially encountered a number of challenges, including cultural differences, language

barriers, communication issues, and potentially negative nationalistic sentiments among
domestic buyers. HomePlus's management implemented several policies aimed at localizing the
business, combining localized marketing with a globalized management and administrative
system.

Homeplus have grown quickly with a network of 124 discount stores and 27,874 employees,
exploring the potential of the Korean retail market valued at USD196 billion in 2011.

Introduction
This HomePlus – An Overview of HomePlus in Korean retail market, its challenges over the
years, the strategies implemented, new challenges that could occur by implementing these
strategies and the possible solutions for them.

This report will provide a brief:

 To provide a short overview of current great achievements, with clearly defined success
factors and challenges.
 Also assists in identifying hidden potential, as well as providing comprehensive solutions
that HomePlus should consider the strategic approaches for growth and retention of
competitive strengths in the coming years.

HomePlus Business Achievement

Some of Homeplus achievement in Korean retail market can be briefly named as the followings:

 Ranking the second-largest retailer of Korea with 124 discount stores and
27,841 employees (Exhibit 1 – 2011)
 Being a key driver in the development of the Korean retail market: switching the retail
format from department stores to discount stores after the 1990s, and innovating the
online shopping experiences of consumers with advanced technology thanks to the mixed
 "Global" power of investment on both financial, operation, and management, product-
selection wisdom from Tesco, and local advantages from Samsung.
 Homeplus stores were successfully established as "value stores," not only offering low-
priced and diverse products.
 Having the highest Personal brand ratio of 28 percent (Exhibit 2 – 2011), Homeplus
gained a competitive advantage over local chaebol-affiliated manufacturers,
giving Homeplus greater control over price, margin, and product selection.
 With a total of 358 SSM outlets in 2010 (Exhibit 3), it successfully led the
market segmentation of super-super market (SSM) among the big three retailers,
exploring the potential of the lower-income market previously owned by convenience
stores of other retailers.

The Challenges and The Strategic Solutions

There are few problems, challenges that Homeplus faced and the possible solutions needs to
resolve.
1. HomePlus was initially successful in Korea due to its ability to quickly adapt to changing
market conditions and consumer demands. However, as the company grew and became
more bureaucratic, decision-making processes became slower and less flexible. This made
it more difficult for HomePlus to respond to changes in the market and compete effectively
with other retailers.

Suggested Solutions: Set-up a local senior team that can revert quickly on related policies of
products, sales promotion

2. New retailing regulation bills were currently being discussed in the Korea Parliament. If
they became law, they might greatly hamper company’s further expansion in Korea and
seriously derail the strategy.

Suggested Solutions: Set up a team solely dedicated to seeking permissions for

SSMs in case the first bill gets passed until they find a
long-term solution.

3. HomePlus had initially relied on a centralized warehousing and distribution system,

which allowed for efficient delivery of stock to stores. However, as the company grew and
expanded its store network, it became more difficult to maintain efficient delivery times,
and some stores were left with out-of-stock items or slow replenishment of inventory.

Suggested Solutions: Plan the store locations in such a way that they are accessible to
multiple localities and support them with delivery.
Set up a delivery service for faster and efficient delivery by
Homeplus—something that the other small stores lack.
Set up a centralized delivery system that connects SSMs with
customers and using.
Offer online delivery services with inventory in the SSMs even on the
days the stores are closed.

4. Intensive relationship with local stores

Suggested Solutions: Get more involved in the community and build connections with the
locals. If possible, give franchise rights to the locals.
Create a decision-making system that gives more autonomy to local
store owners for taking decisions on the items to be sold in the local
stores.

Key Factors To Success

There are three main factors affecting consumers’ behavior and marketing strategy in Korea.
 First, Korean consumers as well as many other countries becoming convenience-centric
in shopping decision making, convenience should be considered while designing any new
strategies.
 Second, the aging population in Korea has different shopping habits and preferences
compared to younger generations. For example, older consumers may prefer to shop in
physical stores and value traditional brands, while younger consumers may be more
interested in online shopping and trendy products.
 Finally, Korea is known for its high level of technology adoption, which can impact
consumers' behavior and create new opportunities for marketers. For example, mobile
shopping and social media marketing are popular in Korea.

Conclusion
HomePlus has successfully implemented the strategies to compete in the Korean retail market,
including expanding its scale, focusing on customer loyalty, and using different approaches to
reach different customer segments. We also acknowledges the challenges that HomePlus faces in
this market, such as intense competition, changing consumer demands, rapid market changes,
and government regulations.
HomePlus needs to remain agile and adaptable in the face of these challenges, and continue to
innovate and differentiate itself from competitors. HomePlus should prioritize building strong
relationships with its customers, as this will be a key factor in its long-term success.
HomePlus has navigated the challenges of the Korean retail market successfully as Achivements,
but we need also highlights the ongoing challenges that it will need to address to remain
competitive in the future.
EXHIBIT
EXHIBIT 1: THE WORLD TOP 10 RETAILERS BY SALES

EXHIBIT 2: PB PRODUCT RATIO OF BIG THREE RETAILERS IN KOREA (PERCENT)

EXHIBIT 3: TOTAL NUMBER OF STORES IN KOREA BY STORE FORMAT