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What the World Can Learn from Korean Retailers
Leading Retail
What the World Can Learn from Korean Retailers
  • By matthew
  • February 7, 2014, 09:06
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Emart’s Flying Store floats around malls offering free wifi and easy access to Emart’s retail site.
Emart’s Flying Store floats around malls offering free wifi and easy access to Emart’s retail site.


The way that convenience retailers operate in Asia, using customer insight to shape their offer to a level unprecedented in the Western markets, is starting to make businesses in the latter economies really sit up and take notice. Asian retailers’ assortment and adjacencies are all driven by the lifestyle needs of the shopper – unlike many of their European counterparts – with legacy pricing models that prioritize cost and efficiency in store operations.  

Simon Hathaway is the President and Global Head of RX at Cheil Worldwide Inc. in London.Cheil Worldwide works extensively in South Korea, where convenience grew by 15.6 percent in 2012 and is shaping up to have had another bumper year in 2013. That’s significantly faster than direct retail, including online, which grew by 12.5 percent in the same period. Why?  Primarily, because these retailers are delivering real convenience for their customers. They understand what customers want and how much they’re prepared to pay.

But perhaps more interesting is their eye for the future, based on the changing shopping habits and expectations of retail.  More than 20 percent of Koreans in their 20s now shop via smartphone, and that’s where some of the most interesting work is being done: to unite the mobile device with the store.

Korean retailers are starting to deliver for a customer who sees the smartphone as the primary tool for shopping, and therefore now expects retail to be three things: Everywhere, Instant, and Personal. 

For example, virtual stores in Seoul subway stations have become the global benchmark of Everywhere retail. The store is indicative of how South Korean retailers continue to redefine the shopping experience, and the idea has since been borrowed by businesses across the globe.

But when that virtual store was started in 2011, only 11.9 percent of South Koreans shopped with a smartphone according to a Korea Chamber of Commerce and Industry (KCCI) study in May 2013. Last year, it was a colossal 62.6 percent. 

Seoul is the eleventh biggest city on the planet with more than 25 million people in the greater metropolitan area, most of whom have a smart device that enables them to shop anywhere. So it is no surprise that many retailers who want to engage today’s agile consumers are looking to South Korea for inspiration. Fast adoption of 4G and in-store wifi opportunities are driving this new approach to retail, and offer businesses the opportunity to engage with shoppers in different and really exciting ways. 

For one, people now have access to endless information to answer any questions they might have – and that means they’re making more educated choices about brands and products. Mobile is all about searching, shopping, and sharing. 

Retailers are also starting to realign their loyalty, promotion, and even payments through the mobile device. And finally, the mobile has replaced the land bank in the retail space race. Location is no longer about a store in every community, but a shopping app on every phone.

For example, Emart’s sales navigation tool enables shoppers to locate the best offers in-store with their smartphones: they just set their phones into a shopping trolley and are navigated to the aisle containing the product they were after. Smartphones genuinely enhance the in-store experience.

Emart also offers the Flying Store – helium-filled balloons that float around malls offering free wifi to shoppers (plus, of course, easy access to Emart’s own online retail site).

KCCI research in 2013 showed decreased fall-out ratio in Korea, the ratio of people who search product information using smartphones but purchase via computer or at offline stores. The number of people who searched for product information using smartphones but bought using computers was 70.5 percent in 2012 but fell to 66.4 percent last year. Those who bought at offline shops after searching with smartphones also fell, from 38.5 percent to 29.0 percent. 

According to the Chamber, this is mainly due to improved shopping applications, simpler payment processes, and various discount offers for smartphone shoppers. 

Through mobile, Korean retailers are able to offer shopping in any location, at any time, with a level of personalisation that, up until recently, most retailers could only dream of. It’s truly becoming Everywhere, Instant, and Personal, and that’s why the eyes of the global retail industry are on Korea to see what it does next. In a very real sense, this market is shaping the entire world.