Wednesday, November 16, 2011

Tesco enables South Korean commuters to do grocery shopping in a subway station!!

Have you ever imagined a life where you could do grocery shopping in the subway station and when you get home the products that you ordered are already waiting for you? It might sound like such a joke. However, it is not a joke because it is really happening in Korea. I grew up in Korea and I have always had a lot of exposure to high technology. ‘ A Korean’s Mobile Life’ article reported that in Korea, 40% of cell phone users are smartphone users and it is expected that the majority of the population that use internet will be using a smartphone or tablet by 2013. This trend made Homeplus, Tesco’s Korean brand, try this remarkable marketing initiative.
Tesco is well known for its customer centric marketing, which includes club cards program and shopping basket analysis.(For more information, see this case study.)  The company’s mentality played a huge role when they entered the Korean market and started localization. Unlike big foreign supermarket brands such as Wal-Mart and Carrefour, they tried to understand Korean customers shopping behavior and adjusted to the local market. Tesco even changed its name to ‘Homeplus’ and had only 4 employees from the UK headquarter in the Korean office. These efforts finally resulted in success by letting Tesco be 2nd biggest supermarket in Korea followed by E-mart which is a huge local market. Tesco is the first foreign supermarket brand that succeeded in Korea. In the interview of Tom Brown, the company’s winning strategies are well explained.

According to the Tesco Korea’s advertising clip, Korean people have a very strict work ethic and working hard is considered as a virtue. Since working is at the center of their lives, they want easy and convenient ways to enjoy their leisure time. That is why their smartphone usage is growing so fast, as it gives mobility and flexibility to their lives. Also this Venture Korea article indicates, QR code is very commonly used in Korea. People know how to use QR code and therefore many companies are using QR codes to give information and sell their products. Tesco saw this trend and they didn’t just ignore it. In order to be a number one supermarket in Korea without spending tons of money, they opened its stores in the subway station. The buying process is very easy. Customers see the real size product picture on the walls and if there is a product that they want, they just simply scan the product’s bar code or QR code and click the purchase button. When they click the purchase button, they can select the time and place that they want to receive the products. For hard-working people in the world, this will be just the easiest shopping experience ever.

It is cool but you might think  ‘OK, this sounds amazing, but is this really working? People actually use it?’ Yes. Here is the answer. Homeplus stated that after opening this virtual store, they became the number one supermarket in online markets making 130% sales growth and increased the number of new registered members by 76%. Understanding customers’ lifestyle and trying to offer relevant services for them made Tesco successful. Then, here is the last question: is this applicable in other countries? Well, if it were a market where people are highly engaged with smartphones and mobile shopping, this new initiative would be worth trying. The key here is to read the rapidly changing trend in the market and to come up with relevant creative ideas. Socialmediadc blog said that the company has to give its audience something they want and/or need, and in this case the QR code tactic allows consumers to kill two birds with one stone, something everyone wants!’

Chloe Moon
Graduate IMC
Followe me on Twitter @chloe0227

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