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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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...

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...


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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