Homeplus †Marketing Essay

Background of Homeplus â€Å"Homeplus† was initially owned by Samsung Corporation[1] in 1994. During the Asian financial crisis in 1997, Samsung was affect by the crisis and tried to strive its business in the retail industry. It eventually collaborated with Tesco, a major British retailer in 1999[2]. The joint venture benefited both Samsung and Tesco. Samsung was saved from bankruptcy, in the same time, Tesco was able to enter the tough local retail business because of the partnership with Samsung[3]. Tesco took over 94.68% shares of the company in 2011[4]. Vision – Great Stone Face Homeplus’s vision is to be recognized as the most admired company in South Korea[4][5][6][8]. The company concerns with two major value creation, which are the market and social value. â€Å"Face of Growth† is based upon the market value creation. It involves in stimulating value for customers by clearly understanding customers’ needs, in turn, providing these value to them, which benefits the company in terms of market value maximization[4][6][8]. Referring to customers’ satisfaction, Homeplus emphasizes on reliable shopping value. According to figure 3, there are several factors that the company must consider i.e. low price, wide range, high quality and great services or products. Figure 3 Homeplus – Great Stone Face[6] Figure 3 Homeplus – Great Stone Face[6] â€Å"Face of Contribution† reflects the relationship between Homeplus and its stakeholders. It refers to the social value creation. That is, the company gives importance to its stakeholders and understands their expected value[4][6][8]. Figure 4 Stakeholder Viewpoint[5] Figure 4 Stakeholder Viewpoint[5] According to figure 4, it can be seen that Homeplus is the leading company among its competitors measured by the involvement with its stakeholders especially the local community. The integration of these two faces gives the â€Å"Great Stone Face†, which is Homeplus’s vision of two values creation must be achieved in order to sustain its business long – term. The sustainable growth, together with social contribution is the key driven to gain higher market value and becoming the most admired and respected company in the world[6]. Mission – Artience House Homeplus created its own management structure called ‘Artience House’. The house’s structure logically explained the correlations between each of the elements being applied in its management framework. Figure 5 Homeplus Vision House[5] Core Purpose – Foundation To found a basis of house, Homeplus regards to ‘create increasing value for customers to earn their lifetime loyalty’ as its core purpose explaining the reason why it exist. Values – Pilling To make the foundation firm, Homeplus focuses on ‘values’ in its business execution, which are ‘No one tries harder for customers’ and ‘treat people how we would like to be treated’. 4 Generations Development of New Concept Stores Homeplus has continuously developed its hypermarket concept as shown in the following figure. Figure 6 Homeplus 4 Generations of New Concept Stores[6] Homeplus has developed its store concepts up to the 4th Generation. The following explanation of each generation will be described in details as follows. 1st Generation Homeplus (Samsung and Tesco) entered the retail industry in 1999[2][4]. The 1st generation’s concept was known as â€Å"One Stop Shopping Service†. The company focused on offering low price products to customers. Like other retailers, Homeplus experienced many threats such as high competitiveness and the warehouse – like style discount stores did not really attract customers etc. 2nd Generation A year later, the â€Å"Value Store† concept was introduced in the 2nd development phase in 2000[6][7]. The â€Å"Value Store† was created based upon the customer oriented Korean style[6]. It comprised with â€Å"One Stop Shopping Service† and â€Å"One Stop Living Service†, offering optimal shopping services and other service facilities in a clean environment. â€Å"One Stop Living Service† delivers new floor layouts. The first floor is equipped with food courts, children’s playrooms and other service facilities where the second and third floors are the supermarket and products display[4][6][7]. 3rd Generation The 3rd generation was first introduced in Jamsil 2007[6][7]. Homeplus added â€Å"Emotional Store† to the 2nd generation, offering art and culture to customers. Moreover, the â€Å"Emotional Store† adopts four concepts of Art – being, Well – being, Touching and High Technology to the store[4][6][7]. In other words, it combines art with science, so called â€Å"artience† environment to customers. This include art galleries and function rooms located on the fourth floor expansion of the hypermarket[1][6]. Hence, the â€Å"Emotional Store† concept consisted of â€Å"One Stop Shopping Service†, â€Å"One Stop Living Service† and â€Å"One Stop Touching Service†. 4th Generation Homeplus recently introduced a new concept for the 4th generation in 2011[6][7]. This radical shift differed from other development phases where it combined the services both online and offline shopping and created a new innovative shopping concept. The â€Å"Smart Virtual Store† concept was developed and it became the first virtual shopping concept in the world[1][8]. The â€Å"Smart Virtual Store† provides a new way of shopping in subway stations. It aims to persuade customers to shop â€Å"Anywhere, Anytime and Anyplace† regardless time and space[6][7]. The concept was created inversely to traditional stores by bringing the stores to customers rather than waiting for them to visit the stores[6][7]. Homeplus launched applications that smart phones or tablets can recognize products’ barcodes by interfacing information embedded in the online store[6][7]. Homeplus installed â€Å"shelves†, displaying more than 500 products featured with QR codes are pictures plastered on the subway station’s glass walls, which could be scanned, purchased through smart phones applications[1]. The products consists of 3 categories and 11 subdivisions i.e. Daily Takeouts, Tesco Direct Souring, most frequently selected items known as Best 100 and Happy Range consisting of infant cares etc[6][7]. Moreover, purchased goods deliveries can be arranged and arrive in minutes or hours. This concept also pleasure commuters that are waiting for their train. The first virtual store is located in Sellong subway station, which is one of the busiest stations in South Korea’s capital city, Seoul. Later on, the installment took place at Seomyeon, Busan and expanded to Kwanghwamoon bus station in Seoul[6][7]. It is believed that the virtual shopping is one of Homeplus’s creative innovations that helps expanding the online sales rather than investing on new stores that requires huge amount of capital. The expansion of the smart virtual store is expected to be locating at busy pedestrian areas, offices, parks as well as universities and college campuses etc[6][7][9]. The figure below is a â€Å"Smart Virtual Store† in Sellong subway station. Figure 7 Homeplus Smart Virtual Store in Sellong Subway Station Figure 7 Homeplus Smart Virtual Store in Sellong Subway Station Leading Innovation and Development Leading IT Systems Due to Tesco’s leading role of Information Technology, Homeplus employed some of Tesco’s current technologies to its operation. Examples of effective analytical systems deployed by Homeplus are Product Management System (PMS) and Radio Frequency Identification Pilot Project (RFID)[6][7]. Self-Checkout System Homeplus runs the first self-checkout system in Korea. This system is currently being operated at 58 stores and provides customers with more convenient and reliable shopping environment[6]. It can not only reduce waiting time, but also enable customers to arrange their goods by themselves. By using this system, customers can keep private of the goods they purchased, and avoid making their credit card data to be disclosed. Automatic Queuing System In Yeongdeungpo store and Jamsil store, Homeplus introduced the automatic customer queuing system to optimize their customer’s shopping experience. Instead of lining up in front of the cashiers, customers are automatically queued with queue numbers. It has maximized the efficiency of both customers and cashiers. With this system being utilized in retail market, the operation of check out has become more flexible[6]. New systems and the customers’ parliament Homeplus decided to adopt the lotus system for retailing, which had achieved the global standard and was flexible enough to manage a rapid expansion [21]. Meanwhile, in terms of Development of alternative technologies [10], Homeplus introduced a self-checkout system and a smart card system, which can automatically count products in a shopping cart. Automatic queue counting technology is another introduced method, which is aiming to eliminate waiting in checkout lines. Also, the self-order and self-pay system has also been introduced to apply in their food courts. Additionally, Homeplus has its own philosophy that all of its stores are the customers’ parliament and places great importance on seven types of customer surveys conducted 200 times annually [17]. PMS (Product Management System) Homeplus initially set up the Product Management System (PMS) in 2004[6][7]. The PMS is an Oracle developed system, which is used to analyze and predict demand, stock ordering and promotion tools. The system is considerably accurate in terms of profitability management. Moreover, the data storage can be stored more than two years. The PMS helps supporting functions that in weak areas of existing domestic systems such as researching on demand analysis and stock inventories etc. The objectives of PMS is to reduce operating costs in all areas from product ordering, merchandise management, price inventory planning to increasing productivity[6]. Radio Frequency Identification Pilot Project (RFID) Occurring in the same year as the PMS, Homeplus adopted the Korean government’s Radio Frequency Indentification Pilot Project (RFID)[6][7]. The RFID is an innovative technology that enables product tracking utilizing embedded semiconductor chips. The product tracking process can be applied across the entire cycle since the production stage to ware – house phase and distribution process. Additionally, Homeplus was the first company in South Korea that developed RFID card to monitor customers’ buying characteristics[6][7]. The data can be collected via electronic tags that are embedded in shopping trolleys. The collected information helps the company to improve product displays to be more convenient for customers. The â€Å"Smart Pallet† was Homeplus’s 1st RFID pilot project that tracks pallets movement in and out among three suppliers; distribution centres, stores and KPP[6]. The development of the 2nd pilot project enhanced the revision of business model creation and operation of individual product. Leading Innovation in Distribution In 2003, Homeplus established its very own distribution service centre called â€Å"Mokcheon Distribution Service Centre†. Two years later, the company built the â€Å"Haman Fresh Food Distribution Service Centre†, which is currently the biggest agricultural and fishery products distribution in Asia[6]. The distribution centres are built to support the rapidly increase in sales due to the opening of new hypermarkets. The following figure indicates Mokcheon and Haman distribution service centres’ capacities. Figure 8 Mokcheon and Haman Distribution Service Centres’ Capacities[6] Suppliers – Shared Growth & Fair Trade For balancing the two wings of itself and suppliers, Homeplus found the ‘Shared Growth Division’ to implement the shared growth policies on six areas (Fair trade, Funding, Cooperation and Technology Support, Export Support, Education Support, Management Support)by collected opinions and comments from suppliers, and to build up sustainable partnership with suppliers. To specific, Homeplus strive to provide the fair trade and free competition with customers and suppliers; and it operates the Vendor financing system to gain more funding support; for the sake of efficiency of distribution, Homeplus supplies cooperative measures and technical support for suppliers and Develop PB products with suppliers and help excellent SMEs expand into overseas markets; Due to The learning ability of one enterprise which decides their future, Homeplus built up an academy, it give staff an opportunity to pursue lifelong education. To improve product competitiveness, Homeplus contributes to strengthen quality control system of suppliers by cooperating with external and internal experts[6][7]. Customer Value * We understand customers and do our best to satisfy them. Generally, customers always play a significant role in a successful company. Sometimes, the opinions of customers might impact the operation direction of a firm. Consequently, customer value can be used as a catalyst in creating a new advanced strategy in an organization. As the second generation store of Homeplus, they built a new construct named â€Å"Value Store† which was focusing on the convenient living conditions. Home Plus provided one stop living service and one stop shopping service, especially the one stop shopping service included cosy shopping, full range of goods, lower price, better quality and extensive customer service. The top managers of Home Plus trained their stuff to understand customers, satisfy the requirements of customers first and act the responsibilities of the company [6]. Figure 10 Community Centre Store Concept[5] Homeplus also does several kinds of customer surveys to hear customer ideas, in order to serve them better. They built a customer plan including several elements which are low price, wide range of product, high quality and great service. Each of the elements contained several items to examine the emotional data from the responders. The data have closely related to the transformational leadership which could decision the strategy of the company to covert the learning organization to innovative company[6].