Tesco HomePlus virtual stores (South Korea)
How a retailer entering a foreign market designed a digital service around local routines.
- Sector
- Grocery retail
- Source
- Digital Entrepreneurship case collection, chapter by Soltanifar and Smailhodžić (2021)
The case in brief
Tesco, a British multinational grocery and general-merchandise retailer, wanted to succeed in South Korea, where consumers have little time for traditional grocery shopping. The case presents this as an opportunity that digitalisation opened up.
Tesco found that South Koreans use a lot of technology in daily life, work long hours and commute longer than most Europeans. It responded with HomePlus “virtual stores”: displays in subways and bus stops showing products with scannable codes.
Shoppers scan the codes with the HomePlus smartphone app, add items to a virtual basket, pay online and schedule home delivery, so a busy person can buy groceries more conveniently.
Key facts
- Tesco stores worldwide (at the time of the case)
- 6,800
- Employees worldwide
- 450,000
- HomePlus app downloads
- 900,000
- Online sales growth since introduction
- 130%
Analysis through module theory
Innovation types (Week 1)
The groceries are unchanged, so this is not product innovation. What is new is how customers experience shopping (service innovation) and how orders are taken and fulfilled (process innovation). For the level, you could argue “new to the region”; the case makes no claim that it was new to the world.
PESTEL (Week 1)
The design follows social factors (long hours, long commutes, busy lifestyles) and technological factors (heavy smartphone use). This is a clear example of analysing the target country’s environment before designing the entry offer.
Digital internationalisation (Week 12)
HomePlus is digital-enabled rather than pure digital: it still needs products, warehouses and delivery. The digital layer brings the store to where time-poor customers already are.
Discussion questions
- 1.Is HomePlus mainly a service innovation or a process innovation? Argue one and explain why it is not the other.
- 2.Which PESTEL factors made virtual stores a good fit for South Korea? Would the same idea work in a country where you might take your Individual Report business?
- 3.Tesco is a multinational and could not be used in the Individual Report. What lesson still transfers to an SME?
Takeaways
- Digital entry starts with understanding local routines, not with the technology.
- An unchanged product can be delivered through a new service and process.
- Digital-enabled models still depend on physical logistics in the target market.