Retailer Brand Development and Handling Processes: A Comparative Study of Tesco Korea and Local Korean Retailers

Abstract

This research began with the question: why is the retailer brand market share of Tesco Korea higher than that of local Korean retailers? Of the foreign grocery retailers who have expanded into Korea, Tesco has achieved the most outstanding performance, with the highest retailer brand share in the market. After the withdrawal of Wal-Mart and Carrefour from Korea in 2006, Tesco Korea has been positioned as the successful foreign retailer. Accordingly, how the retail operation of Tesco Korea differs from that of the local Korean retailers attracted the author’s interest, specifically in terms of the development and handling processes of the retailer brand. Rather than examining the customer perceptions of both Tesco Korea and the domestic Korean retailers, the researcher concentrated on identifying the differences between both parties from the point of view of their retailer brand program operations. Based on in-depth interviews with retailers and suppliers, store observations, the author’s own experience in retailer brand development, and company documentation, this research explored the differences between Tesco Korea and domestic Korean retailers in how they develop and handle their own brands. Tesco Korea has taken advantage of retailing know-how, that is, retailer brand development skills created by Tesco UK. With the help of Tesco UK, the retailer brand development process of Tesco Korea is differentiated in a number of areas from that of the local Korean retailers. The flows of retailing know-how from Tesco UK to Tesco Korea has also influenced the whole retailer brand market in Korea, as well as stimulated the local Korean retailers to improve their retailer brand development skills. The entry of retailers with advanced retailer brand development knowledge into markets where retailer brands are less well developed is a catalyst in promoting retailer brand markets, and in intensifying retail competition. Also, the retailer brand development know-how of domestic retailers is enhanced by imitating or benchmarking foreign retailers. This research suggests that retailer brand share is related to the degree to which retailers are proactively involved in the development and handling processes for retailer brand product ranges, as well as to how sophisticated or advanced their knowledge of the retailer brand development process is. Advanced development and handling skills make a considerable contribution to increasing retailer brand share in markets with a lower share or no presence of retailer brands.