As Mothercare continues its Asia expansion by launching stores and online in South Korea, what does this mean for retailers looking to break into the country?

Mark Newton-Jones with Do Sung-hwan, chief executive of Homeplus

Mothercare has signed an agreement to open stores and launch online in South Korea, which will see the British specialist’s presence in Asia increase to 17 countries. But Mothercare is just the latest in a long string of global brands to break into the market in the past 20 years.

The state of the South Korean retail market

In the early 1990s big name grocers including Walmart, Carrefour and Tesco moved into South Korea, which spurred on others to enter the question, Planet Retail’s global research director Robert Gregory tells Retail Week.

“Up until that point it was dominated by big department stores such as Shinsegae and Lotte Shopping, and the rest of the market was small independents and pop-ups,” he says. “But the big global grocers entered and it revolutionised the market leading to two decades of rapid hypermarket growth.”

But it wasn’t completely smooth journey, Walmart and Carrefour both pulled out of the market when they had difficulties competing with the local conglomerates, but Tesco remained and the country remains one of the grocer’s largest overseas markets.

Who are the big retail players?

Since the mid-2000s the market had attracted the interest of all the major retailers. After grocery, a number of fashion retailers have successfully expanded into South Korea, with the likes of H&M, Burberry, Abercrombie & Fitch, Marks & Spencer, Zara and Uniqlo all making the move in recent years.

What are the opportunities?

Thanks to the early movers, the market is now penetrable and very healthy – with consumer spend per capita strongly increasing, according to Planet Retail.

Retailers that choose to expand there can benefit from a population that is very youthful, tech-savvy and very comfortable with online shopping. Gregory also says South Korea is very developed and accepts Western influences, especially beauty brands.

Topshop has just withdrawn from Japan, which is a tough market in terms of having an old demographic, and retail sales trundled along or even dipped in some cases,” he added saying that retailers like Topshop exiting Japan just highlights the opportunities that a shift to Korea could provide.

What are the risks?

History proves that retailers can find the market unfavourable if they are not willing to provide bespoke products and services.

“Retailers have fallen foul there before if they haven’t tailored to local market tastes,” said Gregory.

And the established local department stores still play a big influence on South Korean’s lives, which could mean fierce competition.