South Korea becomes Asian test market for global retailers

Korea is increasingly becoming an important test market for multinational companies who are looking to enter the Asian market. The latest example is Intersport, the world s biggest sports retailer, which is making its first foray beginning in Seoul.

The Intersport flagship store, run by the Korean franchise holder LG Fashion, opens in Guro, Seoul, Friday. It will feature 140 sports brands including Adidas, Nike, Puma, Asics and Reebok under one roof.

Franz Julen, Intersport International CEO, said the company is hoping to become a success in Korea first before it pursues further expansion in the Asia Pacific region.

``We are starting in Korea and then moving to other Asian countries, then India, Pakistan, Australia and New Zealand. In ten years from now, we hope Intersport is very strong in Europe, Canada, Middle East and also Asia Pacific... Today this is a big moment for us. This is our big move in Asia Pacific, he said, during a press conference at Lotte Hotel, downtown Seoul, Wednesday.

Intersport is the number one sports retailer in the world, with 9.2 billion euros ($11.2 billion) in sales in 2009. Its franchising business model has helped the company expand to 39 countries and 5,296 franchise, but none in Asia Pacific region until now. LG Fashion signed the master franchise agreement for Korea with Intersport last year.

Koo Bon-keul, LG Fashion CEO and president, is confident this new innovative sports retail concept will be a success, with the combination of LG Fashion s expertise in the local retail market and Intersport s global market knowhow.
Unlike the homogenous franchise approach followed by McDonald s and Starbucks, Intersport and LG Fashion will be adapting its stores to the local market.

``We have a lot of respect for the culture, history and consumer here, so we will adapt our system to the Korean market. That s why we have to find the right balance between the uniform approach and the adaptation to the market, Julen said.

Korea was chosen as the first market in Asia because, Julen said, of the Korean market s similarities with the European market, such as its preference for performance-driven and outdoor sports. However, Korean consumers are used to buying sports gear at either department stores or single-brand stores.

Intersport offers not just global brands but also its own in-house brands Energetics, McKINLEY and ProTouch at the Guro flagship store, which has a total floor area of 4,959 square meters.

The store is located only a stone s throw away from outlet stores at the Gasan Digital Complex, which offer heavily discounted sports gear and related equipment.

Officials are quick to mention that Intersport is not a ``discount outlet, and will offer not just quality products but sports expertise. Store personnel are trained professional sports experts and are ready to give advice to customers about all the products sold in the store.

``Our core competency is not in discount but in offering a good quality-price ratio... But at the end of the day, there is only one person that decides if we are successful or not, it is the consumer, Julen said.