Tesco Takes Virtual Store to Subway Riders in South Korea

Discussion
Jul 06, 2011

Tesco was looking for answers in South Korea. According to a video from the company (be sure to watch it), its Home Plus chain was second largest in the market and investigating ways to gain share without adding physical stores. Management reasoned that hard working South Koreans needed something that would make their lives easier. The answer that Home Plus came up with was to take the store, a virtual one at that, to consumers inside a subway station.

The virtual location is laid out exactly the way a typical Home Plus store would be. The company has created photo layouts of products it sells with a unique code for each product. Consumers scan the QR codes for the items they wish to purchase and then check out. Orders are automatically delivered to the consumer by the end of the day.

According to the chain’s video, the virtual store has brought it thousands of new customers and its online sales in South Korea have increased by 130 percent.

Home Plus’ virtual store is just one of many innovations likely to come to retailing with the development of mobile technologies.



Source: Home Plus

“For sure, your cell phone will be the graphical user interface to the shopping services,” Abel Sanchez, research lead at MIT’s Intelligent Engineering Systems Laboratory, told MIT Technology Review. “Think of the early days of the web versus today. In the early 1990s, the web was one way, like a paper book. Today, the web is full of interaction; it’s how we do our jobs. I think the supermarket will go through a similar transformation.”

Discussion Questions: What do you think of the Home Plus virtual store? Does it have applications in the U.S. market?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

22 Comments on "Tesco Takes Virtual Store to Subway Riders in South Korea"


Sort by:   newest | oldest | most voted
Marge Laney
Guest
7 years 8 months ago

This is the perfect application for mobile in retail. Giving customers access to what they want, when they want it without being in the store. Why would I stand in the aisle of a store and use my smart phone to get information or order when I can interact directly with the product and/or a service person? But, in this case, time starved commuters can take care of the basics on their way home without having to take more time to actually visit the store. They know the store, and they know the products they buy on a regular basis–Brilliant!

Richard J. George, Ph.D.
Guest
7 years 8 months ago

I am a firm believer of “fishing where the fish are.” The Korean test should be carefully studied to determine if it can be adapted and adopted in the U.S. I have not doubt that the rapid growth of smartphones will be followed by new applications and this is a terrific opportunity for food retailers.

Paula Rosenblum
Guest
7 years 8 months ago

I think it’s an awesome idea. Does it have an application in the US market? I think in a channel-less world, any place a consumer has time on his or her hands is a good place to go shopping. Subway stops are good places to make it possible because they have those large walls.

In a way, the fact that a subway station exists in an area means there’s sufficient population density to make it work.

The challenges I see in the US are: 1) keeping the virtual store graffiti and vandal-free, 2) finding places in cities that don’t have subway stations where this might make sense and 3) working through home delivery challenge.

Rick Moss
Guest
7 years 8 months ago

I’m trying to imagine why renting all that subway wall space, installing those fancy digital screens and engineering the entire system makes more sense than applying your intelligence to improving the online shopping experience–whether at home or on a mobile device. I can see how shoppers might feel more comfortable with the full-size display and the familiarity with the shelf layout, but scanning each QR code seems a heck of a lot clumsier to me than clicking the “Add to cart” button on an e-commerce website. (And I won’t even get into how the homeless population could derail this type of effort in the NY subway system.) I believe there’s merit in this concept but all the pieces aren’t fitting yet, for me.

Gene Detroyer
Guest
7 years 8 months ago

As I said in yesterday’s discussion, mobile is not a device. Mobile is a lifestyle. And this is just another aspect of people in the mobile lifestyle and where it is taking retail.

Dan Berthiaume
Guest
Dan Berthiaume
7 years 8 months ago

This is very similar to the in-flight e-commerce question posed yesterday. Subway riders, like plane passengers, are a bored and (somewhat) captive audience who are looking for distractions. The US market does not currently offer as much m-commerce opportunity as the rest of the world but as smartphone penetration continues to grow, so will American m-commerce. Now is the time to take initiative and get an early stake in the mobile branding competition.

Roger Saunders
Guest
7 years 8 months ago

As a greater number of U.S. consumers shift to mobile technology offerings–links to the Internet, use of QR codes, payment systems, etc.–this offers serious promise. The simple reason–it’s making shopping easier for the consumer.

Tesco has done their homework in listening to some of the key reasons that consumers may choose to shop a retailer. They are addressing one of the chief issues on the customers’ mind–“convenient location.” This virtual store also covers issues of “Expanded Selection,” “Quality” (demonstrated with strong visuals), “Price” (gives consumer chance to compare pricing), “Service,” “Trustworthy Retailer” (they are coming to the consumer), “Store Appearance,” “Store Layout,” and “Prepared Meals.”

Office buildings, transportation areas, non-competing retailers or malls all offer a cooperative set of venues to deliver on the execution side.

wendy wasserman
Guest
wendy wasserman
7 years 8 months ago

I am very much intrigued by this application and hope someone will study it with an eye to exploring how it might be used to expand access in food deserts. The concept of having these interfaces at strategic locations backed-up by a well administered delivery system may be applicable in both rural and urban food desert communities. I also imagine that the overhead costs are cheaper than building and maintaining a brick and mortar location.

If anyone is exploring, or hears of anyone exploring, this avenue for food deserts, could you please alert me?

Bill Robinson
Guest
Bill Robinson
7 years 8 months ago

Wow! What a terrific use of technology and brilliant vision. Tesco has synthesized the physical shopping experience with the on line experience. And while it has done so, it addressed two major human needs: (1) not liking to wait for shopping and trains and (2) not liking to waste time.

Dan Stanek
Guest
Dan Stanek
7 years 8 months ago

I love the use of dwell time and the integration of this form of shopping into everyday life activities. I think one of the profound changes in shopping with mobile devices is this life integration and the implication of marketing to stimulate behavior wherever the customer may be.

Eliott Olson
Guest
Eliott Olson
7 years 8 months ago

It has legs. Billboards, magazine ads, inflight catalogs, game day programs and playbills, at a QSR drive through, on a restaurant menu, attached to product packages are all possibilities. Remember the old catalog showroom featuring home furnishings? This could bring it back and more; a food showroom.

Herb Sorensen
Guest
7 years 8 months ago

This looks like a home run with great evolutionary possibilities. For example, the screen could be digitized for easier shelf management, and the screen itself could be interactive. And then, of course, the screen could be mirrored on the shopper’s tablet. Lots of interactive possibilities.

John Karolefski
Guest
7 years 8 months ago

I think the Home Plus concept is good for South Korea and its shoppers. Will it fly in the U.S.? Test the concept in the New York City subway system and judge the results.

Seriously, let’s not get carried away with the smartphone revolution. Grocers need to make their stores shopper-friendly for the younger generation. That’s where the focus should be.

Dave Wendland
Guest
7 years 8 months ago

Simply put, yes. Putting a “shopping experience” in the hands of consumers when and where they want to shop has always been the underpinning of retail–think location, location, location.

Well, with digital capabilities quickly becoming an integral aspect of our lifestyles, virtual stores most definitely have application in the U.S. And, as others commented, this is not to replace emphasis and refinement of e-commerce and the continued evolution of traditional brick-and-mortar.

Craig Sundstrom
Guest
7 years 8 months ago

Richard’s comments remind me of a joke along similar lines: a man is asked why he’s fishing where there aren’t any fish, and he replies that there’s no competition either. But anyway, back to the topic at hand, I have mixed feelings: as a consumer, I applaud the novelty, but as a(n at least occasional) subway user, the last thing I want is someone getting in my way so they can scan a wall on their smart phone…hopefully the transit authority considered the traffic flow implications when they gave their OK.

James Tenser
Guest
7 years 8 months ago

I love this video and the imaginative thinking behind it. A crowded subway station has the advantage of many opportunities to see, but also the disadvantage of crowding and time pressure as trains depart.

I’d could see this applied in U.S. commuter train stations for take-out restaurants. View and order before you leave; pick up your freshly-prepared meal as you exit the train near your home. Convenience grocery could work too–but I think stored shopping lists might be more convenient than scanning a bunch of pictures along the walls.

Tim Henderson
Guest
Tim Henderson
7 years 8 months ago
I really like the Home Plus virtual store. No, it’s not totally innovative– consumers have been buying pantry and medicine cabinet goods via a variety of ways for some time, e.g., catalog, traditional phone, smartphone, Internet, vending, kiosk, and pop-up stores. What impresses me about Home Plus is that it slips the product almost seamlessly into the consumer’s everyday lifestyle. In this case, it goes beyond a single product to encompass an entire store that fits into this consumer’s every day, busy lifestyle so they can shop with simplicity and convenience. This type of virtual pop-up could prove another creative way for brands to reach consumers in unique places, e.g., the college campus, retirement communities, large apartment complexes, corporate centers, urban areas, food deserts, airports, etc. That said, the big hurdle may be delivery costs. For time-starved consumers who seriously dislike weekly grocery shopping, they may not think anything of paying extra dollars for this convenience. But today’s post-recession, bargain savvy grocery shoppers will likely shy away from any added costs. For that reason, the… Read more »
Gordon Arnold
Guest
7 years 8 months ago

I would like too see some specific sales results as a result of this market expansion mission on the store side. Same store sales dollars, average basket dollars, impulse item dollars per store and percent increase or decrease of clearance items displayed in lost revenue would be my biggest concerns. IT services, billing, and the entire delivery service are in fact variable expenses on the same side as existing LOHM G&A. Time will tell if there was sufficient profit and loss testing for this move; I know I will be watching.

Bernice Hurst
Guest
7 years 8 months ago

Like our conversation a few days ago, I think execution will determine success and whether this is a gimmick that people try once and drop or actually find useful enough to become repeat (loyal???!!!) customers. It will also be interesting to look at average spend and frequency of orders. This might be most attractive to those who have run out of milk or need something delivered to eat that evening. I don’t think it’s very likely that people will stand around planning their weekly (or even weekend) shop.

I find the whole idea of shopping in a subway station somewhat ridiculous, too. People are thinking about getting to where they want to go and, as notcom pointed out, they don’t want any extra reasons to be shoved around if they are blocking another passenger’s view of the screen.

Overall, I have to disagree (as usual) with virtually everyone here. I really don’t like this concept or believe it will work in the long term.

Mike Osorio
Guest
Mike Osorio
7 years 8 months ago
Tesco has often created innovative shopping solutions and this is simply their latest. They have focused on the specific shopping needs and behaviors of the South Korean consumer and designed a unique method to combine two activities, commuting on the subway and shopping for that day’s grocery needs, into one. The whole allure of mobile platforms–i.e. tablets and smart phones–is the potential for allowing people to shop wherever they are. The virtual subway store enables people to shop the way they like–either independently on their device at the online store, or “roaming the aisles” via the virtual store. Based on the stated results, the consumer is reacting well. Over time, this method may lose its novelty but it is a brilliant way to entice more consumers to try the online store. Would it work in the U.S.? Probably not in the same way. The subway experience in the U.S. is far different than in Asia. In addition, home delivered online grocery shopping is not well penetrated in the U.S. as compared to South Korea. However,… Read more »
Geoffrey Igharo
Guest
Geoffrey Igharo
7 years 8 months ago

Its not wise to judge this from the perspective of an American sitting living a daily life of traffic jams and suburban sprawl.

This concept has excellent prospects to work well in a major south Korean city context. They have the population density, work long hours 6 days a week, commute by public transportation, and have much broader and deeper internet usage habits including earlier adoption of smartphones and high speed mobile internet service.

No this won’t work in Buffalo, Detroit or Houston. In the US, you might be looking at this working only in maybe New York City and Boston. But so what? The world is full of cities more like the one that Tesco is testing this in. In fact, if you look at the demographics, that’s where the world will see growth, not in the places where people are scratching their head about this.

Geoffrey Igharo
Guest
Geoffrey Igharo
7 years 8 months ago

Also, I’d encourage folks to think more broadly as well; this is not just about subways, it’s more about density of foot traffic. This concept could produce immense value in the lobby of an office building for example, at a sports arena, any number of places. You could operate convenience stores and put this in to sell a wider range of products online to the customers that you are acquiring in-store based on footfall in that particular location. And so on.

It will do best with public transport, but really it has broad possibilities.

wpDiscuz

Take Our Instant Poll

How successful would virtual store technology, similar to that being used by Home Plus, be in the U.S.?

View Results

Loading ... Loading ...