Wal-Mart to sell 85 stores in Germany and exit country
For starters, Wal-Mart appears to be betting on cracking the Chinese marketplace, which holds just about all the international potential one could hope for. With Wal-Mart already doing so much business importing goods from China, perhaps the "buddy system" will repay the retailer as it forges ahead into that country.
After almost nine years in Germany, Wal-Mart seemingly could not win over German customers, who are very price-focused. Although Wal-Mart offers "everyday low prices", it found that its German competitors offered just as low of a price on many items, putting it on a level playing field with the Wal-Mart stores in the area. In addition, some of Wal-Mart's signature offerings like smiling employees, baggers at checkout and stores outside of town centers proved unfavorable to the standard German consumer.










Reader Comments (Page 1 of 1)
7-28-2006 @ 1:43PM
Richard said...
This article referred to Wal-Mart's smiling employees. I've never seen an employee in any Wal-mart I've been in every smiling. They usually look as if they can't be bothered and would rather you took your business elsewhere. The article also referred to baggers. Never, ever, seen one of those either.
7-28-2006 @ 3:03PM
carlos said...
It's unfortunate that might Wal-Mart has been heckled out of Germany. The problem is not the employee's inability to smile. The problem is the product. It's a known fact that much of their merchandise comes from China. So do virtually all of the offerings at 99 cent stores. Why would a shopper in Germany, or in South Korea for that matter, put up with the masses for inferior products. I can't shop in a U.S. Wal-Mart because of the crowds. For many shoppers, it's not worth their time to fight for a parking spot and then deal with the hordes to save pennies on a "cheap" product that ends up costing them dollars in lost time. As a contrast, just look at the Costco and Target business models. Yes there are hordes of people, but the prices are good and the quality is very good.
Wal-Mart underestimated the German market by thinking everyone only cares about price. Price is defined as cost vs. quality, and not cost at the expense of quality. The world does not need another K-Mart. I think China may not be as easy to crack as perceived.
7-29-2006 @ 10:37AM
Manfred said...
From a customers sight Wal-Mart SuperStores in Germany are not too bad but there are some simple reasons why Wal-Mart failed to attract enough customers and therfore never managed to reach profitability: Price/quality ratio is poor especially regarding their low-price goods (about 10% of goods offered in food sector and 90% of non food). Competitors like Aldi and Lidl are milestones ahead in this section. Brands are not much cheaper than in other stores - if at all. Departments for fresh not packed food like cheese, sausage and fish where shrinked to a fraction of their origial size or closed, banishing a lot of former customers. Prices for vegatable and fruit are premium. Service is rather poor. You´ll never see a bagger at the checkout - although a lot of customers would appreciate this. You don´t even get a bag if you don´t ask for. Most of the checkouts are permanently closed, resulting in long queue times. Last but not least advertising is lousy.
7-30-2006 @ 10:44AM
Julie said...
I am glad Walmart left the German Market. It wasn't the right place for their everyday low price strategy to work because the laws in Germany make it illegal to match a price a customer paid at another store and it is illegal to keep a store open 24 hours. These two factors greatly impede Walmarts draw to customers in other markets.
7-30-2006 @ 6:09PM
Manfred said...
For shure it wasn´t German laws that let Wal-Mart fail on the German market. Competitors also have to follow local laws. By the way - it is not forbidden there to match or undersell competitors prices.
Wal-Mart´s Managment should have made a better job in analyzing local competitors and customer´s preferences. That would have saved shareholders a lot of money. Obviously similer mistakes where made as in Korea.
7-30-2006 @ 6:15PM
Manfred said...
For shure it wasn´t German laws that let Wal-Mart fail on the German market. Competitors also have to follow local laws. By the way - it is not forbidden there to match or undersell competitors prices.
Wal-Mart´s management should have made a better job in analyzing local competitors and customer´s preferences. That would have saved shareholders a lot of money. Obviously similer mistakes where made as in Korea.
2-18-2008 @ 4:46AM
puppylove said...
it looks on the surface that wal-mart in germany fail due to quality imperfections vs german products.but a strong reasoning is that most germans are still mercantilists trying to protect their nation's interests ^_^ so many reasons of poor performance on the part of walmart allowed germans to work on those tools 'provided' readily which gradually drove walmart out from the country :)