Wal-Mart Learns Lessons Overseas
By George Anderson
Wal-Mart didn’t get to be the world’s largest retailer by having more failures than successes. In the U.S., Mexico, South America and the U.K., the company and its respective divisions are a force to be reckoned with.
Why then has the retailer faced challenges to its business in countries such as Germany, Japan and South Korea? In some part, government regulations, such as those in Germany, have kept Wal-Mart from leveraging its pricing to gain an advantage against competitors.
In other countries, most notably South Korea, where Wal-Mart recently sold off its stores, the company’s traditional approach to retail merchandising has failed to deliver the numbers of converts needed to be profitable.
According to a Bloomberg News story, Wal-Mart “misread consumer preferences with warehouse stores that emphasized frozen foods in a spartan layout.”
Yasuyuki Sasaki, a retail analyst at Credit Suisse Group in Tokyo, said Wal-Mart should heed its experience in South Korea. “There’s no guarantee that the same thing won’t happen in Japan if Wal-Mart sticks to its own way and ignores the Japanese consumers’ demands.”
Part of what Japanese consumers look for at discount stores is fresh produce. The low prices at Wal-Mart, said Mr. Sasaki, do not overcome the fact that consumers cannot find the produce they are looking for when they go shopping.
“Japan is not America; Korea is not America,” said Edwin Merner, president of Atlantis Investment Research Corp. “Global giants like Wal-Mart fail in these countries because they don’t try hard enough to localize their businesses.”
Moderator’s Comment: Why does a retailer’s model translate in some countries while not succeeding in others? What do retailers entering the American
market need to know if they wish to be successful here? – George Anderson