Why did Wal-Mart fail in Germany ?
TOP 15 LARGEST RETAILERS in the WORLD
Rank
Company
Type
HQ Country
Sales USD in millions
1
Wal-Mart Store, Inc
Discount Store
United States
$285,222
2
Carrefour SA
Hypermarkets
France
90,297
3
Home Depot Inc.
Hardlines
United States
73,094
4
Metro AG
Diversified
Germany
70,093
5
Royal Ahold NV
Supermarkets
Netherlands
64,615
6
Tesco PLC
Supermarkets
UK.
62,284
7
Kroger Co.
Supermarkets
United States
56,434
8
Sears Holding Corp.
Department Stores
United States
55,800
9
REWE Handelsgruppe
Supermarkets
Germany
50,698
10
Costco Wholesale Corp.
Warehouse Clue
United States
48,107
11
ITM Enterprise SA
Supermarkets
France
47,218
12
Target Corp.
Discount Stores
United States
45,682
13
Group Casino
Hypermarkets
France
45,155
14
Aldi Einkauf GmbH & Co OHG
Supermarkets
Germany
42,981
15
Schwarz Group
Supermarkets
Germany
42,571
Type : Discount Department store/ Public
Founded : Sam Walton (1918-1992),
Founder
Key People : H.Lee Scott, CEO
S. Robson Walton, Chairman
Industry : Retail
Products : Discount stores, Grocery stores,
Hypermarkets
Revenue : 315.654 billion USD
(2006)
Net Income : 11.231 billion USD
(2006)
Employee : 1.8 Million (2006)
GERMANY TOP 15 RETAILERS
Rank 32.0
Company
Revenues in Germany (Bil..Euro)
1
Metro AG
32.0
2
Rewe Group
28.6
3
Edeka/AVA/Group
25.2
4
Aldi Group
25.0
5
Schwarz Group
17.2
6
Karstadtquelle
16.1
7
Tenglemann Group
12.5
8
Lekkerland-Tobaccoland
8.2
9
Spar Group
7.5
10
Schlecker
5.3
11
Globus
3.4
12
Dohle Group
2.9
13
Wal-Mart Germany
2.9
14
Norma
2.4
15
Bartels-Langness
2.1
Retail Competition
Manufacturers
Retailer Act
End user
- Small
- Immobile
- Uniformed
Retailer’s Competitive Advantages
• Lower Prices (Everyday low prices)
• More Favorable (Near or easily accessible)
• Better Product Selection and Category
Management
• Superior Customer Service
Impediments of Retailer
•
•
•
•
Legal Barrier (Law and some forms of behavioral Regulation)
Stringent Planning Regimes and Zoning Regulations)
Restrictive Shopping Hour Regulations
Antitrust and (un)fair Trading Regulations that may restrict price
competition or prohibit some forms of advertising and sales
promotion)
Internationalization in Retailing
1.
Status Quo
- A Handful of Players of International Retailer such as Carrefour
and Aldi
- Most of these companies are based in Western Europe rather than in
the US or North America
2. Prevailing Strategies such as organic growth, joint ventures,
Strategic alliances, Franchising, Mergers and Acquisitions
3. Impediments to Retail Internationalization
- Mixed bag, Barrier to entry, Aggressive, Reaction by the
incumbent Oligopoly
The German Retail Market
1. General Background Information
- The biggest national retail market in the old World
2. Oligopolistic Market Structure- The Key Player
3. Ultra-Low Profitability – Probably the least profitable
all over the industrialized world
4. Retail –Specific Legislation such as Planning Law
and Zoning Regulation
Store Opening Hours in Select EU Countries
Country
Mon-Fri
Sat
Sun/Holidays
Hours/Week
UK
00.00-24.00
00.00-24.00
00.00-24.00
168
Netherlands
06.00-22.00
06.00-22.00
Closed
96
Spain
00.00-24.00
00.00-24.00
Closed
144
France
00.00-24.00
Germany
06.00-20.00
00.00-24.00 Open (Only Store
Owner and family
members but no
employees)
06.00-16.00
Closed
Source : KPMG
144
(Minimum)
80
Wal-Mart’s Strategy in Germany – Why It Failed
1.
2.
3.
4.
Flawed entry-by-acquisition Strategy
Management by “hubris and Clash of Cultures”
Neither “ Everyday low prices” nor” Excellent Service”
Repeated Infringement of German Laws and Regulation
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