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A Case Study By: Phoebe Jui InWal-Mart had entered in the German retail market through acquiring the failing German retail chain Wertkauf but quickly encountered problems. Wal-Mart had demonstrated phenomenal success in the US by providing an Every Day Low Prices guarantee, inventory control, and efficient distribution.
The retailer continues to grow while others struggled with inflation and recessions. During the s, Wal-Mart began to further expand and thus pushing some retailers to closing some of their regional stores.
Wal-Mart had been able to implement its Every Day Low Price strategy by focusing on 1 developing a sophisticated logistics system with heavy information technology investments, 2 efficient distribution system by placing retail stores close to distribution centers and using RFID technology, and 3 being a non-union employer.
Retailer Shift towards Globalization Wal-Mart was a relative latecomer to international retailing. It started in by opening two stores through a joint venture in Mexico.
InWal-Mart now with 1, international stores had sales growth of During that same time, its competitors had also begun expanding. K-Mart entered the European market in and began expanding.
InWal-Mart moved into the German market through acquiring the Wertkauf chain 24 stores and unprofitable Interspar chain 74 stores. The Interspar stores were in poor repair and in poor locations. Retail market growth rates had averaged at 0.
Bankruptcy filings were numerous.
In10, retail stores filed for bankruptcy. This points towards a competitive landscape that might prove to be challenge for Wal-Mart to succeed in.
They would overhaul the supply chain systems, and incorporate new scanning systems, centralized distribution, and high quality customer service. By doing so, Wal-Mart had created a fierce price war in Germany. According to a Goldman Sachs report, Wal-Mart could be trusted to implement its US strategy and gain efficiency, low prices, and inventory control and thus propel the underdeveloped German market into the future.
However, to the contrary, an analyst in a DG Bank report warned of many foreign retailers failing in Germany because of land-use restrictions.
Germany had limited store hours, price regulations prohibiting retailers from selling below costsand stringent zoning requirements. Also, Unions were more influential than their US counterparts. Zoning InGermany had enacted strict planning and zoning regulations designed to protect traditional retailers and thus prohibited construction of stores with more than m2 sales area in locations not designated for retailing.
Yet, even within cities, where retail restrictions were less onerous, the approval process for a new store still could require from 1 to 4 years.
Opening a large retail store outside urban area was possible however require multiple steps. The retailer would be required to create a building use plan that would cover a comprehensive development concept that accounted for environmental, conservation, and private legal concerns.
An example would be the new site could not sell products that would compete directly with stores in nearby towns.
The plan would need to be first approved by the town or city council and then regional planning boards at the state and national level. This resulted in little to no success rate especially since the German government did not want retail businesses to pull away customers to outside of a town leaving old buildings and monuments in the city center vacant.
This would be extremely problematic for Wal-Mart because all of its stores in Germany were Supercenters.
Labor Union Relations Germany service sector union Ver. This ultimately led brought Wal-Mart to the negotiating table with Ver. As a result, the retailer conceded a salary increase that was 0. It was instituted to protect domestic retailers from larger competitors who could afford to keep their stores open longer with lower expenses.
This was also reinforced by religious factions who supported the importance of family time while the left side of the political spectrum believed that retailers working longer than other workers was inherently unfair.
The shortened working hours have resulted in higher wages per worker for retailers. Customers Unlike many of its German competitors, Wal-Mart offered credit card payment and free bags for goods purchased, improved store interiors, and friendly customer service.
Since German customers were not accustomed to friendly greetings, they focused more on how much more is Wal-Mart charging customers for these additional services. Not having to hire greeters helped mitigate costs from having to pay higher wages per worker compared to the UK. Customers were also loyal to the domestic large players in the retailing industry including Metro, Aldi, and Rewe.
Suppliers Wal-Mart experienced great difficulties in dealing with suppliers. The retailer did not have the bargaining power to buy goods from suppliers at low cost and also did not have a reputation of low prices with German consumers.Mar 18, · Essay on Wal-Mart Essay on Wal-Mart The Wal-Mart case, as well as the business itself does not leave you indifferent – you either love it or hate it and hardly anyone will blame you for such expressing feelings.
May 16, · Walmart’s Downfall in Germany: A Case Study By: Phoebe Jui In , Wal-Mart had entered in the German retail market through acquiring the failing German retail chain Wertkauf but quickly encountered problems.
Wal-Mart, now it is branded as Walmart is the world largest public multinational corporation by revenue in , which runs a chain of large discount department stores and a chain of warehouse stores worldwide.
Wal-Mart Stores Case Study Essay Sample Wal-Mart is a lowest Price leader and they have a competitive advantage in pricing, distribution center, and store locations. Wal-Mart keeps its promise of everyday low prices, by having a smooth business cycle maintained by unbeatable distribution center supported by trucking networks, and excellent.
Wal-Mart Opportunities Business Essay Example. The retail industries are the largest industries in the world. In the US there is one million stores with large revenues; in the total retail sales equaled around 4 trillion dollars.
In August , Wal-Mart achieved an agreement on establishing a joint venture with Bharti Enterprises, which would be called Bharti Wal-Mart Private Limited, for back-end supply chain management and cash-and-carry operations in India.