WHY DID WALMART FAIL IN GERMANY TOP 15
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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 Gmb. H & 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
barriers 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. 00 168 Netherlands 06. 00 -22. 00 Closed 96 Spain 00. 00 -24. 00 Closed 144 France 00. 00 -24. 00 Germany 06. 00 -20. 00 00. 00 -24. 00 Open (Only Store 144 (Minimum) Owner and family members but no employees) 06. 00 -16. 00 Closed 80 Source : KPMG
Wal-Mart’s Strategy in Germany – Why It Failed Flawed entry-by-acquisition Strategy 2. Management by “hubris and Clash of Cultures” 3. Neither “ Everyday low prices” nor” Excellent Service” 4. Repeated Infringement of German Laws and Regulation 1.
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