Wal-Mart Stores Incorporation, known better as Wal-Mart, is an American corporation The Walton family control over 50% of the retail corporation. Along all those years since its incorporation in 1969, Wal-Mart has remained as a family owned enterprise. The headquarters is situated in Bentonville, Arkansas. Some of the investments engaged by Wal-Mart that are very successful include in china, United Kingdom and in South America. Those that have not been successful include operations in Germany and South Korea.
Wal-Mart in Germany was started in 1998 when it acquired 95 stores from two retail companies and interns spars (Clark, 2006). By the acquisition alone, it by default became the fourth biggest operator of hypermarkets in Germany. Wal-Mart had chosen Germany as it is the world’s third largest economy (Clark, 2006). The Germany Wal-Mart was a Wal-Mart international initiative and was started by acquisition as the retailer had been denied operation licenses. The state of good roads and transportation system, with the added advantage of Germany’s location at the centre of Europe offered for expansion to other states. Its sales slogan for Wal-Mart in all its operations until 2006 was “Everyday Low Pricing” (Seeking Alpha, 2013). After nine years of operation, the retail corporation offloaded its hypermarket chain to Metro, a rival operating firm in Germany (Clark, 2006).
The target market for Wal-Mart was similar to those of other competing retail markets in Germany and, therefore, its low pricing strategy that the retail giant was using to win over customers in other areas yielded no fruits (DW, 2006). This is because the company was entering an oligopoly market. Also upon its entry to Germany, the firm had already acquired a 2% of the food market in Germany, with the overall presence of 19% behind the market leader then, which was Metro, followed by the Rewe group (New York Times, 2007). The initial strategy for Wal-Mart was to refurbish the dilapidated stores as well as capture the market and eventually be market leaders.
Improved service delivery and satisfaction of customers was also an income strategy for the retail store (Ewing, 2005). By so doing, Wal-Mart created a fierce price war rather than a conducive environment for fair competition in Germany (Pheobe, 2011). It was also alleged that the corporate company was using predatory pricing so as to kick out the common shopkeepers out of the business (Nelson, 2006). Regulations in the state that included limited store selling hours and prohibition of sale of goods below production costs eventually forced the company to increase its prices for butter, milk and flour (Arndt, 2003). In addition, Wal-Mart went wrong in their style of store merchandising. Instead of putting the discounted products at the eye level so as to woo customers, the products with discounts were stored on upper and lower shelves (Kwintessential, 2013). This irritated the German customers who were loyal customers of the retail store.
The targeted market in Germany was that of the commoners who were also served by other companies in the state. The target market for Wal-Mart in Germany was also not a very clear for them too. This is because, the company did not take the time to learn the customers shopping times and habits too. Moreover, the company used more of its space on non food products which were not a major revenue earner as compared to food products. While other firms were making more profits for investing their retail store spaces with food products, for example Metro, Wal-Mart used its space on non food products thus earning fewer revenues and finally withdrawing (Kottolli, 2006).
The brand position of Wal-Mart as it ventured into the retailer companies market in Germany was the fourth in position. When the company was closing off its books in the country, it was already making losses, and it is estimated to be close to 3million Euros (Seeking Alpha, 2013). The largest retailer in Germany was metro while other key market players which included Schwarz Unternehmen, AldiGmbh & Company Ohg, Rewe Zentral AG were still thriving despite the losses made by Wal-Mart (Pheobe, 2011). The brand position deterioration in Germany was associated with a number of factors. By the time the firm was venturing into Germany, there was the upcoming of ‘greenness’ in the state. By this time, environmental conservation and the need to recycle waste products was gaining ground.
Wal-Mart, however, introduced plastic bag for the packaging of products. This was annoying for the German shoppers as the plastic bags were being rendered redundantly and shoppers did not want to be seen as not being ignorant to the going green campaign in the nation then (Kwintessential, 2013). Wal-Mart was known to be a success in other nations, but the brand position of the company in Germany continued to fall with time. Cultural factors were also a big determiner in the success of this company in Germany. As it was tradition in the United States for Wal-Mart employees to spy on each other and report any misconduct to the top management, this culture was not adopted by the German employees as it was considered time barred.
Ignorance of the top management to views and feedback provided by employees was also a factor that led to the brand deterioration and fall in position of Wal-Mart, in Germany (Kwintessential, 2013). Wal-Mart in Germany also made wrong ethical choices which made it lose the popularity among the Germans. Some of these stringent rules by the management were the prohibition of any sexual relations and intimacy among those employed in the retail chain store. This did not go well with all the employees of the retail store as it went against the ethics in business. These laws made Wal-Mart very infamous within Germany and in return lowered the brand position of the retail store in the nation. (Macary, 2011)
References
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Ewing, J., 2005. Walmart Struglling In Germany. Bloomberg Businessweek Magazine, p. 1.
Kottolli, A., 2006. Trans-cultural Business Failure: Wal-Mart Exits Germany. BlogSpot, p. 1.
Kwintessential, 2013. Walmart in Germany:Cultural Problems. [Online] Available at: http://www.kwintessential.co.uk[Accessed 29 March 2014].
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