Wal-Mart cannot rely solely on everyday low price strategies, it has to also adapt to local environments

IIPM PUBLICATION
The Bentonville behemoth is surely blinking now. Just like the South Koreans, the Germans too have proved to be misfits in the wall (read plans) of Wal-Mart. The big daddy of retail announced on July 28 that it was shutting down its 85-Supercenter Chain in Germany and selling them off to arch rival Metro AG at a humongous loss of $1 billion. Wal-Mart’s penchant for ‘everyday low prices’ and ‘one-stopshop’ failed to attract price-focused consumers. The exit has left analysts pondering if the magical run of Wal-Mart is drawing to a close. Wal-Mart stamped its exit as a ‘forward-looking statement’. Michael Duke, Vice-Chairman of Wal-Mart Stores, stated, “We focus our efforts where we can have the greatest impact on our growth and return on investment strategies”. What Wal-Mart, then, needs to remember is that ever since it kicked-off its operations in Germany in 1997, it was unable to catch the pulse of price-sensitive Germans, who prefer driving to multiple stores in the hunt of the cheapest deal, instead of traveling outside urban areas – where the retail giant had plopped its stores. More importantly, Wal-Mart’s ‘Everyday low price’ promise failed terribly because local “hard discounters” like Lidl GmbH & Aldi Einkauf GmbH succeeded in undercutting Wal-Mart heavily on prices.

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Source : IIPM Editorial, 2006, Editor – Prof. Arindam Chaudhuri  

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