Walmart outside U.S


Kogel is a small shopper or customer in Germany. He also does not visit big stores like Walmart frequently because it is on the edge of town and he does not own a car. His one purchase for the day was tucked under his arm a neck pillow.

Food is cheaper at German discount chains. Shoppers like Kogel help explain why Wal-Mart raised the white flag in Germany, the site of the company’s first foray into Europe.

After nearly a decade of trying, Wal-Mart never cracked the country failing to become the all-in-one shopping destination for Germans that it is for so many millions of Americans. Wal-Mart’s problems are not limited to Germany.

The retail giant has struggled in countries like South Korea and Japan as it discovered that its formula for success low prices, zealous inventory control and a large array of merchandise did not translate to markets with their own discount chains and shoppers with different habits.

Over all, Wal-Mart is still expanding outside the US, particularly in markets where it entered by acquiring a strong retailer. Still, given its formidable record at home, the firm’s recent setbacks have exposed a rare vulnerability overseas

Some of Wal-Mart’s problems stem from hubris, a uniquely powerful American enterprise trying to impose its values around the world. At Wal-Mart’s headquarters in Bentonville, however, the message from these missteps is now registering loud and clear. In particular, Wal-Mart’s experience in Germany, where it lost hundreds of millions of dollars since 1998, has become a sort of template for how not to expand into a country.

It’s good, important lesson, a turning point, an international spokeswoman for Wal-Mart said. Germany was a good example of learning. She said that Wal-Mart now cares less whether its foreign stores carry the name derived from its founder, Sam Walton, as the German Wal-Marts do. About 70% of Wal-Mart’s international sales come from outlets with names like Asda in Britain, Seiyu in Japan or Bompreco in Brazil.

Wal-Mart is trying to integrate acquisitions with more sensitivity a process that that involves issues like deciding whether to consolidate multiple foreign headquarters and how aggressively to impose Wal-Mart’s corporate culture on non American employees.

In Germany, Wal-Mart stopped requiring sales clerks to smile at customers a practice that some male shoppers interpreted as flirting and scrapped the morning Wal-Mart chant by staff members

People in Germany found these things strange; Germans just don’t behave that way said Hans Martin Poschmann, the secretary of Verdi union, which represents 5,000 Wal-Mart employees here. Wal-Mart’s changes came too late for Germany, but they could help it crack other markets, like China, where it already has 60 stores and 30,000 employees. Wal-Mart is forging ahead with an aggressive program of foreign acquisitions far from being chastened by its setbacks.

In a single week last fall, Wal-Mart completed the purchase of the Sonae chain in Brazil, bought a controlling stake in Japan’s Seiyu, and became a partner in the Carcho chain in Central America. The deals added 545 stores and 50,000 employees to Wal-Mart’s overseas empire. Wal-Mart international is doing much better after the acquisitions and culture changes.

Starting from scratch 14 years ago, Wal-Mart International has grown into a $63 billion business. It is the fastest growing part of Wal-Mart with nearly 30% sales growth in a year. Even subtracting one-time gains from acquisitions, it grew at nearly 12%, about double the rate of Wal-Mart’s American stores.

Sustaining that pace is critical for Wal-Mart, because high fuel prices have helped sap the buying power of Americans. In June, store traffic in its home market declined.