While I wouldn't completely discount cultural and business-environment differences, this is probably the most relevant part,
> Another fatal flaw was that Germany's retail market is already saturated with discounters such as Aldi and Lidl, meaning that any new arrival inevitably finds itself in the midst of a cutthroat price war.
Walmart's model is to do high volume at low margins with a highly optimized supply chain. But that is already exactly the model of Lidl and Aldi, and there's not a lot of room to beat them at that game.
"Not a lot of room" in this case is basically zero.
FYI to those unfamiliar with Aldi: their (grocery) stores are fairly small, run in a seriously minimalistic manner. Products are usually presented either on their shipping palettes, and/or still in volume cases - customer does some of the unpacking. Most products are "made for Aldi" or otherwise sourced from bottom-price manufacturers. Variety is nearly nonexistent. Typically (at least in every store I've seen in USA) there are only two employees at any time - one acting clerk, other stocking/cleaning. Credit cards are not accepted; before debit cards, it was cash only. Aldi seemed the last store to use barcode scanners, clerks having literally memorized the codes for every product in the store and could process checkout nearly as fast (sometimes faster) than barcode scanning. Stores are very clean & simple.
You'd be hard-pressed to beat that cost-cutting business model.
As a german, don't even know enough about Walmart to tell if they are in the same game or not. There are two mutually exclusive ways of doing cheap: you either take pride in being cheap our you try to hide it in everything but the price tag, aping pricier retailers in all other aspects (something Aldi or Lidl would never do, minimalistic presentation is the core of their brand identity).
The pretend-premium version of cheap simply would not work in Germany, because kills trust in the value of the actual products sold. Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price because all the saving comes only from cheap presentation has taken deep roots in the public consciousness. And this is where cultural differences really put Walmart in a pinch: even if they are firmly in the proud-cheap camp (which neither I not the general public would know), transplanting American service ideas like excessive greeting or the whole bag-packing thing (even just getting a bag for free is considered borderline wasteful) would give the exact opposite impression. Premium presentation, that combines with cheaply sourced goods into a very toxic "faux-quality" image.
In addition, an important part of Aldi's recent success in Germany is that they do not compromise on quality. Often their products (say olive oil, toilet paper,...) win/score at the top of consumer reports. They have a great brand image (much better than Lidl).
When Aldi came to Dallas a few years ago (I'd like to say 2010-2011ish), they started a price war over milk that resulted in milk prices in Dallas plummeting to 1960 levels.
I like the Aldi I used to go to in Kansas while working there. Cheap, clean and no one bothers you. It actually was a better experience than Walmart, even for this American. They had cool, better carts too!
> The company also scrapped the staff warm-up sessions scheduled at the start of every day, on the grounds that German employees found them ridiculous.
Ah, Germans. Gotta love the directness of the culture. Keeps things real.
Germans I've asked about this say "why do you need to perform a cheer to begin your work?" It's not just the directness, it's the attitude that you show up on time and work. No screwing around, no hand-holding needed.
Just wondering.. i never heard of this (I'm german) but i have seen a documentary about Japan, where employees (in this case salesmen) gathered in the morning, did some kind of sports and some motivational speech and things like that. Is that also something i'd find in the US? I must admit, i smiled at it and found it ridiculous. I'd think all the time "stop wasting time with this shit and get some work done"...
As an american I find this kind of thing "ridiculous" as well. I think a lot of folks share that sentiment. The question is why are we still doing it.
I also have to ask what they entail at walmart? Ya for no heath insurance, Ya for working but having to be on food stamps, Ya for not enough hours to support my family?
When Walmart came to Germany I've actually kinda hoped, they would succeed with that warm-up thing. But as most (if not all) stores were just bought up from other German chains - their employees were bought with those stores and remained as unmotivated, bored and sometimes aggressive as they were before :-)
When you write about "the directness of the culture" I find it telling, that Wal-Mart sees its methods as "people-centered" while the competitor's German CEO sees them as "all about budgets, not customers"
"The company gave the job of masterminding Wal-Mart Germany to an American who didn't speak a word of German. This should surely have been indispensable to finding out what the German salespersons would need to know about local shopping habits."
Well. Culture beats strategy
I love when people think they can learn about a new market from their comfy office an ocean away
This reminds me of Tesco trying to crack the US. No language barrier, and spent ages studying US shopping habits but gave up in the end. Supermarkets are hard.
That was such a failure. They baited people in with the promise of a good selection of products at a low price when they had actually a pitiful selection and jacked up prices.
Half of the shelves were actually empty.
Clothes were of extremely low quality.
The Wal-Mart in Munich, Germany introduced me to the concept of "hot dog relish" (must have been ~10 years ago) which I had never heard of before. So if not for other reasons, for getting ingredients for sandwiches and stuff I mourn their parting :)
Locally walmart means absolute junk quality for poor people who wait in long lines. The description of Germany is a good fit for retail in general, but not walmart. This truth can't be stated in a commercial publication, walmart spends too much money on advertising, but I think it fairly obvious.
Now Target could have possibly made it. Or maybe walmart could have made it in far southern or eastern Europe in very poor areas.
There were a lot cultural misses in Walmart. For instance, nobody bags your groceries in Germany. When you're not expecting it, it's fucking weird to have some employee come up and grab your food.
Also, Germany has places like Kaufland and Rewe (in addition to Aldi) that have certain items much cheaper than Walmart. I found that milk, rice, bread and cheese were all cheaper there than in the US... and better quality for some reason too.
As some have mentioned, yes. But in general: Why must someone push his brand and store concept into another country, instead of buying/creating a local chain?
How often will grocery-buying customers from one country be shopping groceries while on vacation? And would a recognizable brand really leave the customer with an advantage? E.g.: If I were an American in Germany, yearning for Twinkies, which are nowhere to be found in regular stores in Germany, would I or Walmart be really better off, by also-not-finding-them in the German Walmart too?
[+] [-] _delirium|10 years ago|reply
> Another fatal flaw was that Germany's retail market is already saturated with discounters such as Aldi and Lidl, meaning that any new arrival inevitably finds itself in the midst of a cutthroat price war.
Walmart's model is to do high volume at low margins with a highly optimized supply chain. But that is already exactly the model of Lidl and Aldi, and there's not a lot of room to beat them at that game.
[+] [-] ctdonath|10 years ago|reply
FYI to those unfamiliar with Aldi: their (grocery) stores are fairly small, run in a seriously minimalistic manner. Products are usually presented either on their shipping palettes, and/or still in volume cases - customer does some of the unpacking. Most products are "made for Aldi" or otherwise sourced from bottom-price manufacturers. Variety is nearly nonexistent. Typically (at least in every store I've seen in USA) there are only two employees at any time - one acting clerk, other stocking/cleaning. Credit cards are not accepted; before debit cards, it was cash only. Aldi seemed the last store to use barcode scanners, clerks having literally memorized the codes for every product in the store and could process checkout nearly as fast (sometimes faster) than barcode scanning. Stores are very clean & simple.
You'd be hard-pressed to beat that cost-cutting business model.
[+] [-] usrusr|10 years ago|reply
The pretend-premium version of cheap simply would not work in Germany, because kills trust in the value of the actual products sold. Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price because all the saving comes only from cheap presentation has taken deep roots in the public consciousness. And this is where cultural differences really put Walmart in a pinch: even if they are firmly in the proud-cheap camp (which neither I not the general public would know), transplanting American service ideas like excessive greeting or the whole bag-packing thing (even just getting a bag for free is considered borderline wasteful) would give the exact opposite impression. Premium presentation, that combines with cheaply sourced goods into a very toxic "faux-quality" image.
[+] [-] r3m6|10 years ago|reply
[+] [-] amyjess|10 years ago|reply
When Aldi came to Dallas a few years ago (I'd like to say 2010-2011ish), they started a price war over milk that resulted in milk prices in Dallas plummeting to 1960 levels.
Edit: Source: http://www.wfaa.com/story/money/consumer/2014/08/10/13621020...
[+] [-] lnanek2|10 years ago|reply
[+] [-] pbreit|10 years ago|reply
[+] [-] kordless|10 years ago|reply
Ah, Germans. Gotta love the directness of the culture. Keeps things real.
[+] [-] joezydeco|10 years ago|reply
[+] [-] buster|10 years ago|reply
[+] [-] zer00eyz|10 years ago|reply
I also have to ask what they entail at walmart? Ya for no heath insurance, Ya for working but having to be on food stamps, Ya for not enough hours to support my family?
[+] [-] woodpanel|10 years ago|reply
When you write about "the directness of the culture" I find it telling, that Wal-Mart sees its methods as "people-centered" while the competitor's German CEO sees them as "all about budgets, not customers"
[+] [-] Oletros|10 years ago|reply
I don't know any Spanish, Portuguese, French or Italian that doesn't find that ridiculous
[+] [-] raverbashing|10 years ago|reply
Well. Culture beats strategy
I love when people think they can learn about a new market from their comfy office an ocean away
[+] [-] thisisblurry|10 years ago|reply
[+] [-] exeterfan|10 years ago|reply
http://www.bbc.co.uk/news/magazine-13190124
[+] [-] barkingcat|10 years ago|reply
http://www.theglobeandmail.com/report-on-business/small-busi...
[+] [-] john_fushi|10 years ago|reply
Half of the shelves were actually empty. Clothes were of extremely low quality.
They just did not do anything right.
[+] [-] wink|10 years ago|reply
[+] [-] VLM|10 years ago|reply
Locally walmart means absolute junk quality for poor people who wait in long lines. The description of Germany is a good fit for retail in general, but not walmart. This truth can't be stated in a commercial publication, walmart spends too much money on advertising, but I think it fairly obvious.
Now Target could have possibly made it. Or maybe walmart could have made it in far southern or eastern Europe in very poor areas.
[+] [-] riffraff|10 years ago|reply
[+] [-] cygnus_a|10 years ago|reply
Also, Germany has places like Kaufland and Rewe (in addition to Aldi) that have certain items much cheaper than Walmart. I found that milk, rice, bread and cheese were all cheaper there than in the US... and better quality for some reason too.
[+] [-] werber|10 years ago|reply
[+] [-] skrebbel|10 years ago|reply
[+] [-] woodpanel|10 years ago|reply
How often will grocery-buying customers from one country be shopping groceries while on vacation? And would a recognizable brand really leave the customer with an advantage? E.g.: If I were an American in Germany, yearning for Twinkies, which are nowhere to be found in regular stores in Germany, would I or Walmart be really better off, by also-not-finding-them in the German Walmart too?
[+] [-] domrdy|10 years ago|reply
[+] [-] legulere|10 years ago|reply
[+] [-] wink|10 years ago|reply
[+] [-] joezydeco|10 years ago|reply
[+] [-] shanemhansen|10 years ago|reply
[+] [-] mmphosis|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]