How Germany Busted Wal-Mart's Bubble.Pptx

How Germany Busted Wal-Mart’s Bubble

Reasons and lessons learned behind Wal-Mart’s failed attempt into Germany

• Founder Sam Walton opened the first store in 1962 and is now the world’s largest retailer with more than 10,000 retail units under 69 different banners in 27 countries. • 2.2 million employees serving 200 million customers and members every week. • Net sales for 2012 increased 5.9% to $443.9 billion, $125 billion derived from international sales.

Wal-Mart’s 2012 Annual Report……

Five key strategies that are central to Wal-Mart’s future success: 1. Developing their people 2. Driving the productivity loop 3. Winning in Global eCommerce 4. Reinvigorating their customer–focused culture 5. Being the lead on social and environmental issues

Wal-Mart’s History in the German Market

• Entry began in 1997 with the acquisition of 21 hypermarkets from Wertkauf GmbH, then another 74, which included sites which previous owners had failed to make profitable. Wal-Mart Germany was initially lead by an American (who didn’t speak a word of German.) Lacking an understanding for German culture, Wal-Mart misfires a second time by replacing the CEO with a Brit to take the helm. Unable to find what makes German consumers “tick”, Wal-Mart exits the $370 billion German retail market and sells its 85 operations to rival Metro AG, incurring a pretax loss of $1 billion *Wal-Mart’s largest global competitor Carrefour SA of France, operating in 29 countries, has steered clear of Germany.

•

•

General Economic Obstacles of the German Market

• Location: While Germany has 1/3 the population of the US, the surface area is roughly the size of Oregon. Every square foot of Germany is either developed or about to be. German planning law offers many obstacles to newcomers, especially those wanting to construct buildings on the Wal-Mart scale. • Rival, German-grown discounters such as Aldi, Metro and Lidl have the market nearly saturated. According to Nestle...