Wal Mart

WHY DID WAL-MART FAIL IN GERMANY?

ALI EKBER PERKDAS

SOUTHERN STATES UNIVERSITY

PROFESSOR

CLAUDIA ARAIZA, PHD

AUGUST 2011

Why did Wal-Mart fail in Germany?

Wal-Mart Brief Background

Wal-Mart founded by Sam Waltson 49 years ago in 1962 in Bentonville, Arkansas. According to the case, ‘first year Wal-Mart garnered $700,000 in sales’. In fiscal 1980, Wal-Mart became the youngest retail company, and the only regional retailer, to exceed $1 billion in net sales. (Gunnar Trumbull, 2004)

1980s, Wal-Mart become national discount retailer. But some of the attempt was fail in 1980s. This failed did not effect to Wal-Mart growing, “1990s Wal-Mart become the largest retailer in the world. In FYE 2003, it had posted net sales of $244.5 billion and Wal-Mart has approximately 750 stores worldwide.”(Gunnar Trumbull, 2004)

Wal-mart decided to enter in Germany in 1997. Wal-Mart bought 24 stores from the Mann family, and 74 stores from the unprofitable Interspar chain in 1998. (Gunnar Trumbull, 2004)

Problem definition:

As indicated by marketing analyst in Germany, Wal-Mart failed drastically in the market, due to a poor concept selection. Conventionally, further supportive reference also indicated that Wal-Mart struggled in the German hypermarket chain, because of their failure to enact with German marketing rules and regulations.

According to the information gathered from the government reports, the famous superstore consistently disregarded the laws of the fair competition by marketing products at rates that were very low below the constitutional standards, which posed at risk to competitors of smaller ranks. Due to the dynamic pricing method, Wal-Mart is not favored as other hypermarket stores. Additionally, the Wal-Mart headquarters was also contacted about their poor working conditions. Due to these circumstances Wal-Mart had to withdraw its ofference to the German market; with disappointing aspirations.

Diagnosis:

“Wal-Mart is well known for...