Ha! Wal-Mart retreats from Germany

[Zkribbler]

We Love Lancer Day in Florence...




We Love Lancer Day in Los Angeles...

[mrmitchell]

Myth: "Walmart store brands are of poor quality."
FACT: I've replaced most of my expensive garbage (shampoo, contacts solution, etc.) with the store brand. There's no difference in quality - they both share most of their ingredients anyway - and I save around 50%. In fact some store brands are resurrected old independent labels (example: Grapette).

Myth: "Wal Mart gets its stuff from Chinese slave labor."
FACT: I can keep every trip to Wal Mart in the Western Hemisphere (you know, the better one). I check, and most of the goods I buy are from Canada, the USA or Mexico. Every retailer today imports at least as much of its products as Wal Mart does. WM lowers prices by the massive economies of scale and extreme information management - they know how profitable any item in any store at any price is, and they can shift accordingly.

Myth: "Wal Mart is vicious to its suppliers."
FACT: No one is holding a gun to these guys' heads. They sign deals with Wal Mart because a Wal Mart contract can double, at least, most suppliers' business. In addition the price pressure that Wal Mart puts on its suppliers often forces them to streamline their own businesses making themselves run faster. Levi, for one, finally cleaned up its act and made shipments on time after signing a supply contract with Wal Mart. Wal Mart pays all of its bills to suppliers right on time, and is one of the few corporate giants today that pays the rate it's supposed to for taxes (around 32%) instead of finding crazy loopholes.

Myth: "Wal mart killed downtown America."
FACT: Job outsourcing and the decline of the middle class killed downtown. Wal Mart had no more to do with it than malls, Target, or K Mart. Highway subsidies that let people travel to far-off shopping centers and interstate exits are also a culprit. But there are still thousands of "alive" downtowns even today.

pchang
Sort of. I can usually go to Fred's and beat Wal Mart prices on DVDs, name brand bathroom stuff, etc. But you see where the savings come from: Fred's is even dingier than Wal Mart, and the difference is never much larger than 10%. Not to mention with a dollar store, the stock may be older or imported from questionable countries.

Consumer's are fooled into thinking Walmart always has the lowest price due to the ads/marketing of the lead items.

What ads? This is one of the reasons hippies hate Walmart: they don't waste money advertising in local papers. Even on national TV other retailers like Target and Sears advertise far more than Wal Mart. Ads mean higher costs so Wal Mart lets its prices speak for themselves.

As for German consumers not being "fooled", Wal Mart's international ventures have failed for various reasons. Ecthy is probably right, the German economy is probably too restricted for a foreign company to enter and beat down two existing aggressive discounters, especially during an economic slump.

[Lancer]

Originally posted by Zkribbler
We Love Lancer Day in Florence...




We Love Lancer Day in Los Angeles...

[Kontiki]

Myth: "Walmart doesn't suck donkey balls."
FACT: It does.

[Colonâ„¢]

RETAIL GIANT HUMBLED

Wal-Mart Admits German Defeat

By Anne Seith

The American discount chain Wal-Mart is a worldwide phenomenon -- but in Germany it has been an embarassing flop. All 85 of its stores will be sold to Metro Group, its German competitor. The Americans overreached themselves, say industry experts.

It was a handful of words for what seemed like unimaginable news: "We never managed a turnaround," said a Wal-Mart spokeswoman today, trying to explain the end of her company's German venture. The world's largest retail corporation, growing worldwide as fast as the likes of McDonald's and Coca-Cola, has given up on Germany after an unrewarding eight-year slog. It will sell all 85 franchise stores to its German competitor, Metro Group, which will replace the American stores with hypermarkets run by a Metro subsidiary called Real.

It's a step that Wal-Mart's German chief David Wild still said was unthinkable as late as June this year. "Germany is the third-biggest market for retail goods in the world, after the United States and Japan," he told German newspaper Die Welt am Sonntag. "As a global concern we can't ignore the German market." Wal-Mart, he said, was simply considering closing a few unprofitable stores.

Friday's announcement that Walmart is abandoning its German operation registers as a painful defeat for the retail giant. Elsewhere its formula for selling discount goods has long been an international success story. The American firm operates 2700 stores in 14 countries outside the United States. In the first quarter of 2006 alone, the company's profits rose 6.3%, to a record level of $2.61 billion, and international turnover amounted to $79.61 billion -- 12.3% up on the previous year. Walmart's total group turnover in 2005 was a staggering $312 billion.

In Germany, though, Wal-Mart lost money. The company announced it would incur a pre-tax loss of $1 billion on the German operation. Nationwide losses for 2005 are thought to have run into hundreds of millions of euros. The reason, experts suggest, was an incomplete market strategy. In 1997 Wal-Mart bought 21 stores from the Wertkauf discount chain, then added 74 shops purchased a year later from Interspar. But the rapid expansion was more of a bargain hunt by Wal-Mart than a coherent, fully-developed concept. "Wal-Mart bought whatever stores were for sale and then just hung its name over the door," says Ulrich Eggert, a trend researcher for entrepreneurial consultancy, BBE. "So there was always more Wertkauf or Interspar waiting for customers in those stores than Wal-Mart -- which means two very different retail concepts. Wertkauf stores ... were nicely outfitted, large, with fairly good service; Interspar had small, sort of grungy shops."

"85 stores, that's too small"

Wal-Mart never really found a foothold in Germany, a source close to proceedings told SPIEGEL ONLINE. The American-style workers who smiled at people entering the stores or tried to pack items into shopping bags for them at the register -- something Germans are used to doing for themselves -- were not fully embraced by German consumers.

But above all it was Wal-Mart's hectic shopping spree in Germany that doomed it to failure. All other attempts to acquire new stores were unsuccessful, which can be fatal in the discount-store industry. "Eighty-five stores, that's way too small," said one source. "And yet Wal-Mart in Germany has one head office and three distribution centers -- which is the infrastructure of an overgrown retail company."

Last, but not least, the industry is agreed that the success-spoiled Americans stumbled on their own arrogance. Wal-Mart simply underestimated its competition. "They came here and thought they would just roll up the market, just because they're the cheapest," says trend researcher Eggert. But the discount retail sector has a far larger market share in Germany than in other countries -- about 40 percent of the supermarket business -- which means the prices for groceries and other daily goods tend to be about 15 percent below average (Eggert estimates). And, supermarket giant Aldi has long had a reputation for being the cheapest discounter in Germany.

Several German Wal-Mart bosses tried to control these problems in various ways -- which led to a wild fluctuation in prices and more chaos. "We're a company and we want to turn a profit," said the last of them, David Wild, in June. But the solution is a bit different from what he had in mind. Michael Duke, a vice chairman of Wal-Mart, said in a statement on Friday, "As we focus our efforts on where we can have the greatest impact on our growth and return on investment strategies, it has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire."

http://service.spiegel.de/cache/international/0,1518,429137,00.html

[DinoDoc]

So Asher was right? Germans really do react violently if you bag thier purchases for them?

[Colonâ„¢]

Why wouldn't they? It's freaky.

[Kuciwalker]

Originally posted by St Leo
Armwrestling their suppliers so that they have to adopt unethical business practices and cut their margins to near insolvence (thus becoming likely to go out of business in a recession) does that. A company should be going for a stable price in the long term, not the lowest price now. Wal-Mart will disappear in 20 years, leaving behind a wasteland in place of a healthy economic ecosystem.

Forcing suppliers to operate right at the margins

I'm not going to respond to the "unethical business practices"

[Ecthy]

Probably better this way. What basis would there be for elaboration?

[Kuciwalker]

mrmitchell

[Ecthy]

Originally posted by mrmitchell
Ecthy is right

Originally posted by Kuciwalker
mrmitchell

[Last Conformist]

Originally posted by DinoDoc
So Asher was right? Germans really do react violently if you bag thier purchases for them?

I don't know about Germans, but I'd certainly react badly if the personel down at the supermarket tried that.

As soon as you've checked my stuff and accepted payment, you're supposed to take the next customer, you anti-efficiency commie scum!

[DinoDoc]

Originally posted by Last Conformist
As soon as you've checked my stuff and accepted payment, you're supposed to take the next customer,

I do. Your order is being bagged while I'm checking your stuff.

[Last Conformist]

Originally posted by DinoDoc
I do. Your crap is being bagged while I'm checking your stuff.

That will take more time (or require an additional person) than just checking it and sending it along, so you're still a commie.

[DinoDoc]

Originally posted by Last Conformist
That will take more time (or require an additional person) ...

For express lanes the only time the line gets slow is when people ignore the 20 items or less sign. All the other lanes move at a pretty good clip. Waiting on the consumer to bag only seems like it would slow the process of getting them out of my sight down.