Global retail may be becoming more homogeneous due to international expansion by various chains, but the success of internalisation is patchy within and across retailers, and there have been failures on an industrial scale.
This made me curious as to why a retailer fails in some markets and not others. It turns out there are a few common themes. Here’s what I’ve been able to discern from some of the more notable and/or recent failures and market withdrawals.
Walmart loses the culture wars
The Arkansas-based behemoth closed 269 stores worldwide in 2016, just over half of which (154) were in the US. Its efforts in Germany and Korea were two examples of a lack of cultural understanding and demonstrate why cut-and-paste is ineffective.
Walmart pulled out of Germany in the late noughties, having learned that what is “customer service” in one country may be offensive in another. German customers, for example, were offended by greeters and Walmart’s 10-foot rule (greeting/interaction/eye contact if coming within 10 feet of a customer). Germans didn’t like having their groceries bagged or taken to their cars. Walmart was also using plastic bags in a country that’s very eco-conscious. Walmart’s employee policies and lack of understanding of German labour laws and unions resulted in it being considered anti-democratic, and its employee “no fraternisation” policy grated. To add insult to injury, EDLP pricing wasn’t a differentiator in a country with Aldi, Lidl and Kaufland.
Walmart also pulled out of South Korea in the late noughties. The retailer didn’t understand the cultural importance of Korea’s local fresh food markets and that Koreans understood the nature of supermarkets as having a dry-goods focus rather than food and beverage. Koreans are frequent shoppers doing top-up shops, not the stock-up trip nature of a Walmart format. And the company’s locations outside cities didn’t work because Koreans wouldn’t travel to shop.
