Tuesday, August 01, 2006

Wal-Mart says "Auf Wiedersehen" (II)

Blog friend Rayson points to the Wal-Mart coverage over at Oligopol Watch:

Retreat from South Korea (Monday, May 22, 2006)

(...) [Wal-Mart] just announced it was selling off its money-losing 16-outlet South Korean subsidiary. (...)

French chain Carrefour, the #2 retailer in the world, announced last month that it would sell its 32-outlet Korean subsidiary to another Korean retailer, E.Land Corp for $1.8 billion. (...)

The withdrawal of the two companies indicates several things:

  • Globalization, however powerful, is not inevitable.

  • Adjusting to distinct cultural preferences can still be a problem for global firms. (Wal-Mart is having similar problems in Japan.)

  • On the other hand, a comnpany like Tesco can get it right in Korea while others fail.

  • Successful companies retreat when prospects seem hopeless, to concentrate their effort elsewhere (for Wal-Mart and Carrefour in the far bigger and more friendly environment of China).


Wal-Mart retreats again (Monday, July 31, 2006)


Explanations for the German failure are many. First, had real, smart competition (especially Aldi) who knew how to discount as well as , if not better than, Wal-Mart. Second, some of Wal-Mart’s US practices did not make sense in Germany, especially the forlorn attempt to turn German workers into smiling store greeters. Third, it couldn’t deal with the strong German unions, something it keeps clear of, by dint of energetic counter-measures, its US operations.


Strong German unions? I don't think that the German unions are that strong these days. But the laws backing them are, though. And concerning unions and the "more friendly environment" in China, there are interesting news:

Wal-Mart allows first union shop in China (The Australian, via CDT, which has more links on this issue)

US retail giant Wal-Mart conceded at the weekend to the establishment of its first ever trade union -- in China's southern Fujian province. (...)

(link added)

The BBC lede:

Chinese 'create Wal-Mart union'

US retail giant Wal-Mart, which has drawn criticism over allegations it is union unfriendly, has reportedly seen staff in China start their first union.

Sounds like out of the German frying pan into the Chinese fire to me. And Chinese workers aren't iconic for unopposed accepting a company's decision. Ask Siemens.

1 comment:

Don said...

I don't know anything about South Korea but I've lived in Germany. In retrospect there seem to be several reasons why Wal-Mart failed in Germany. Compared with Aldi, Wal-Mart preferred the 'big-box' approach. Huge boxy stores located outside of city centers, often in rural areas. Aldi in contrast seems to be able to deliver low prices in smaller stores which were street accessible to pedestrians. At least that is what Aldi was like in Stuttgart where I spent 3 months as a pedestrian in 1999.

A lot more people in Europe are pedestrians and there seem to be more one-car families. Traffic congestion seems most higher everywhere I have been and petrol costs much more. All this adds up to a relative unwillingness to take long driving trips.

Another factor I've noticed even in the US is that Wal-Mart's offerings are frequently unappealing in some areas. Men's clothing forgetaboutit! Unless you want that special farm-boy just off the farm look don't shop Wal-Mart. Small appliances often lack appeal. Their computers are hopeless. The result is that increasingly vast spaces of a typical Wal-Mart are no-go areas for any reasonably sophisticated consumer.

Even in the US some of their competitors do it better, Target for one. I don't buy Target clothes any more because I've learned that I can get better quality stuff at a more upscale department store which runs deep discounts before Christmas - but their clothing doesn't get me laughed at. Target also does a nice line of well-designed home appliances and textiles. It's still cheap stuff but it has a vision.

The next big outfit to get a bit hit will be Ikea in my humble opinion. This is another outfit which has gone bad - but in a different area. The merchandise remains good quality and designed for the price but customer service and information are absolutely stone-age. Shuttle bus to Ikea in London? Forget about it!. Easy access to public transport? Forget it.

If you do get there (usually a taxi ride) chances are they will be out of stock of something critical. You can't buy a modular shelf unit when they are out of shelves! I went twice, they were out of a different thing each time!

Last week I was on their website looking for a bed. They had a very slick web bed-chooser which led me to a product (good so far). But the product doesn't exist (at least in the catalog). When I sent an email inquiry I received a completely clueless answer.

Ikea, stage south. Sooner or later someone will realize there is a huge opportunity for good quality furniture at competitive prices with GOOD service! Or even with web-shopping and delivery (delivery charge). I'd do it that way if Ikea would deliver. Many others would, particularly in London. I can't imagine a big city which wouldn't have a huge market for this kind of thing.