Why did Wal-Mart fail in Germany ?

TOP 15 LARGEST RETAILERS in the WORLD Rank Company Type HQ Country Sales USD in millions 1 Wal-Mart Store, Inc Discount Store United States $285,222 2 Carrefour SA Hypermarkets France 90,297 3 Home Depot Inc. Hardlines 73,094 4 Metro AG Diversified Germany 70,093 5 Royal Ahold NV Supermarkets Netherlands 64,615 6 Tesco PLC UK. 62,284 7 Kroger Co. 56,434 8 Sears Holding Corp. Department Stores 55,800 9 REWE Handelsgruppe 50,698 10 Costco Wholesale Corp. Warehouse Clue 48,107 11 ITM Enterprise SA 47,218 12 Target Corp. Discount Stores 45,682 13 Group Casino 45,155 14 Aldi Einkauf GmbH & Co OHG 42,981 15 Schwarz Group 42,571

Revenue : 315.654 billion USD (2006) Net Income : 11.231 billion USD (2006) Employee : 1.8 Million (2006) Type : Discount Department store/ Public Founded : Sam Walton (1918-1992), Founder Key People : H.Lee Scott, CEO S. Robson Walton, Chairman Industry : Retail Products : Discount stores, Grocery stores, Hypermarkets

Revenues in Germany (Bil..Euro) GERMANY TOP 15 RETAILERS Rank 32.0 Company Revenues in Germany (Bil..Euro) 1 Metro AG 32.0 2 Rewe Group 28.6 3 Edeka/AVA/Group 25.2 4 Aldi Group 25.0 5 Schwarz Group 17.2 6 Karstadtquelle 16.1 7 Tenglemann Group 12.5 8 Lekkerland-Tobaccoland 8.2 9 Spar Group 7.5 10 Schlecker 5.3 11 Globus 3.4 12 Dohle Group 2.9 13 Wal-Mart Germany 14 Norma 2.4 15 Bartels-Langness 2.1

Retail Competition Manufacturers Small Immobile Uniformed End user Retailer Act Small Immobile Uniformed

Retailer’s Competitive Advantages Lower Prices (Everyday low prices) More Favorable (Near or easily accessible) Better Product Selection and Category Management Superior Customer Service

Impediments of Retailer Legal Barrier (Law and some forms of behavioral Regulation) Stringent Planning Regimes and Zoning Regulations) Restrictive Shopping Hour Regulations Antitrust and (un)fair Trading Regulations that may restrict price competition or prohibit some forms of advertising and sales promotion)

Internationalization in Retailing Status Quo - A Handful of Players of International Retailer such as Carrefour and Aldi - Most of these companies are based in Western Europe rather than in the US or North America Prevailing Strategies such as organic growth, joint ventures, Strategic alliances, Franchising, Mergers and Acquisitions 3. Impediments to Retail Internationalization - Mixed bag, Barrier to entry, Aggressive, Reaction by the incumbent Oligopoly

The German Retail Market General Background Information - The biggest national retail market in the old World Oligopolistic Market Structure- The Key Player Ultra-Low Profitability – Probably the least profitable all over the industrialized world Retail –Specific Legislation such as Planning Law and Zoning Regulation

Store Opening Hours in Select EU Countries Country Mon-Fri Sat Sun/Holidays Hours/Week UK 00.00-24.00 168 Netherlands 06.00-22.00 Closed 96 Spain 144 France Open (Only Store Owner and family members but no employees) 144 (Minimum) Germany 06.00-20.00 06.00-16.00 80 Source : KPMG

Wal-Mart’s Strategy in Germany – Why It Failed Flawed entry-by-acquisition Strategy Management by “hubris and Clash of Cultures” Neither “ Everyday low prices” nor” Excellent Service” Repeated Infringement of German Laws and Regulation

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