More reports out of Germany suggest that Wal-Mart’s efforts to take this nation by storm have run into a WAL of cultural and government opposition. A news article in the December 29th. Philadelphia Inquirer suggests that the Arkansas company has made some serious missteps in Germany. Wal-Mart entered Germany around 5 years ago, buying out two local chain stores, Wertkauf and Interspar. “The marriage of American hominess and German frostiness has been rocky so far for Wal-Mart,” the Inquirer article said. “Expansion plans have been scaled back, and staffing reductions have been ordered. Company officials are no longer predicting when the adventure in Germany will turn a profit.” In Europe, superstores are called ‘hypermarkets’. Wal-Mart has constructed two hypermarkets in Germany, and the press reports suggest that German shoppers are not happy with Wal-Mart’s bagging their purchases, or with the “synthetic” Wal-Mart friendliness — which is seen as a mere sales technique for pushing more products. The Inquirer story suggests that Wal-Mart’s losses in Germany have been between $200 million and $300 million a year. Wal-Mart also ran into government intervention when it tried to lower food prices. In the fall of 2000, the German Cartel Office cracked down on Wal-Mart, and its competitors, for holding prices below cost, which is illegal in Germany because of the anti-competitive effect such pricing has on the retail marketplace. Even though Wal-Mart has ambitious plans to open dozens of hypermarkets, German law regulates the number of stores. Wal-Mart now has 95 stores, but ranks only 13th in sales among retailers in Germany. According to the Inquirer, the CEO of Wal-Mart’s international division is quoted as saying, in the Economist magazine: “We screwed up in Germany. Our biggest mistake was putting our name up before we had the service and low prices.”
For more background on Wal-Mart’s predatory pricing problems, enter “Germany” as a search word in this newsflash database.
