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Alex213
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Wal-mart takes an ass-kicking in Germany
#5910942 - 07/29/06 01:47 AM (17 years, 9 months ago) |
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Looks like Wal-mart and it's "associates" couldn't cut the mustard in the fatherland 
Mighty Wal-Mart admits defeat in Germany By Stephen Foley in New York and Susie Mesure Published: 29 July 2006
Wal-Mart, the world's largest retailer, admitted its one-size-fits-all business model had failed in Germany as it announced its withdrawal from the country at a cost of $1bn (£540m).
The company has been forced into a firesale of its 85 loss-making German superstores, selling them to its rival Metro at significantly less than the value of the assets.
The humiliating retreat means that Wal-Mart's sole remaining European outpost is in the UK, where it owns Asda and where it has also been struggling to compete with domestic-owned rivals.
It will also serve as yet another warning to ambitious retail executives - not least Sir Terry Leahy at Tesco - that dominance in one market is not always easy to replicate overseas.
Wal-Mart's business model, which has been increasingly criticised even in the US, involves driving down the prices of groceries and other general merchandise through putting pressure on suppliers and keeping out unions.
But in Germany, where domestic "value retailers" already dominate the grocery market, it found customers were turned off by the early designs of its stores, by a too-narrow range of produce, and by the famous "greeters", who welcome shoppers to the store and are instructed to smile when within a certain distance of a customer. It also became embroiled in labour disputes that led to strikes.
Although the terms of the sale to Metro were not disclosed, analysts said the scale of the write-offs indicated that Wal-Mart had sold the business at a knock-down price.
The retreat from Germany is Wal-Mart's second international capitulation this year, after it sold its South Korean stores in May. There is speculation it may also sell out of Argentina.
The company has 2,700 stores in 14 countries outside the US, representing 40 per cent of the group's total stores but only 20 per cent of revenues. Lee Scott, the chief executive, has promised expansion abroad as the company reaches saturation in the US.
A spokeswoman reaffirmed Wal-Mart's commitment to Asda, saying the business had clawed back some market share in recent months. It has managed to hold off J Sainsbury, which came within a whisker of regaining the number two spot earlier this year. However,Asda, which has missed sales and profit targets in the past year, has not lived up to Wal-Mart's hopes. The US group's dream of mounting a challenge to Tesco's market leadership petered out when it was barred from bidding for Safeway in 2003 by the competition authorities.
http://news.independent.co.uk/business/news/article1202911.ece
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RosettaStoned
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5910969 - 07/29/06 01:58 AM (17 years, 9 months ago) |
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-------------------- "Government big enough to provide you with all you need is also big enough to take everything you have." ~ Thomas Jefferson "Without stupid, faggy potheads we wouldn't have wars." - Zappa
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kotik
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Re: Wal-mart takes an ass-kicking in Germany [Re: RosettaStoned]
#5911199 - 07/29/06 05:08 AM (17 years, 9 months ago) |
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apparently they are tired of fascist regimes... heh
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Trav
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5911354 - 07/29/06 07:54 AM (17 years, 9 months ago) |
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Interesting article, thank you for sharing.
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SirTripAlot
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Re: Wal-mart takes an ass-kicking in Germany [Re: Trav]
#5911701 - 07/29/06 11:01 AM (17 years, 9 months ago) |
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Im not sure what Walmart was thinking.....why even go into a country that does not embrace the same capitalism, that their bussiness model was formualted on?
-------------------- “I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.”
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Mourningdove
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Re: Wal-mart takes an ass-kicking in Germany [Re: SirTripAlot]
#5911804 - 07/29/06 11:43 AM (17 years, 9 months ago) |
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It would be wonderful to see Wally World go under. It would be a sign that things are looking up!
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Annapurna1
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5911840 - 07/29/06 11:55 AM (17 years, 9 months ago) |
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good for them..unfortunately..walmart still very much rules the roost here...
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"anchor blocks counteract the process of pontiprobation..while omalean globes regulize the pressure"...
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Trepiodos
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5913449 - 07/29/06 11:03 PM (17 years, 9 months ago) |
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What has the free market wrought? This should not come as too big of a surprise. Competing in foreign markets is not so easy. Years ago, Chevy had a rather successful car sold in the U.S. called the Nova. They decided to try to sell the car in Latin America but neglected to change the name. Needless to say, the marketing was a 'no go.'
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And as things fell apart, Nobody paid much attention... - David Byrne, '(Nothing But) Flowers' from the Talking Heads' album, 'Naked'
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psilomonkey
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Re: Wal-mart takes an ass-kicking in Germany [Re: SirTripAlot]
#5914264 - 07/30/06 06:31 AM (17 years, 9 months ago) |
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The European supermarket industry is every bit as capitalist and competitive as in the US, its a market dominated by buying power and logistics and consumer perception. Walmart failed to adapt its business model to the German market, that is why it failed.
Most of the big European chains have tried to penetrate the US market, most have failed. Is that down to a lack of capitalist values in the States?
Its a tough cut-throat market, size is not a guarantee of success, it just means the stakes are higher.
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LunarEclipse
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5914517 - 07/30/06 09:38 AM (17 years, 9 months ago) |
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Is it possible that the Germans and British might not want to "Buy American"? Hell what am I thinking, this is Wal-Mart, and what do the Germans and British have against the Chinese?
-------------------- Anxiety is what you make it.
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fireworks_god
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Re: Wal-mart takes an ass-kicking in Germany [Re: LunarEclipse]
#5919322 - 07/31/06 05:53 PM (17 years, 9 months ago) |
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Wal*Mart's stock went up upon news that they sold of Wal*Mart Germany. 
The company did some expansion and lost a venture. Oh no! 
 Peace.
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If I should die this very moment I wouldn't fear For I've never known completeness Like being here Wrapped in the warmth of you Loving every breath of you
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Alex213
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Re: Wal-mart takes an ass-kicking in Germany [Re: fireworks_god]
#5921362 - 08/01/06 09:59 AM (17 years, 9 months ago) |
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I think they're looking at China - a dictatorship should help them keep the "associates" in line
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wilshire
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5921487 - 08/01/06 11:00 AM (17 years, 9 months ago) |
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ah... choice.
for a minute there i thought american business interests were an unstoppable imperialistic force.
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Alex213
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Re: Wal-mart takes an ass-kicking in Germany [Re: wilshire]
#5922054 - 08/01/06 02:34 PM (17 years, 9 months ago) |
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The "choice" of who?
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wilshire
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5922537 - 08/01/06 05:30 PM (17 years, 9 months ago) |
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the people of germany.
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Redstorm
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Re: Wal-mart takes an ass-kicking in Germany [Re: wilshire]
#5922904 - 08/01/06 07:29 PM (17 years, 9 months ago) |
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...and every consumer in the world.
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Alex213
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Re: Wal-mart takes an ass-kicking in Germany [Re: wilshire]
#5923987 - 08/02/06 12:34 AM (17 years, 9 months ago) |
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Sounds to me the problem was more that they couldn't drive prices down low enough to undercut everyone else in the market because Germany has unions.
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wilshire
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Re: Wal-mart takes an ass-kicking in Germany [Re: Alex213]
#5925071 - 08/02/06 11:16 AM (17 years, 9 months ago) |
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Sounds to me the problem was more that they couldn't drive prices down low enough to undercut everyone else in the market because Germany has unions.
we have unions here in america too. typically the employees of chain retail stores such as walmart are not organized. are they in germany? i don't know, but it's beside the point.
walmart uses a number of strategies to keep prices low. keeping a non-unionized workforce is only one of them. their competitors (in the united states at least) also keep non-unionized workforces. they cannot match walmart's prices.
if germany's retail workers are unionized like you say, this wouldn't put walmart at a competitive disadvantage - its competition would have union labor too.
they failed because german shoppers preferred to go elsewhere.
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fireworks_god
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Re: Wal-mart takes an ass-kicking in Germany [Re: wilshire]
#5926874 - 08/02/06 09:13 PM (17 years, 9 months ago) |
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Quote:
wilshire said: they failed because german shoppers preferred to go elsewhere.
But this is Wal*Mart Germany's failure, for not making it so that the shoppers preferred to shop there. Bad products, bad management, bad customer service, bad logistics... It is never as simple as unions. 
Starting a new branch of a company in a foreign country isn't exactly going to be an easy task, no matter how successful the company is in its established countries. I'd have to imagine that it was simply a poor venture. 
 Peace.
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If I should die this very moment I wouldn't fear For I've never known completeness Like being here Wrapped in the warmth of you Loving every breath of you
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Alex213
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Re: Wal-mart takes an ass-kicking in Germany [Re: wilshire]
#5927783 - 08/03/06 04:05 AM (17 years, 9 months ago) |
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walmart uses a number of strategies to keep prices low. keeping a non-unionized workforce is only one of them.
They arn't all equal in value tho. What other strategy for keeping prices low do you think compares to paying your "associates" lousy wages and driving prices down for the farmer supplying you?
they cannot match walmart's prices.
Doesn't that have more than a little to do with the sheer size of Walmart tho? It doesn't need to be any genius marketing tactics. Rupert Murdoch often lowers the price of his newspapers for months to drive other newspapers out of business because he has enough money to do so and they don't.
if germany's retail workers are unionized like you say, this wouldn't put walmart at a competitive disadvantage
That depends. Walmart have more overheads because they're setting up new stores, maybe they could have made the same profits as everyone else in a few years time. Perhaps they just felt they'd prefer to use their business model in slave labour "flexible" labor markets like China rather than take on a healthy unionised workforce.
they failed because german shoppers preferred to go elsewhere.
I think there's a little more to it than that.
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