Walmart failed to take off in Germany because of the German’s lack of loyalty to Walmart. The German’s loved their own brand and were not interested in buying from Walmart.
9 Reasons Walmart Failed in Germany [An Avoidable Disaster]
1. German Law Wouldn’t Allow Walmart to Undercut Local Prices
2. Walmart and German Unions Were Incompatible
While the German workforce is accustomed to negotiating their pay with their union, most of Walmart’s workforce is not. Walmart is one of the only major U.S. retailers that does not allow its employees to organize with a union or organize in any way that prevents Walmart from controlling their employment. Walmart hired a group of temp workers to replace the striking union workers.
3. Walmart Underestimated Their Competition
As Walmart did not anticipate the resilience of the German retail market, they did not adapt to the changing customer needs.
4. Retail Chains Were Already Doing Poorly in Germany
5. Employees Felt Uncomfortable With Walmart’s Practices
You can find more information on Walmart’s policies by checking out my post on whether or not Walmart is evil.
6. Employees Felt That Walmart Overreached Into Their Personal Lives
The employees felt uncomfortable about how Walmart was reaching into their personal lives. While Walmart will allow it’s employees to have sex outside of marriage, they also feel a little uncomfortable about it.
In the United States, it is taken as a standard that employees who work in the same department cannot engage in romantic relationships with each other. However, this is not the standard in Germany, and here it is considered an overstep.
Some of the German workers who worked at Walmart were already feeling cheated out of fair wages when Walmart decided to stop issues visas to some of the countries where their workers came from.
7. Walmart Failed to Take Into Account Cultural Differences Surrounding Shopping
Most people, however, don’t have the luxury of being able to drive from one store to store to buy everything they need. The rest of the world is moving away from that model of shopping.
Different shopping habits. Americans seem to prefer a big, mainstream store with a limited selection of goods. Germans prefer a smaller store that offers a wide selection of products.
Cities with large numbers of inhabitants are more likely to have a wide selection, but a limited selection in small cities.
Low population density has a negative effect on large retail chains.
8. Walmart Didn’t Focus Their Services Enough
Walmart’s sales strategy for North America didn’t work on a cultural level; it wasn’t geared to appeal to smaller stores; and this type of large-scale retail store was out of step with the cultural expectations of German shoppers.
Walmart is able to sell things at low prices because of tax subsidies. This allows Walmart to pay low wages and provide cheaper products.
I’m not convinced that the two models are even compatible. As we’ve seen, the online retailers are more effective at providing convenience while the warehouse clubs are more effective at reducing cost.
9. Walmart Failed to Adapt to Germany’s Economy
Walmart could not and would not adapt to the different economic system because they already thought (or maybe thought that their partners thought) that it was the only way to operate.
One of the most difficult challenges facing a large company is the relationship between management and unions: when workers have a union, they are more likely to be treated with respect and dignity, which leads to higher productivity and more satisfied employees.
It is really important to be able to adapt your business to the different cultures and if it means you have to change everything you do, or have to pay more money to your existing customers, then it may be worth it.
So, Really Why Did Walmart Fail in Germany?
I just don’t understand why Walmart picked Germany as the place to open and operate its first German store. German consumer habits differ from the US as well as from China, so they must have known they would fail.
If you would like to learn more about Walmart’s Australian efforts, you can check out an article we published last year on that. If you’re interested in other countries, you can click here for an article we published last year about Walmart’s international efforts.
Walmart is a huge company that has so much power, they can change the way a company operates. They have the power to change your entire grocery store because they are big enough to do it. In fact, Walmart is so huge, they can get away with doing anything. They have the power to change the way you shop and make your grocery store even more like a Walmart. They are so big, they have stores all over the United States and they can take over the entire grocery store and become the most dominant grocery store in America.
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