Germany is a country that, generally
speaking, enjoys aspects of American life- or things that are perceived
to be American. American culture is very popular, such as books, movies,
TV shows or music. Wal-Mart expanded to Germany
in 1997, thinking that Germany with its big economy and large population
would be an easy market to conquer. In 2006 Wal-Mart gave up and left
Germany, the company lost about 1 billion Dollars in the process. What
happened?
Do Germans not like discounters? Do they prefer small neighborhood
grocery stores? No, that was not the problem. In fact, grocery costs in
Germany are about 40% lower than they are in France or Great Britain.
However, at the time Wal-Mart tried to enter
the market Germany already had a large number of well-established
grocery store chains, among them Aldi (which also operates in the US and
owns Trader Joe’s) , Lidl and Real. That means competition for low
prices is though - profit margins are slim. Germany
also has much stricter laws protecting workers and the cost for labor is
higher. That meant that Wal-Mart could not translate the US concept
entirely to Germany because they had to abide to the worker protection
laws. It also meant that employing people just
to bag groceries was very expensive.
Another aspect that caused the defeat of Wal-Mart in Germany was
the company’s ignorance towards cultural differences. In German
supermarkets you have to bag your own groceries (labor is more expensive in Germany, labor laws are stricter). Most people also bring
their own bags and stores charge you if you need plastic
or paper bags. Wal-Mart still insisted on employing people to bag
customer’s purchases, a practice that many Germans did not like.
Customers were also irritated by the “overly-friendly” Wal-Mart
employees. They were instructed to act the way a Wal-Mart employee
would act in the USA.-smiling and asking customers “How are you?”.
Germans are used to the cashier at the check-out not being all smiles
and when someone asks you how you are in Germany the person generally
really wants to know how you are. Wal-Mart also tried
to ban their employees from dating co-workers, which caused an outrage
in Germany and led to an employee lawsuit, which Wal-Mart lost. The
company also ignored simple things, for example, they tried to sell
American-size pillows in Germany, were pillows are
a different size, and so nobody bought pillows at Wal-Mart.
Wal-Marts complete failure in Germany illustrates how important
cultural sensitivity is. Just because something works well in one
country does not mean it will work in another, even if the countries
might seem similar at first glance.
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