Why Walmart Failed Miserably in Germany

video Discription

This video will examine why Walmart was a huge failure in Germany. ​​Walmart entered the German market in 1997 with an aggressive series of investments and big hopes of expanding its global presence. The company bought two existing German retail chains to gain an overnight presence in the country. But after struggling for nearly a decade, Walmart announced its exit from the German market in 2006 and sold its 85 stores at a $1 billion dollar loss. So, what went wrong for the massive retailer in Germany? There are a lot of reasons for why Walmart ended up failing in Germany, but the number one factor in all of them is that Walmart failed to adapt its business strategy to the unique aspects of the German market and culture. Walmart thought that it could take the same approach in Germany as it did in the US and the results were disastrous. As an example of this failure to adapt, when Walmart entered the German market it began attempting to use its tried and true business tactic of offering the lowest prices in order to undercut the competition and gain market share. But Walmart had severely underestimated its competition when it began to take this approach. The discount retail market is full of stiff competition in Germany because there were many strong, established brands like Aldi and Lidl that Germans were already familiar with. These businesses had already built customer loyalty and entrenched themselves in the German market which made it incredibly difficult for Wal-Mart to come in as an outsider and take market share from these successful businesses. And when Walmart tried to undercut these businesses on prices, they fought back and lowered prices themselves. This ended up creating a pricing war which the German government was not happy about. Germany's government accused Walmart of inciting a price war in which it illegally sold products below their wholesale costs. This led the German government to intervene in order to prevent Walmart and other big