Do you think Walmart could translate its merchandising strategy wholesale to another country and succeed? If not, why not?
I think it depends. On one hand, those countries where Walmart achieve its whosale business expansion successfully would like to accept this kind of American shopping style. Otherwise, it could fail due to the different shopping style shock. On the other hand, Walmart should pay much attention to promote its wholesale strategy to local society actively to change local residents’ shopping habits, and also do some changes which especially suitable for local folkways.
Why do you think Walmart was successful in Mexico?
The process of Walmart’s success in Mexico is a long term. First of all, Walmart didn’t entry the Mexico market impulsively but to choose to cooperate with a local business, the Cifra. And due to the different shopping style, Walmart noticed that widely carrying out its wholesale strategy with hypemarkets could cause failure in Mexico. As a result, it adjust its plans quickly to adapt the local conditions by hiring the local managers who are familiar with local shopping habits and building small stores that people could walk to.
Meanwhile, what is more important for Walmart is it insists on changing Mexican consumers’ shopping culture by promoting American shopping style deeply and also offering the real low price of the merchandises. The local consumers got the authentic benefits from Walmart, as the same time, Walmart also achieve its success in Mexico.
Why do you think Walmart was failed in South Korea and Germany? What are the difference between those countries and Mexico?
Unlike Mexico whose local supermarket is empty, both South Korea and Germany already have the local sophisticate, mature and complete retail industry such as the Lotte in South Korea and the Metro in Germany which are widely acceptable by local consumers. And their managing practices quite meet consumers’ preferences. The competition between Walmart and local supermarket is tough and it is hard for Walmart to survival. And the Koreans and Germans are famous for their patriotism so they tend to be fond of local brands rather than the outcomers.
Besides, the consumers in these places tend to purchase the products with high quality instead of low price. As a result, the low price and the attractive discount of products of Walmart seem not to be a cup of tea for local consumers. That is why Walmart quit those above markets.
What must Walmart do to succeed in China? Is it on track?
Actually Walmart’s low price strategy is quite practical for Chinese consumers, and Chinese customers tend to be more like American style rather than European style. So this is a good beginning and it is indeed on track.
It is essential for Walmart to adapt its strategy to mesh with Chinese culture such as the changing the way the products display and provide the appropriate goods Chinese prefer. For example, unlike western countries, Chinese consumers tend to purchase cooking ingredients in local markets rather than supermarket. So if Walmart want to attract Chinese consumers shopping in its supermarket, it must maintain the freshness of food and offer the service for consumers to freely select what the they are satisfied. What is more important for Walmart is to integrate with Chinese business environment.
It must be open to labor unions which widely exist in China. And this is quite practical for it getting approving from Chinese government for its further merger business in China. In one word, to succeed in China Walmart have to play by Chinese rules.
To what extent can a company such as Walmart change the culture of nation where it is doing business?
I think the answer for this question includes two aspects which are the company’s actions and the nation’s situations. In the examples of Mexico and China, Walmart do successfully merchandise its wholesale strategy.
Walmart has helped to change the shopping culture of Mexico, draw them away from small local stores and toward large self-service discount stores by long term low price strategy and persistent advertising. It happened also in china to some extent after doing some changes especially for Chinese consumers. Residents in Mexico and China enjoy the low price products. And the low competition in local supermarkets could be another reason that Walmart could change the shopping culture of those nations and incept its shopping style.
In contrast, in some countries such as UK, SK and Germany, Walmart failed to change the culture. The competition between supermarkets is already fierce and the local supermarket already account for the major share of whole market. And what is more important is the products with high quality instead of low price provided by local supermarket exactly can meet the preference. Walmart’s discount strategy as in US and Mexico hardly attract consumers in SK and Germany. So it can’t change the culture of those nations at all.