Background
Walmart is a US retail giant that operates a chain of discount department stores, hypermarkets, and grocery stores with more than 5000 retail units and approximately 600,000 associates in and around the United States. This multinational retail corporation was founded in 1962 by Sam Walton, was incorporated 7 years later in 1969, and was named as Walmart Stores formerly. Walmart is headquartered in Bentonville, Arkansas, a state in the South Central United States.
Walmart Japan
Walmart, the multinational retail corporation, entered the Japanese retail market in 2002 while making an investment in the supermarket chain Seiyu which operates approximately 300 stores across Japan. Seiyu was opened in Japan in 1963, long before the chain became a wholly owned subsidiary of Walmart, operates at 328 different Japanese locations with 91 hypermarkets and 236 supermarkets across Japan. Six years after investing in Seiyu, Walmart acquired the Japanese supermarket chain Seiyu in 2008, but surprisingly the success story of the US retail giant failed to prove itself in Japan (Walton, 2012). Walmart’s Japan failed to take into account the dietary habits of the Japanese, local business customs, consumer cultural differences, and labor relations as more the distance from the American mainland, the weaker Walmart’s earnings were in Japan.
Failure of Walmart in Japan
Contrary to America where Walmart has proven itself to be a giant in the retail market, Walmart Japan sharply reduced its presence due to the inability to figure out local business customs and regional differences that played a big role in the failure of Walmart’s Japan. The biggest concerns Walmart faced in Japan were unfamiliarity with culture, promotional and branding disagreement, and high investment without a promising plan of return. The major setback of Walmart’s Japan was its slogan “Everyday Low Price” which made the Japanese skeptical of the products because they directly relate the quality of the product to its price as they shop based on their famous saying “Cheap stuff must have good reasons”(Haddock‐Fraser et al., 2009). The corporation made headlines when Nikkei Asia broke the news that Walmart Japan was looking to unload Seiyu, a Japanese subsidiary. Although Walmart denied the news, 100 Seiyu stores out of 300 were closed in recent years confirming the corporation’s failure to make a stronghold in the Japanese retail industry (Walmart Is Retreating Japan’s Retail Market after 20 Years | Fortune, n.d.). The company entered the Japanese market with neither in-store tactics nor strategy for a distinctive region and its culture among competitive supermarkets in Japan ultimately losing Walmart’s investment in Seiyu (Boyle, 2009).
Walmart’s Successful Foreign Expansions
Failing badly in the retail industry of Japan, South Korea, and Germany due to Walmart’s inability to understand the culture of the consumers while forcing global expansion strategy, the US retail giant has a successful presence in China, Brazil, the United Kingdom, Mexico, and Canada. Walmart’s successes in these regions of the world entail an understanding of the country’s culture, the shopping habits of local consumers, and the Walmart model that the corporation adopted according to the local market for the brick-and-mortar expansion of this retail giant in the international market (Hunt et al., 2018). Walmart’s strategy to go online in order to expand internationally has also proven to be the fundamental reason why the corporation is a success in China, Mexico, and Canada. Chinese shoppers may be leading the trend of Walmart’s online as nearly 70% of the Chinese use their mobile phones for shopping as they compare prices of the off-shore online retailers.
Solutions for Walmart’s Global Expansion
While expanding its operations in foreign countries, Walmart should consider factors like demographics, local needs of the consumers, costs, and culture of the country of operation. The retail giant while in other regions of the world must emphasize localization to focus on local needs such as engaging with local suppliers of groceries as many people often like to do grocery shopping every day and do not like buying frozen or preserved food products. Moreover, Walmart can opt for stores with smaller floor spaces having all the variety but in limited stock. Another viable solution for Walmart would be not prioritizing the expansion but increasing the profits at the current stores in a foreign country where the corporation intends to operate and expand in the future. These solutions would help Walmart to be in multiple neighborhoods keeping their unique selling proposition of everyday low pricing that this retail giant aims for.
References
Boyle, M. (2009). Wal-Mart’s Painful Lessons. Management, 3, 12PM.
Haddock‐Fraser, J., Poole, N., & Doishita, M. (2009). The failure of multinational food retailers in Japan: A matter of convenience? British Food Journal.
Hunt, I., Watts, A., & Bryant, S. K. (2018). Walmart’s international expansion: Successes and miscalculations. Journal of Business Strategy, 39(2), 22–29.
Walmart is retreating Japan’s retail market after 20 years | Fortune. (n.d.). https://fortune.com/2020/11/16/walmart-japan-seiyu-sale/
Walton, S. (2012). Case Study: Walmart. Strategic International Management, 67.
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