Why Walmart Failed in Germany

Walmart, the most successful retail operation in the US, failed to make even a dent in the largest and most vibrant European economy (Germany) after losing a billion dollars in the process of bungling their German market experiment with so much failure it is now the stuff of local urban legend..  Let’s examine the reasons.

Cultural Hubris

“The problem was the company’s business philosophy, which had always worked so well,” wrote Frankfurt’s Börsenzeitung in what pretty much amounted to an obituary. “It’s people-centered – but that doesn’t actually work when the people aren’t American.

The company gave the job of masterminding Wal-Mart Germany to an American who didn’t speak a word of German.

The Germans weren’t fond of the Walmart practice of hiring old people to accost greet them at the door, nor were the German workers impressed with morning warm-up sessions (“Higher Profits Uber Alles! — Can I get an Amen there Fritz!!”)

Economic Hubris

They have all kinds of laws over here against the kind of disruptive market “capitalism” that has decimated small towns across America, (and still threatens the world economy IMHO):

1. You can’t sell below cost in the Eurozone countries just to run your competition our of business, even if you have a billion dollars to give it a go.  Helps to level the playing field.  Gives the small guys half a chance to compete with the bigger players.

2. You can’t abuse the workforce with “falling wages” and expect the government to subsidize your slave-wage workforce with food stamps and healthcare just to make ONE corporation rich at the expense of the society at large.  Something else the German workers were repulsed by?  A ban on flirting in the workplace.   Germans to Walmart: You Don’t Own Us.

Playing by the same rules as everybody else proved FATAL for Walmart here in Germany.  This Atlantic Times summed up Walmart’s German problem nicely back in 2006,

One consequence was less competitive prices than those of their rivals.

I don’t think the American business community learned much though.  The same US based recap of the Walmart fiasco quoted above, also said this:

The third problem was bad press. The media reported that shoppers were turned off by Wal-Mart staff hired to greet them at the door and bag their groceries. This sort of thing was and still is unusual practice in Germany, so it was done away with.

Dam you media.  If only you hadn’t highlighted all of Mitt Romney’s lies Walmart’s practices, we would have Seal Team Six deployed alongside the IDF right now Walmart in Germany!

There is a full thirty five pages of Walmart Schadenfreude, (apparently written as a German business college research paper) at the end of the abstract reprinted here from linked English language PDF following.

Clearly dominating the US retail market, Wal-Mart expanded into Germany (and Europe) in late 1997. Wal-Mart’s attempt to apply the company’s proven US success formula in an unmodified manner to the German market, however, turned out to be nothing short of a fiasco. Upon closer inspection, the circumstances of the company’s failure to establish itself in Germany give reason to believe that it pursued a fundamentally flawed internationalization strategy due to an incredible degree of ignorance of the specific features of the extremely competitive German retail market. Moreover, instead of attracting consumers with an innovative approach to retailing, as it has done in the USA, in Germany the company does not seem to be able to offer customers any compelling value proposition in comparison with its local competitors. Wal-Mart Germany’s future looks bleak indeed.

Walmart Fiasco in Germany (35 page PDF)

Enjoy.

In Germany…

In Germany…..

The local version of the German Sears catalogs (OTTO) is not paperback, but hard bound like a prized novel.  Walmart, America’s number one retailer, failed miserably here in Germany.

They have Cheetos here, but they are all PEANUT (Erdnusse) flavored!  I have yet to see  CHEESE FLAVORED PUFFS of any variety.  WTF?  Cartman weeps.  Don’t even get me started on potato chips.  You gotta search for a good “regular old” potato chip.  Eighty percent of potato chips here are red bell-pepper flavored (paprika in German).  Pretzels are popular and available.

Want some saltine crackers for your soup?   Not on your life my friend!  You can get Ritz and sesame flavored crackers, but pity the fool looking for plain old Nabisco saltines.  How is this even possible?  In a land of otherwise awesomely delicious soups, both Campbell’s and the saltine cracker are nowhere to be found.

Breakfast and dinner are pretty much the same thing over here. Only the lunch menu ever varies.  For all practical considerations you can think of breakfast and dinner as perpetual trips to Subway.  The “variety” comes from the different meats, breads and condiments you use to make either your breakfast or dinner sandwich.  Admittedly, there are a lot of permutations on sandwiches (which is a good thing), but can you imagine eating two meals a day at SUBWAY every day for the rest of your life?

Umwelt.  They got it in spades.  What the hell is umwelt?  From my on-the-scene analysis, it is a form of conservation that somebody like Teddy Roosevelt would have appreciated.  It is rare for me to walk in a place over here that hasn’t been continuously occupied in one form or another for five or more CENTURIES.  The US is only a couple centuries old and only the east coast has any claim to continuous urbanization for any coherent length of time.  The people here know that if they destroy their environment, there isn’t anywhere else to go.  Therefore, they tend to be [b]extremely[/b] sensitive to their environmental impact.  They actually care about the place their kids will grow up (crazy, I know).  I was at a zoo with a young couple and their four year old son.  The mother is a smoker.  We were sitting at a park bench in the concessions area of the zoo when the ashes from the end of her cigarette fell to the bricked patio floor.  Her four year old almost had a nervous breakdown witnessing this singular diabolical act of “pollution”.  It is quite illegal to even trim your hedges after very, very early in the spring or late in the fall, as this might disturb nesting birds.

Bacon.  There’s good news and there’s bad news.  The kind of Waffle House bacon that most of us grew up eating is available here, though you need a bit of savvy to find it.  Most stores will carry it as “breakfast bacon” or “American bacon”.  All the bacon I have purchased in Germany has been sliced thinner than Mitt Romney’s intellect, and there seems to be no option for apple smoked or maple flavored varieties.  You will most likely be buying it in 100 gram packages at about a euro per package.

Milk.  Most commonly packaged and purchased in one liter boxes (US quart) at about half a euro each.  Largest milk container I have seen is two liters, which is about half a gallon US.

Sugar.  One size fits all.  Sold in one kilogram packages only (at least at the retail level).  That is a bit over TWO POUNDS, which translates into those tiny little bags of sugar they sell at your local Kroger alongside the enormous stacks of five and ten pound bags most US customers routinely purchase.

Cereal.  Frosted Flakes and Rice Krispies are identifiable and available.  Cereal aisle in German store a tenth that of the US though.  Weird that most FLAVORED cereals tend to include chocolate and not fruit as a sales hook.  They have a lot of “health” themed cereals that look like trail-mix, though I don’t remember seeing any Grape Nuts.

Healthy living.  Along with their focus on environmental Umwelt, the Germans  tend to take their health more seriously than Americans.  The tiny 1kg portions of sugar and 100g bacon packaging in the stores underlines this attitude.  Even rich people with Porshes ride their bikes back and forth (in the winter, in the snow) without so much as a second thought.  People older than your grandma are out riding all the time.  At the end of the day, German life expectancy is only a couple months, give or take, longer than the US.  Matter of fact, if you removed all the needless gun deaths from the equation, the US population lives longer than the average German.  I find it interesting that the focus on health in Germany doesn’t really translate into longevity.  That speaks volumes about any individual’s ability to manipulate his or her lifespan through exercise alone.  What I can say with certainty is that old people here ARE healthier and more active, even if they do eventually fall out at the same pace as their more portly and docile US counterparts.

Don’t ask for a Kleenex.  They have no clue what a Kleenex is.  Ask for a Tempo instead.

Turns out that all that Umwelt is expensive, so you are going to pay through the nose for bottle deposits as well as grocery bags at the store, not to mention gas for your car, which is somewhere around the equivalent of EIGHT BUCKS a GALLON USD.  Note the one liter bottle of Mobil One oil priced at 22 Euro to get an idea how bad things are on that end.  Expect your utility rates to triple from whatever you pay in the US, which WILL have you looking at the THIRTY OR MORE varieties of high efficiency LED LIGHTS already being sold in stores here.

Kitchens.  Kitchens are not considered “part” of a house or apartment here.  They generally move with the occupant.  Kitchen cabinet sizes are standardized, as is mounting hardware.  Since everything is brick here, solid mounting points for heavy cabinets are easy to find.  The local version of Home Depot sells entire kitchens, complete with all appliances, cabinets, counters and sinks, starting at around a thousand euro.  Kinda of an Ikea Kitchen in a box. Custom kitchen retailers abound.  A few thousand euro will get you a COMPLETE KICK ASS kitchen over here (where I paid about two thousand bucks just for a refrigerator back in the US!).  About the most you could spend on a kitchen is five thousand euro, and those kitchens have amenities like MOTORIZED HANDS FREE drawers!  You kinda push against them with your knee and voila they open.  Another press and zippity do dah, they close.  My favorite upscale kitchen appliance?  They sell a flush wall-mount built in latte-cappuccino maker for a little over a thousand euro.  I opted for a table top model at 350 euro.  A little piece of Starbucks right in my kitchen (dislosure: my machine is actually a DeLonghi model).

McDonalds.  This little slice of American heaven lacks the reliance on the red goo meat and bio engineered crap they serve in the US (outlawed here).  Metrics has killed the Quarter Pounder as well.  You can order beer at McDonald here (though I have yet to see anybody do it).  And for the life of me, I don’t remember the breakfast biscuit coming with sliced tomatoes and lettuce in the US.  An aside of an entirely different aberrancy is that KFC does not sell biscuits here, a crushing blow for certain members of my immediate family and something that is certain to have the corpse of the Colonel rolling over in his grave.

Enjoy.

German Saturday Teile Drei/Vier – das große Spiel/ Nachtleben

A fresh, new Saturday is already upon me, so it behooves me to truncate the last two parts of my experiences from last Saturday, lest I get too far behind in my attempts to document the best of my daily life experiences here in Germany.

Teil Drei – das große Spiel

The sport of choice around here, as it is in most parts of the world, is soccer..  In the USA, outside the realm of women’s college sports, soccer is an also-ran in comparison to nearly every other recreational pastime.  As a matter of fact, soccer doesn’t even make it into the top ten most popular sports in the US, coming in at number eleven, just behind running, but a notch up from skateboarding.

To be honest, I’ve never payed close attention to sports even when I was in the US, but I would get interested if an underdog team, against all odds, would make a run for the top spot in any sport.  I usually try to follow the travails of any local sports team in the areas I live, (e.g. the Denver Broncos when I was in Colorado and the New Orleans Saints when I was in Mississippi) so I won’t appear totally ignorant (gay-lol) hanging around the water-cooler chatting with co-workers on Monday mornings.  I’m trying to bring myself up-to-speed on the finer points of soccer for the same purpose of social lubrication that I did back home in America.  It’s also a good thing to be aware of local rivalries around here, since emotions are often intense in regard to the success or failure of the local teams.  When Holland and Germany play, it is a good idea to keep a low profile.  My wife and I were shopping in Holland one day when a local retailer warned us we might want to “get the hell out of dodge“ before the game ended and the streets swelled with fans.  We drive a Mercedes with German tags, so we would be easy targets for the rage of inebriated local fans should the German team best the Dutch this given day.  We quickly gathered our purchases and headed for safe haven across the Dutch/German border to our home in Wessum.

My access to American sports on television is hindered by a six hour shift in time zones as well as limited local US sports programming.  The Super Bowl is broadcast live here every year, but the game starts well after midnight!!  In a nutshell, it’s rare that I see any live American sports on TV here.  That said, I did happen to notice that Clemson was making a huge move in the college football league.  Unrated at the beginning of the season, I began to read sports news on the Internet about their surprising winning streak against much higher rated teams.  I think I first noticed a sports story about Clemson’s amazing season when they were 4-0.  After that, I would eagerly check the online sports news every week after they played to see if they could keep their streak alive.  When I read that Clemson was still undefeated at 7-0, having won their last game in an amazing come-from-behind victory, I shared the news with a friend of mine here in the area.  To my surprise and delight, he told me that Clemson would be broadcast LIVE on his premium satellite television at six p.m. this particular Saturday evening!  They would be playing an away game at North Carolina in a bid to remain undefeated and go 8-0.

After finishing with my tour of the German car lot and most-excellent zoo in Rheine, I headed over to my friend’s house to see Clemson and North Carolina battle it out.  We ordered pizza at halftime (my host picked it up from a pizza place within a half block of his apartment).  In the end, Clemson won by three touchdowns, going 8-0 for the season.  I think Clemson is now rated among the top five college football teams in the US, and if they keep playing the way they have been, are real contenders for the national championship.  Getting to see Clemson win for the eighth time in a row and continue their unbeaten season made for a very pleasant evening.  Immediately after the game, I effusively thanked my friend for his hospitality and excused myself, walking short the two kilometers back to my temporary hotel apartment in the crisp night air.

Teil Vier -Nachtleben

As has become my custom while staying at my temporary abode in the Aristo Hotel, I dropped into the bar and ordered a nightcap upon arriving back home.  I was greeted with open arms by the smattering of patrons still mingling about the bar.  The single nightcap I had planned on consuming turned into several more than I had originally envisioned.  Just before excusing myself and wandering stumbling off to my room for bed, I was treated to a nice bit of performance art at the bar which I had the good sense to capture on video.  I offer it here as a final peek into the closing moments of my most excellent Saturday adventures here in the Nordrheim-Westfalen region of Germany.

Enjoy.

German Saturday Teil Zwei – Den Zoo

As we distanced ourselves from the dealership, I learned the destination of the bonus trip they had in store for me. A visit to the local zoo in Rheine. Now I’ve been around the world, and I’ve been to the Memphis Zoo, but in all my travels as they’ve unraveled, I still enjoyed the view. At my age, the zoo is always more exciting when you have a child with you. It’s just as fun for me to watch the children react to the animals as it is to see the animals themselves! I have as fond a memory as any father whose ever lofted his young son atop his shoulders for a free ride (and a better view) at the zoo. The afternoon was going to be at least as much, if not more exciting than the trip to the Disneyland of car dealerships earlier in the day!

My hosts were quick to note that their wunderkind was already aware of our destination before they ever shared it with me (or him). He’d been to the zoo enough times to know we were on the road that leads there. He was pointing out the zoo signs well before we were anywhere close to the place. His excitement was as clearly palpable as it was contagious. The combination of excellent weather, the generous hospitality of my host family and the enthusiasm of youth bode well for my afternoon activities.

Upon arriving at the zoo, the first thing I noticed was the availability of several specialty bicycle lockers placed next to the regular bike rack. These are provided for people riding electric bikes (e-bikes) so they can charge their bikes while visiting the zoo. How cool is that?!?

I was barely within the zoo when I noticed several people had their dogs with them.   I’m getting used to bringing my dogs along to all the restaurants (fancy or otherwise) my wife and I frequent, but I never even considered that they would find equal toleration at the zoo!

I’ve had many of these. “Toto?, I have a feeling we’re not in Kansas anymore.” moments since my relocation to Europe, but when we strolled into the monkey section of the zoo, I almost went into shock.  The monkeys were all sitting around within a special enclosure (no dogs allowed in there).   They were not caged in any way, and you could walk right up to them (no touching).

I got so close to this one that he reached out and tried to grab a pack of cigarettes out of my coat pocket….bad monkey!!

There was a similarly interactive display in the penguin area.  The signs offered a disclaimer about them biting (they will!!), which roughly translated said “You have only yourself to blame”.   The concept of contributory negligence must be unknown here.  In any case, I couldn’t resist my primal impulse to pet one of them.

I let several of them bite me on purpose just to see how bad a bite they would inflict.  My hands are tough, but one did manage to nick my finger just enough to draw a bit of blood.  Best to keep a close eye on the kids.  I tend to believe that a monkey going berserk and ripping a kid’s face off is a much bigger risk than a penguin bite, and that’s obviously a risk that this society is willing to take.  If you ever get a chance to walk freely alongside the monkeys, I would encourage you to do so.   As we left the zoo, I couldn’t help but feel as if I were leaving the set of a National Geographic special.  We strolled “Out of Africa” and back into the parking lot for the short ride home, completing Teil Zwei of my perfect German Saturday.  Teil Drei – Das Große Spiel to follow.

Enjoy.

German Saturday Teil Eins – Das Auto

Is your car dealership solar powered?

I accepted an invitation to ride along on a visit to a huge German car dealership last Saturday. Located in Rheine, it’s a Disneyland of a car dealership and offers Mercedes, Opel, Volkswagen, KIA, Nissan, BMW, Suzuki, Chevy and Ford brands. The weather couldn’t have been more cooperative. We departed for our destination awash in all the sunshine that Heaven could muster. It was as warm and bucolic a late-October day as is likely possible in this northern European utopia.

The young German couple (and their adorable 4-year old Wunderkind), who offered me the chance to tag along with them, are looking to upgrade their Nissan Qashqai five passenger SUV to an even larger Ford model with seating for seven. They were in a ‘just looking’ mode today, but they are definitely eager to upgrade soon.

After arriving at the dealership, we entered the vast complex of glass and steel showrooms with the intention of working our way through the byzantine maze of autos to the ginormous Ford SUV’s. As our initial reconnaissance failed to land us in the immediate vicinity of the aforementioned objects of affection, and there is apparently either an ancient custom, or perhaps even a law (dam ‘nanny state” socialism) against letting your four-year-old starve to death (Hoocoodanode?), we paused for lunch. It hardly broke our stride though, as they’ve a nice lunch cafe conveniently located right inside the car dealership!.

I drank my obligatory five-sugar latte and bought a couple candy bars for the youngest member of our entourage. Right now, the strongest language we hold in common is candy-based, and is heavily enhanced in chocolate code, but we’re working together to close the German/English gap (hopefully before I push the poor kid headlong into childhood diabetes). I’m obviously taking a serious risk of looking foolish by being linguistically outperformed by a toddler. I’m already having nightmares of the little tyke dressing me down, in perfect English, on my inability to master his native tongue!

He’s a bright and spirited child, who apparently seeks the same in a friend, (even if it just so happens to be an old geezer like me – lol). Don’t try and curry favor by offering him candy right before lunch though. Sure, he”ll take it, but he’ll just stuff it in his pocket until AFTER eating lunch, without the benefit of motherly intervention, and all without a second of hesitation. I could see my chances of winning the great international language competition through forced self control alone was going to be a fool’s errand for me. This kid is a pro. Toss in an attentive German mother, already fluent in English and eager for her son to master same, and you’ve got the recipe for a looming disaster for my (stereotypically) fragile male ego.

When lunch was completed and the candy was consumed, we continued our trek towards the exact Ford SUV under consideration. Upon arrival at the promised land of Ford’s 7-passenger vehicle of perfection, they zeroed in on examining the size, fit and finish. After finishing with their inspection, we took a walk across the complex towards the Mercedes area, taking only one brief respite to let “das kinder” enjoy a moment in the thoughtfully provided kiddie play area. Getting to witness the look of pride and accomplishment on the face of a confident and enthusiastic four year old, after successfully negotiating a two meter slide was well worth the momentary disruption on the way to see the Mercedes.

Several of the showrooms are linked internally, but the place is so big you need to cross a street to get to the Mercedes showroom. The entire complex was well maintained and thoughtfully landscaped. As we crossed the road to the Mercedes building, I glimpsed a nice reflection of the Mercedes logo mirrored nicely off the surface of the Koi pond near the entrance to the showroom. This is a dealership as intelligently designed as any of the thoughtfully engineered German vehicles on display within. I lost track of the time we spent at the dealership, and of the many brands and amenities offered on the plethora of vehicles displayed for purchase. The Coup de grâce of our car shopping adventure coincided with the viewing of a shiny red Mercedes SLS (gull-wing doors). I saw no price listed. If you have to ask, you obviously can’t afford it.

A lithe and agile a vehicle like this, powered by a brutish 6.3 liter engine, is a sure ticket to an exhilarating death via heart failure for an old man like me. The viewing of the red Mercedes completed the day’s pilgrimage to the car dealer. My ever-gracious hostess offered me her spot riding shotgun in their Nissan Qashqai, as she settled in the backseat next to her adorable young progeny. As we drove away from the car dealership, my hosts inquired as to my schedule. Once confident that they weren’t interfering with any plans I might have made beyond the scope of their initial invitation to the dealership, they offered me a diversion of a totally different dimension for the rest of the afternoon that I eagerly accepted. It turned out my day had only just begun. To be continued in “German Saturday Teil Zwei-Den Zoo“.

Enjoy.