Wal-Mart Abroad (Print Version)

It would seem logical to assume that Wal-Mart would be successful on a global basis, just as it is in the US. Wal-Mart has built up a phenomenally strong position in the US, selling a vast array of goods at affordably low prices. Just as in the US, many consumers in other countries have a strong interest in buying low price goods at a one-stop shop.

Where Wal-Mart went wrong

Yet Wal-Mart seems to have been an innocent abroad. When Wal-Mart first entered markets that ranged from Chile to China, and from Germany to South Korea, it insisted on offering American style products in American style stores. It just never seemed to occur to the good folk who run Wal-Mart that consumers in other countries might have different tastes from Americans.

Where is Chile?

To give just one example, Wal-Mart’s executives seemed to be unaware that Chile happens to be in the Southern Hemisphere. Wal-Mart sent spring clothing to its Chilean stores at the same time as it sent the same spring clothing to its US stores. Wal-Mart managers made exactly the same decisions when it came to summer, autumn and winter clothing. And then the US based managers wondered why the clothing didn’t sell.

As a result of a series of these kinds of errors, Wal-Mart was chased out of Germany and South Korea, and had to learn some valuable, but highly expensive, lessons in countries such as China, Chile, and the UK.

Not just a Wal-Mart problem

This is not just a Wal-Mart problem. As I discuss in New Market Entry - The Five Steps To Success In Entering New Markets, many companies, including Starbucks, Tesco, and Toyota, have made similar very basic mistakes when they have left the comfort and security of their historical markets and decided to enter new markets.