Walmart’s multinational expansion was not as successful as projected and their most notable failure occurred within Germany. Reviewing some of the reasons led me to see their overall failure to reach China, EU, Japan, South Korea, and some others. Mainly, they had difficulty providing their advertised “Everyday Low Price” and disregarded local cultural habits. Going into Germany in 1997, Walmart utilized its consistent business model and practices that did not work with their employees or customers. In the ten years, they learned about issues; received advise; but they failed to change their operations. Some elements of culture that were not taken into account:
- Social Interactions
Walmart has practices and moral boosters that did not fit with the German’s conservative way. German’s are known to have a quick and non-interactive shopping experience. Walmart smiling greeters and active floor helpers made customers feel uncomfortable. In addition, smiling female customer service appeared to males as if they were flirting. For staff, they were uncomfortable with team building exercises and some would avoid them. German employees were not used to doing a morning chant. Lastly, Walmart overreached into their romantic relationships by banning this type of connections between employees.
- Value Systems (people’s norms and standards)
German’s were used to bagging their own groceries as it was not sanitary or normal for others to touch their items. Customers were not used to and did not like that Walmart employees would bag their groceries for them. Germans had their familiar discounted and walking distance stores they would go to. First, Walmart’s prices did not compare to their other discounted stores like Aldi. Secondly, Walmart did not have the same quality as the small businesses they visited. German’s were not convinced with this large chain store that sold every household and outdoor item. Since it was not in their habits to spend a lot of time at stores, the layout of trying to find the items they needed took too much time. This was not appealing to customers who knew what they wanted and did not have to ask for help.
Overall, Walmart had difficulty reaching the German market because they refused to change their business model and adhere to any advice coming from the locals. There was provided evidence that other large chains did poorly with the German market. Here management did not do their part to integrate and adapt within the culture norms. There was an air of arrogance in the US’s management team – as they believed they had a superior business model and the German’s would submit to their ways. However, this was not the case and Walmart shutdown their businesses in Germany.
2 replies on “Walmarts Cross- Cultural Failure in Germany”
It is fascinating to see the differences in culture between two first world countries and how it affects marketing!
It is very interesting to see how Aldi was worried about how the US market would handle things when they expanded, but now the tables have turned in this situation. Walmart has been pretty good with expanding into other markets, and I imagine Germany might be a challenge but is doable.