Walmart Abroad

U$.$S$.-$based Walmart is by far the world$$s largest brick and mortar retailer and is known for offering large stores stocked with groceries and general merchandise. Its entry into international markets was a shock to local retailers who suddenly saw the status quo of decades upset by a powerful global competitor.

Walmart$$s first foreign market entry was Mexico. It entered in $1991$ by partnering with a local retailer which it eventually bought out. Although the company took several years to break even in the Mexican market, it soon rose to be the dominant retailer in Mexico, operating under a variety of brand names and diverse store formats in addition to its superstores. For example, in Mexico half of grocery sales are made through street vendors, traditional markets, or small stores. As a result, Walmart created a mini$-$grocer format named Bodega Aurrera Express. Its mascot is $$Mama Lucia,$$ a chubby cartoon homemaker who dresses as a masked wrestler and fights for low prices. These stores target the low$-$income segment of the market which accounts for about $80$ percent of consumers in Latin America.

Walmart entered China in $1996,$ and government officials in China have credited the company with revitalizing the retail sector in that country. For years, government$-$owned retailers offered the same limited products while employees took naps on the counters. When Walmart opened its new store underneath the soccer stadium in the city of Dalian, the store was soon packed to capacity. Still, Walmart chose to enter China slowly in order to learn as it went along. When it opened its first stores, customers arrived on bicycles and made only small purchases. Walmart also discovered that it couldn$$t sell a year$$s supply of soy sauce to customers who lived in small apartments, and many potential customers preferred to shop for bargains in small shops or online.

Furthermore, the firm faced a variety of government restrictions. Foreign retailers needed government$-$backed partners, and cities often restricted the size of stores. In response to these challenges, Walmart invited government officials to visit its headquarters in the United States, donated to local charities, and even built a school. Walmart sourced nearly all its products locally, and nearly all employees were Chinese. To understand Chinese consumption patterns better, Walmart$$s American manager walked the streets to see what the Chinese were buying.

Walmart also repositioned its Sam$$s Club as an upmarket retailer in China after struggling to do so in the United States where the brand suffered from its association with Walmart$$s low$-$price image. In China, Sam$$s Club offered imported goods and high$-$quality food and targeted affluent mothers between the ages of $35$ to $40$ who were concerned about food safety and quality and were willing to pay a premium price but expected value in return.

Walmart entered Japan in $2002,$ but the company struggled to reproduce its earlier success overseas. The company studied the Japanese market for four years and decided it needed a local partner. It agreed to buy $6$ percent of Japan$$s fifth$-$largest supermarket chain, Seiyu, with the option to increase its share to $67$ percent. Still, Walmart faced challenges: real estate prices were high and current competitors$$ long$-$standing relationships with suppliers made it difficult for Walmart to quickly establish a supply chain. In addition, Japanese consumers associated low prices with poor quality. If the price of fish was low, it must be old. And employees balked at the idea of approaching customers and asking them if they needed assistance. Traditionally, employees waited for customers to ask them for assistance. Perhaps the biggest challenge was the speed at which competition responded by slashing prices, building single$-$story supercenters, providing acres of parking, launching $$Made in Japan$$ campaigns, and streamlining their logistics systems. Walmart operated in Japan for seven years before showing a profit.

Other markets proved even more difficult. Walmart abandoned its investment in Germany after purchasing a low performing competitor. The company failed to turn around the acquisition and struggled to compete in a country that already had entrenched low$-$cost competitors. In addition, the government severely restricted where hypermarkets could be built and how prices could be discounted. Walmart also exited South Korea, despite the fact that South Koreans were very accepting of hypermarkets and had the highest penetration per capita of hypermarkets in Asia. Local competitor E$-$Mart bought Walmart$$s stores in South Korea. Walmart was credited with inspiring E$-$Mart$$s cost$-$cutting efficiency. However, the South Korean retailer had its own unique spirit. The atmosphere in these stores was bright, loud, and frenetic, as if E$-$mart was attempting to capture the feel of a traditional outdoors market.

Walmart entered Brazil in $2009$ when the local economy was booming. By $2016,$ it was c