Why did Walmart fail in Germany
Wal-Mart in Germany: Close your eyes and go for it
Sam Walton's ten rules of success:> Identify yourself with your tasks.
> Treat employees like partners and share the success with them.
> Motivate your partners.
> Communicate with your employees at all levels.
> Appreciate everything that employees do.
> Celebrate success and carry failures with humor.
> Listen to every employee.
> Exceed your customers' expectations and they'll stay true to you.
> Be more cost-conscious than your competitors.
> Swim against the current and challenge all conventional wisdom.
The "Supercenter" on St. Pauli has a sales area the size of a soccer field and the charm of a bunker. It's a shop that sells everything from stock cube to dishwasher, albeit in a strange order: the milk is 50 meters away from the yoghurt in a different department. The saleswoman - she wears a button that says "Our people make the difference" - simply leaves the searching customer standing: "I have finished work now." Just German service. However, this supermarket has been owned by the US company Wal-Mart for a year and a half, the giant that set out to make Germany's service desert bloom. With employees who are not just salespeople, but "associates": allies in the fight for the well-being of customers.
Wal-Mart: Signs, buttons and optimism instead of market knowledge The German headquarters of the group selected the Supercenter Oststeinbek on the outskirts of Hamburg for the official visit. At 20,000 square meters, it is twice as large as the one on St. Pauli, much tidier and largely "whale-martyred". During a tour of his empire, the 32-year-old store manager Oliver Huckschlag greets every employee who comes near with a handshake. With most of his 550 people, he is on your terms. When a customer asks him about the paddling pool from the advertisement for 79.97 marks, he leads the man straight to the right shelf.
That's how it should be. So that this doesn't only work in the presence of the press, David Lorentz, Wal-Mart manager from Tucson, Arizona, has been a coach in Oststeinbek for two years. A development worker who shows his German colleagues that you leave everything where it is when a customer has a problem. And "that it is good to smile because then others smile too". Conveying that attitude is a tedious process, he says, as he dodges a retiree who almost rams him with his shopping cart.
In 1998 the group took over 21 run-down Wertkauf stores, and in 1999 74 Interspar stores. Almost the entire management team was replaced by Americans, several markets were given Wal-Mart signs before the renovation and the sellers with "Our people make the difference" buttons. From now on they belonged to the "Wal-Mart family", explained the then Germany boss Ron Tiarks. He started an advertising campaign that promised permanent low prices and super service. The strategists at Wal-Mart assumed a rather short process of market conquest.
"An example of how not to do it," says Professor Gerhard Raab, head of the market and communication psychology section at the professional association of psychologists. The biggest mistake was "to generate expectations that could not be met because you had not familiarized yourself with the situation beforehand".
From truck logistics to dress code: problems everywhere The competition registered a terrific false start. The service offensive petered out because the attitudes of the staff did not change overnight. Many customers did not even notice that the owner of their old supermarket had changed (by the end of 2000, Wal-Mart plans to have converted just 25 stores). And the bargains weren't too far off, as the Society for Market & Trade Research from Celle found out. Accordingly, Wal-Mart ranks in the middle - also because competitors like Rewe have radically lowered their prices.
The sometimes missionary zeal of the new bosses caused displeasure. For example, a female coach triggered a storm of protest in a branch in Baden-Württemberg: She was bothered by the skirts of some cashiers who, in her opinion, were too short and demanded a stricter dress code. In the case of suppliers, Wal-Mart tried to set US standards "in complete misjudgment of its actual market power in Germany" ("Lebensmittel Zeitung") - including the right to inspect the production of branded goods without prior notice. A lot also went wrong in-house. For example, Wal-Mart, which has the best inventory control system in the USA, left trucks standing on the ramp for half a day because the warehouse was not staffed. According to insiders, the problems with logistics have not yet been resolved.
Anti-union and destructive: the Wal-Mart history "Wal-Mart started with the show, but first comes the duty," mocked Jürgen Glaubitz, who is responsible for retail at the trade union trade, banking and insurance (HBV) in Düsseldorf . In the beginning, the group was welcomed very warmly by the employee representatives. "In the German retail trade, competition has been based solely on price since the mid-1990s," says Glaubitz. "In this respect, it is initially positive if Wal-Mart also relies on the service." He is pleased that the workforce has been increased by more than 1,000 to around 17,800 nationwide, primarily to ensure longer opening times (on weekdays from 7 a.m. to 8 p.m.).
The deputy chairman of the works council at the Supercenter Oststeinbek is "absolutely satisfied with this development: 140 people were hired and finally there was another investment in the store". In addition, the tone has become looser, "even if the Americans had to learn what a works council is". At home, Wal-Mart is doing everything possible to keep the unions out. Of just under 890,000 American employees, only twelve are organized in a meat department in Jacksonville, Texas. The department is now to be closed.
Wal-Mart's success story began in Rogers, Arkansas in 1962. There Sam Walton opened his first discount store with goods that were of poor quality but cheap. The salespeople, mostly women, were paid 50 to 60 cents an hour, only half of the statutory minimum wage, but it was not mandatory for small business owners. Cheap department stores for branded goods had existed in the USA for more than 30 years, albeit almost exclusively in large cities. Sam Walton bet on the provinces, where there was cheap building land and personnel, but no competition. His concept, also known as the "Mao Tse-tung strategy" after the Long March of the Chinese Communist Party leader, worked. In seven years, Walton opened 17 more Wal-Marts, all in small towns.
At the end of the seventies, the company was now listed on the stock exchange, it already owned 276 markets and systematically rolled out the Midwest. Today, Wal-Mart is considered to be the destroyer of the "American Hometown" among citizens' groups because, thanks to its success, the inner cities became deserted and life shifted to the shopping complexes on the periphery. Walton attracted customers with permanent low prices, a huge selection, long opening times and exceptional service. So he posted a "greeter" at the entrance of every supermarket, who greets all visitors in a friendly manner (and also keeps an eye on potential shoplifters). He also introduced the "Ten Feet Rule": Anyone who approaches a salesperson within three meters should be addressed in a friendly manner.
Wal-Mart wants to change the world: but it doesn't want it. Walton was a penny pincher with charisma who established his own corporate culture in his "Wal-Mart family". For example the "Morning Cheer". To this end, around 30 employees compete in the Oststeinbek Supercenter. This morning the "Cashier of the Month" is awarded. Then store manager Huckschlag tells his people that the day before they were slightly behind the Supercenter Karlsruhe in terms of sales. "But we're close: They can already see our lights in the rear-view mirror!" Then the "family" is sworn in. "Give me a W!" Shout Huckschlag and coach Lorentz. "W" echoes back cautiously. "Give me an A!" "A". So the whole company name is spelled out. At the end there is the question: "Who is number one for us?" Answer: "The customer all the time!" Some family members look like they're embarrassed.
In the USA, Wal-Mart's "community-based personnel policy", as it is called in a current study by the Hans Böckler Foundation, together with tough cost management and superior logistics, has proven to be unbeatable. In the nineties, the group was powerful enough to force competitors out of the market with price wars and to expand abroad.
Today, eight years after the death of Sam Walton, Wal-Mart operates more than 4,000 supermarkets on four continents with 1,140,000 employees.With sales of $ 165 billion, a profit of about $ 5.6 billion was made last year. The company's headquarters in Betonville, Arkansas, dream of dominating retail anywhere in the world.
But outside of the US, the group is struggling. Only in the neighboring states of Mexico and Canada can it make full use of its logistical strengths. In Asia, South America and Europe, on the other hand, business leaves much to be desired. One reason: the US company does not pay enough attention to regional characteristics. According to "The Economist", Wal-Mart in Brazil built parking lots and corridors that were too small for the traditional weekend rush. A commitment in Indonesia also flopped. There Wal-Mart took prices like in the USA and thus belonged to the luxury class - an image that the company could not shake off. After two years and an estimated $ 100 million loss, they withdrew.
St. Pauli is far from Arkansas: a happy ending is not in sight Nikolai Baltruschat, trading expert at Deutsche Bank in Frankfurt, attests Wal-Mart "conqueror hybris" and the "inability to learn from mistakes". He sees the future of Wal-Mart Germany as black, also because of a lack of market power. Annual sales of 15 to 20 billion Marks are considered a "critical mass" for the industry that needs to be achieved in order to be able to keep up seriously. In 1999, Wal-Mart had sales of around five billion marks in the Federal Republic of Germany and failed when attempting further business takeovers. As a Wal-Mart spokeswoman explains, "We want to be the best, not the greatest." The flagship supermarket in Oststeinbek has already done it: It was named "Best German Store of the Year" by the headquarters. An employee from the furniture department received the award at the shareholder meeting in Betonville in June. However, the shareholders would prefer to see profits. It is estimated that the German offshoot of Wal-Mart, which operates as a GmbH & Co. KG and does not publish any figures, made around 150 million marks lousy last year. This year it could be 200 million.
Peanuts, on the one hand. On the other hand, the stock market is very impatient right now. In December, Wal-Mart shares reached a high of almost $ 70, and in the first two months of this year they posted the largest losses of all Dow Jones stocks - according to analysts, mainly due to the losses abroad. But the question is how Wal-Mart wants to get into the profit zone in this country. There is only room for maneuver in terms of wages. The company that is not in the employers' association still pays according to the tariff. For the future, however, the unions fear wage dumping based on the US model. According to the Hans Böckler Foundation, "the average earnings of a Wal-Mart employee there is below the US poverty line".
Can Wal-Mart Afford to Fail in Germany? "No," says the unionist Glaubitz. "Yes," says the analyst Baltruschat. "As long as the shareholders are more interested in the expansion in Kentucky than in what is being sunk in Germany." Allan Leighton, new boss of Wal-Mart Germany, who recently replaced his hapless predecessor, is considered an excellent man in the industry, but also as someone "who cannot be said" and who has no international experience. Not the best prerequisites for the difficult German market: nowhere else are the profit margins in retail lower, nowhere else there are more sales area per inhabitant. "Wal-Mart would not be the first foreign company to get a bloody nose here," says Baltruschat. "Wal-Mart shows," says market psychologist Raab, "that recipes for success cannot simply be applied to a different culture St. Pauli is a long way from Arkansas. In search of milk, the customer finds Leinenschu Hey, at a price of 12.90 Marks, unfortunately only up to size 39. When asked whether this is also available in size 43, the seller shrugs his shoulders. The man is wearing a smiley button.
Contact: Wal-Mart: www. walmart.com The study "The Wal-Mart System" (order number 11020), published by the Hans Böckler Foundation, can be requested under fax number 0211/4 08 00 80, price 15 marks plus shipping costs.
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