rowantheexplorer:

belvarine:

shieldfoss:

shieldfoss:

blackestsabbath:

yveinthesky:

Every time I read up on why Walmart failed in Germany again I am massively entertained.

I can recommend it to everyone. 

Google “Why Walmart failed in Germany”. 

Hours of entertainment. 

Why walmart failed in Germany:

https://thetimchannel.files.wordpress.com/2012/11/w024.pdf

My Lidl Entrepeneur: Capitalism is Magic.

The EURO-conversion was used by retailers to raise prices. Aldi, however, reacted with the biggest price reduction of its
corporate history. As a result, it was able to double its profits.

Paragraph edited for clarity – the original is on page 17.

Imagine that – taking market share by improving service and prices.

EDIT: Mind you, some of Walmart’s failure is absolutely because the government has put bars on the free maket that made it illegal for them to succeed:

With organic growth close to being a mission impossible for hypermarket operators
due to stringent* planning and zoning regulations

Soon faced with
rapidly mounting losses, Wal-Mart’s management resorted to staff cuts and closures to
reduce its above-average personnel costs. Due to strict worker protection regulations,
however, making surplus workers redundant can be a complicated, lengthy and costly
affair in Germany – a cumbersome fact of life for its German competitors, but, obviously,
terra incognita for Wal-Mart Germany’s (mostly) American executives

* Stringent is explained elsewhere in the text and it is, indeed, stringent.

Beautiful article. My favorite parts:

– The leading retail strategy in Germany is “hard discounting” which offers a very narrow selection of high quality products at “rock bottom” prices. Aldi rules at this and hard discount retailers control a third of the market. In the UK etc this accounts for less than a tenth of the market. This is the polar opposite of Walmart’s “sell literally everything” strategy.
– Germany has zoning laws that favor smaller buildings. This works in favor of hard discounters because they offer a narrow selection and minimalist shopping environment. Compare to Walmart’s “browse an entire warehouse and grocery store then eat at one of several restaurants” model.
– Germany has antitrust/fair trade laws that forbid merchants from permanently selling goods below cost. This is Walmart’s favorite strategy famously observed in the gallon-jar pickle campaign.
– Germany only allows retailers to be open for 80 hours per week, compared to 196 in the UK, 96 in the Netherlands, and 144 in France.
– Walmart refused to recognize the outcome of the collective wage negotiation process with their German unionized employees and were “completely surprised” when said unions promptly organized walkouts in 30 stores. They were probably surprised because of their millions of US employees, only 12 are known to be unionized. This gave Walmart a “union basher” rep in Germany where unions are influential and popular.
– Walmart tried to pull their “hire a ton of employees and give them shitty part time hours so we don’t have to give them full-time benefits” but worker protection laws prevented this and Walmart was forced to compete on product margins and services rather than recouping losses by shafting their employees. Aldi was able to match their prices cent for cent, but offered better service and more value.
– Walmart repeatedly defied German antitrust laws like “You must provide your balance sheet and annual profit/loss statement” and “You must provide a bottle/plastic refund system for products you sell.” None of the other leading German retailers had a problem sustaining growth and profit while complying with these laws.
– Germany put some dude from Arkansas in charge of the acquisition. He didn’t speak German. Anyone who’s spent time with Germans can imagine how well this probably went over.

So basically Walmart rolled up to Germany and tried to play its usual game of “buy out entire supply chains, sell products below cost until competitors are dry, then use their market reach to demand bulk orders from suppliers at near-zero margins, all the while keeping stores open 24/7 to maintain a huge pool of redundant part time workers at minimum wage with no benefits to reduce operating costs and further subsidize more supply chain buyouts” and the heavily unionized, aggressively antitrust, worker protection, high value low price German market laughed in their dumb weasel faces and sent them packing.

Meanwhile, Aldi, who has been commanding the German market while complying with all these regulations, has been expanding seamlessly into the US and has owned Trader Joe’s since 1979, which sells twice as much per square foot as Whole Foods.

This article is a beautiful demonstration that the only reason shitty companies like Walmart keep biting us in the ass in the US is because our leaders refuse to put them on a leash.

And not only that, the capitalism works better when there are strong anti-trust, strong worker protection, and strong market controls in place. More small businesses providing better goods and services for cheaper because they’re actually competing instead of doing like Walmart and burning capital until they force the local competition out of the market.