[Currently listening to: There's A Small Hotel from the album "My First Jazz Chet Baker" by Chet Baker]
This news actually broke yesterday, but I was a wee bit behind times again. It seems that Walmart is closing up shop in Germany and giving up.
Yes you heard that right. The almighty Sam Walton Empire has been defeated by evil socialist Germany and is now retreating with it’s tail tucked in:
Friday’s announcement that Walmart is abandoning its German operation registers as a painful defeat for the retail giant. Elsewhere its formula for selling discount goods has long been an international success story. The American firm operates 2700 stores in 14 countries outside the United States. In the first quarter of 2006 alone, the company’s profits rose 6.3%, to a record level of $2.61 billion, and international turnover amounted to $79.61 billion — 12.3% up on the previous year. Walmart’s total group turnover in 2005 was a staggering $312 billion.
In Germany, though, Wal-Mart lost money. The company announced it would incur a pre-tax loss of $1 billion on the German operation. Nationwide losses for 2005 are thought to have run into hundreds of millions of euros. The reason, experts suggest, was an incomplete market strategy. In 1997 Wal-Mart bought 21 stores from the Wertkauf discount chain, then added 74 shops purchased a year later from Interspar. But the rapid expansion was more of a bargain hunt by Wal-Mart than a coherent, fully-developed concept. “Wal-Mart bought whatever stores were for sale and then just hung its name over the door,” says Ulrich Eggert, a trend researcher for entrepreneurial consultancy, BBE. “So there was always more Wertkauf or Interspar waiting for customers in those stores than Wal-Mart — which means two very different retail concepts. Wertkauf stores … were nicely outfitted, large, with fairly good service; Interspar had small, sort of grungy shops.”
Bummer.
Personally I don’t like Walmart, not so much because they are successful, but rather because of their business practices and, to a degree, because I think they symbolize quite well what is wrong with the way most of us live our lives today. Granted a large family on a tight budget may be able to squeeze by thanks to Walmart, but at the same time I have to wonder if the family wouldn’t be better off if the overall “cost line” would be higher so that people can actually earn a decent wage?
I am sure life will go on in Germany without Walmart, but it goes to show you that even the biggest ones can fall.
