American Reacts to Why Walmart Failed In Germany

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Willkommen! My name is Sean Huggins, an American living in Germany. Watch as I learn about German culture and life in Europe!

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[karstenbursak]

10:10 "It has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire."

May I translate ...
"We can not be sucessfull in a market if we can not bend and break existing local legislation to our preferences."

[mrm]

One important factor Cheddar missed - the locations. Walmart had big stores in remote locations at the edge or outside the town. In Germany you have usually grocery shops within residential areas, within walking distance where people life. Why should I drive to a remote location for grocery shopping, when I can get everything I need just around the corner?

[blabla]

When Walmart came to germany i lived in Munich and the Walmart was just 5min away. I was there twice. My main critic was, that it was simply to big and way too much stuff. You have to understand while many families only buy groceries once a week, a lot of people go much more often and buy less things. Since you can do this in germany by walking or biking, it's not a problem. But that also means, if you just want to buy a piece of butter and a milk you dont want to search through a big monstrosity of a store. You want a reasonable small market to get in and out fast.
And yes - most germans hate superficial, fake friendliness. There is a word in german for this: "scheißfreundlich". I also hate it. I expect politeness, thats all. No employee should fake that he/she is actually happy that i visit the store. That's creepy as f***.

[klamin_original]

The funny thing to me is that ALDI (Aldi and Trader Joe‘s) and LIDL are extremely successful all over the world and especially in the US with basically the same strategy as Walmart in Germany: Keep the traditions alive.
Aldi in the US doesn’t offer employees who bag your groceries as far as I remember correctly, they don’t do much small talk, they don’t stand all day, the products aren’t presented in a consumer friendly way, the carts need to be released from their locks with coins and the list goes on and on.
It’s basically the proof that the German concept of running low price stores works while the American concept doesn’t work. German stores focus on efficiency and don’t exhaust their employees or their competition while the American way is the exact opposite. And apparently many Americans don’t need people bagging their groceries, don’t need smalltalk and smiling cashiers and apparently they also don’t need to be feeling like the store thinks they’re stupid and need to be tricked into buying shit they don’t need.
On a more serious note it was a great experience when I went to Australia in December of 2017, walked right into an Aldi store in Sydney and bought some original Nürnberger Lebkuchen from Germany, the same brand I knew from home. :)

[helloweener]

They did not have a German speaking managment either.
All was done from the ZUk I think, with non-German speaking high management.
Then multiple violation of labour laws and competition laws.
Other supermarket chains also violate competition laws from time to time.
They pay the fines and move on.
Walmart was bitching about it and went to court. They even won on the lowest court.
But the federal agency for competition the Bundeskartellamt said: No, if you go bitchy about we will go as high as it needed to solve this issue.
Walmart lost the case on the next higher court.

[RustyDust]

Cheddar made several errors, either unknowingly or by mosinterpretation. It wasn't the laws that allowed smaller markets lower prices. It was the general ban on predatory pricing. You simply aren't allowed to abuse your financial base to undercut your own price tag.

Firing someone for not reporting others for a company internal ethics code is simply not allowed.
All companies with more than six employees at any location are required to allow a so-called Betriebsrat / a company council. The members of these councils also cannot be fired for doing their required work of mitigating between employer and rmployees.
The list of these violations went on and on.
All of this in a market that was already saturated with different chains, as well as an average profit margin of only around 1.5%. The typical Walmart practices simply couldn't be afforded while still adhering to the German employee protection laws.

[tobyk.]

6:50 "Walmart required their employees to denunciate their coworkers..." - surely a good idea at a time when the memory of a repressive communist regime with a powerful internal security service and a widespread network of informants was still relatively fresh, just about 7 years after the end of communist dictatorship in East East Germany... and then they were surprised that many people didn't like such methods?

And the mandatory calisthenics (certainly normal in a military unit) and group chants might perhaps seem normal for managers who come from a country in which school students are expected to group chant a "pledge of allegiance " every morning for 12 years - but at least in Germany this leaves an incredibly creepy impression. If your "team building " measures let people think of a military organization, or -in a worse case - fascist youth organisations in the late 1930s, then you are probably making something wrong.

[AzzameenAZ]

There was also the issue of Walmart hiring part-timers with hours just low enough to not count as full-time.
Which in America, apparently meant no healthcare and other stuff to pay for Walmart.
In Germany, you are legally required to pay all those benefits to part-time workers as well, meaning Walmart's strategy cost them a lot more money than if they had just hired full-time empoyed staff.
They refused to adapt to anything as well.

[EinChris]

Shopping hours can hardly be an argument. Or as one professor of economics it stated..."you won't suddenly sell twice the cars if the dealership doubles it's opening hours, you only waste money. Because people still will only buy one car if they want to buy one car." I wonder why one needs to be a professor for realizing that. Shopping hours are sufficient in Germany. Germans tend to be organized. They know when the shops are open and organize their shopping time accordingly.

[HappyBeezerStudios]

And at the opposite end Aldi (and Trader Joe's) and Lidl are successful in the US.
But yes, the discounters are basically focused on a small assortment that will cover 90% of your daily shopping needs. Bigger stores with a larger assortment and non-food articles are also a thing, but not where you get your daily stuff.

[pixelbartus]

I remeber zapping into these "Walmart" chants in german tv and it took me a wile to understand, that this wasn't a report about scientology or something like that

[JohnHazelwood]

I remember Walmart in Germany - many (!) years ago! In our town they were selling - let's say - "american items" ... half of the products were products I've never heard of and the other half was too expensive for the low quality they offered! Kind of: "No, thanks! Next stop ALDI! Lower prices, better quality!" ^^+gg XD

[oleurgast]

Actually the main reason Walmart failed and what they underestimated is their concept depends on US zoning laws. In most US suburbs, actually there is not even a small store alowed. Due to the low density (single house only) it wouldn't be profitable anyway. Germany is much more open here: Smal shops are allowed practicly everythere, But very limited in size.
So Germans do not do one big shopping tour every two weeks or so, spending a whole day for just shopping what they need. Everything you need dayly, you get in a short walk or (if living backcountry) very short drive. Many times simply walking or even using public transport. Germany is not as car-centered as many other countrys.
While Wallmart is not a grocery store, grocerys are still atractor to get customers there. You mostly do not go to wallmart (or any other shop like Kaufland in Germany) with the intend to buy a TV; you go buy grocerys, see the nice deal for a TV and get it. Or you see advertisement for the TV deal and say - oh lets do our next grocery shopping there. The whole concept of Wallmart base on the need to do regular "big grocery shopping tours". A need that not exist in Germany due to very strict laws how big and what kind of shop can be in wich location.
The german zoning laws actually intentional prohibit such concepts to become a problem. And they are a problem: Car traffic is insane. I actually got a car very late in my life - I simply didn't need it, due to reaching most destinations by feet, bike or public transportation. How would I go to a wallmart?
And why, even back in the days? If I needed something special, I went to the city center. Of course nowerdays, nearly everything exept grocerys and maybe clothes I simply order online anyways. As many others do.
Without grocerys as attractor, a concept like Wallmart can not function. And the grocery segment in Germany is quite different, as shown in the video. Actually the large share of discounters like Aldi and Lidl has an extreme effect on other stores. A german customer might be willing to spend a bit more in a nicer store or for a better product. But they always know the price from the discounter - so the possible difference is limited. As the discounter always is just around the corner. As said: Limitation on shop sizes depending on location and higher density of living means much higher density of shops and less car dependence. Wallmart never hat the slightest chance to compete in such conditions.

[danibristol]

There was one Walmart conveniently near to a tube station where I live (and it is still and always has been a big supermarket, belonging to different chains, the latest was REAL and is now a Kaufland). What I never liked about it the few times I went there, were the huge packages which I as a single household could never buy as it was far too much for me. Meat, sliced sausages and cheeses, but also fruit and veg I think, all came in packages for at least four people. Which might have been great value for families, butwhat about smaller households? You can't keep meat for so long, it will go off and I also don't want to eat the same dinner three or four days in a row so that the big package is eaten before it goes off. That's the most important reason why I never warmed up to Walmart and wasn't surprised when they closed. They didn't listen and didn't want to learn.

[MarkusWitthaut]

The video of Cheddar on walmart is not very well researched. Walmart most important mistakes are the following:
1. Neglecting the huge differences of German shoppers versus Amercian shoppers. There is simply a very small market for these big walmart style shops. That market niche has already been occupied by the German retailer Metro. German shoppers prefer to shop several times a week for groceries and want that this done in a very short time (e.g. one the way home from work). Having a large facility were the way from and to to parking lot takes longer than the whole shopping process is a disadvantage.
2. The retail market in Germany was in the late 1990ies (and still is) the most competitive market in Europe. The margins are very low and one has to compete against strong players (ALDI, LIDL, EDEKA, REWE). Walmart could only get "leftover" locations from Wertkauf and Spar.
3. Management by arrogance: The first CEO was American Rob Tiarks, who could not spreak German and did not understand the German culture - neither in respect to shoppers nor in the treatment of employees. He was followed in 1998 by Englishmen Allan Leighton, who came from the british retailer ASDA which was acquired by Walmart. Leighton did not speak German and was also not very familiar with the German retail sector. After six month he was replaced by German Volker Barth, who did work before as an Wertkauf manager. However, the top managers from Wertkauf have already left Walmert. Barth could no resolve the difficulties in integrateting the logistics for the rather small sized ex-SPAR markets with that for the large ex-Wertkauf markets. He was replaced in May 2001 by Kay Hafner, another German.
4. Not understanding the German employment law. Cheddar got that right. Germany is very unionized company. Union representatives and managers work closely together. Walmart is actively fighting against unions.
5. The Walmart strategy of cornering the market by predatory pricing was (and still is) illegal in Germany. You can not bankrupt the local competition through dumping prices (below the purchasing) price to become the only local player and thus dictate the prices.
6. The topics about baggers, greaters and morning cheers are quite amusing but were not the reasons for Walmarts failures.

[justus]

Tradition: Dieser Kommentarbereich ist Eigentum der Bundesrepublik Deutschland.

[dansattah]

Another great video on this topic is from "rewboss" aka Andrew Bossom, a Brit with dual citizenship in Germany.
His videos would be great for your reactions, both for German culture and linguistics.

[p.s.]

Thing is also, that we have special stores for everything, so if I want a bike I'll go to the bike store and if I want a Mobilephone I'll go to the phone store. We also have markets that sell everything like Real, but thats not very efficient.

[CP]

Underrated Channel.

You do a fabulous job with your explanation/expectation at the beginning and also otherwise the reactions from you are "real" and not exaggerated, I have seen worse on YouTube.

As a European, I also found it very exciting to learn about unknown things like the "greeters" at Walmart. The Tesla plant in Brandenburg is also struggling at the moment with the trade unions, they also have massive problems dealing with the local customs.

Greetings from Switzerland

[EJannings]

I'm so glad there's no Walmart in the Netherlands. If only McDonalds would go away too. Sadly that won't happen.