Why Walmart Failed in Germany

Wherever you go, there are three things that you always see: McDonald’s, Starbucks, and Walmart. However, sometimes these incredibly common companies fail to expand their money-making machines into certain countries. McDonald’s failed in Iceland, Starbucks failed in Australia, and Walmart failed in Germany. In this video, I’ll be explaining exactly why Walmart failed in Germany. Walmart’s failure didn’t have anything to do with the logistics of their stores. After all, a massive company like Walmart with lots of resources will rarely have problems with logistics. Instead, the issues that Walmart faced were more about the German culture. This was seen across multiple fields. For example, when employees smile at customers in America, we take that as them being kind and friendly. But in Germany, it felt more like the employees were pretending to be your friend in order to get you to buy from Walmart. Another issue was that Walmart employees were supposed to chant “Walmart! Walmart! Walmart!”, which weirded out some of the German customers. However, these were mostly smaller issues. But there were bigger issues. One of the bigger problems was predatory pricing. In Germany, companies often face stricter rules, which meant that Walmart was severely punished for undercutting German companies. Another big problem was that there was controversial employee treatment. Some weird policies were used, which again led to severe punishments. These factors all added up to give Walmart a 1-2% profit margin, along with just a 3% market share in the largest economy of Europe. Because Walmart was struggling so much, it ended up selling its German Walmart branch for a loss. And that’s why Walmart failed in Germany.

Remember to subscribe for more content like this!

Leaving a like can help me out a ton, because these videos take many hours to make. Thanks in advance!

Disclaimer: I am not a financial advisor. Your capital is at risk.

[vyse]

Germany is a highly competitive market with a broad range of established players for all segments - the most prominent segment being retailers like Aldi and Lidl.

The segment Walmart fits in is doing poorly by comparison (looking at 'Real', operating in a similar model to Walmart, but still mainly groceries). We don't really buy clothes or electronics together with our groceries here. That's like, separate shopping tours: groceries -> Aldi, Lidl etc / electronics -> Saturn, Media Markt etc / clothes -> clothing stores. Those segments bundled in 1 store just seems strange. And Walmart was a 'Real' store on steroids.

I also remember Walmart coming of as low quality at moderate prices - simply put: it felt like you were buying crap :v. With Aldi and Lidl being highly established in the market with enormous scale, they simply got better prices from suppliers than the newcomer Walmart and were able to give that price advantage to the customers: long story short, Aldi and Lidl were cheaper than Walmart, at better quality. I remember Walmart being more around Rewe level prices than Aldi and Lidl.

Another thing was the whole shopping experience being really awkward and strange there. Like having your groceries packed for you or someone fake greeting you at the entrance... uhm no thanks.
Reports of those Walmart morning cheers didn't help either with shaking of that feeling of awkwardness.

Since we got our products at Aldi, Lidl, Edeka, Kaufpark etc at fair prices with desired quality as we always have, no one really bothered to deal with the cringe that was Walmart which was hard to place in the quality spectrum.
Most people didn't bother to check them out in the first place as the market was competitive without Walmart already.

And let us not forget, that Walmart does not have a good reputation in the first place... To describe Walmart in one word, that word would be 'questionable': in business practices, atmosphere and quality. Not a good basis to succeed. And they haven't.

[SageFinance]

It’s not here in Australia either - our supermarkets are pretty solid. Only aldi coming here has had some success

[DaddyDebt]

Target tried to come to Canada and failed miserably!

[DisruptiveWealthCreation]

In the UK, Wallmart sold its ASDA shops to British billionaires in 2020 and since then life is better for all concerned. Great vid.

[LucidInvesting]

Great insights into this, thanks for posting!

[TheGamingCrow]

In a nutshell: Walmart failed because they didn't want to play by german laws.

[akmclemore]

Super informative video bro! I love it!

[darkredvan]

Additionally to what Vyse wrote below (which is all correct!) Walmart fell over it’s own stupidity and arrogance. They thought they could just send over an American manager, who could do business as usual in the US. He (or they) failed on too many levels to get it straight afterwards. Main areas where the management failed greatly: 1. they did not know nor did they oblige to several German laws. 2. They had no clue about German Unions and how to treat / work with them 3. They had no idea of German workforce, their mentality or rights, nor did they care 4. They had not the slightest clue about German customers, nor did they give a damn. 5. They did not listen to their (German) junior managers, who tried to warn them! Add to that crappy products at high prices, a very competitive market, lots of endless lawsuits and a very low profit margin of about 1-2% and a market share of 2-3% - a 100% bulletproof recipe to fail. AFAIK they were in Germany for about 9 years and lost about 3 Billion € (estimated).

[wafflebro]

I’ve never even seen a Walmart in my life

[WaysToWealth]

I wonder if they will go and buy a like minded brand like they did in the UK.

[called-matii]

Try to speak just a bit faster and with a little more enthusiasm and your videos will be so much better!

[tahmidahmed]

আরে মামা কেমন আছো অনেকদিন পর দেখা হলআমার থেকে তুমি টি-শার্ট নিয়েছিলে ওয়াও ওয়াজ