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[CNN money.com] Wal-Mart: 'Auf Wiedersehen' Germany, Hello India
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2017-11-20 20:20
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Exiting Germany and South Korea a 'brilliant' move that will allow the No. 1 retailer to enter India and expand faster in China, analysts say.
By Parija B. Kavilanz, CNNMoney.com staff writer
July 31 2006: 7:23 AM EDT
NEW YORK (CNNMoney.com) -- Wal-Mart, a company that doesn't like to admit defeat, did so for the second time in months when it announced Friday that it would exit the German market where it's been hard-pressed to find success.
In May, Wal-Mart (Charts) announced it was pulling out of another challenging market - South Korea - where it operated 16 stores.
These setbacks may be humbling to the world's largest retailer, but some retail industry watchers say Wal-Mart is making some very clever moves at the same time......
Find this article at:
http://money.cnn.com/2006/07/28/news/international/walmart_international/index.htm?section=money_topstories
"It's a brilliant decision by Wal-Mart," said Love Goel, CEO of Growth Ventures Group, an investment firm focused on retailers. "Korea and Germany's retail market is too competitive. Secondly, consumers there really aren't aligned with Wal-Mart's core value proposition of offering bottom-barrel prices."
Freed of having to worry about cracking the difficult German and Korean markets, Wal-Mart will probably now aggressively forge ahead with its plans to enter and expand into more lucrative markets -- primarily India and China, Goel and others think.
This is more a necessity than a "would-like" for Wal-Mart given that the retailer is keen to capture international growth opportunities as it faces market saturation in the United States, where it already operates close to 4,000 stores.
In that regard, "Let's fish where the fish are biting," is becoming Wal-Mart's modus operandi, said Craig Johnson, president of retail consulting group Customer Growth Partners.
"Even for the largest retailer in the world, you're not going to hit a home run everywhere you play," Johnson said. "If it's not working in Germany and South Korea you have to redeploy your resources to a faster-growing situation with more opportunity."
India and China, he said, are the two biggest growth engines of the future for Wal-Mart. "Leaving Germany is smart. It takes just as much management attention to butt your head against the wall in Germany and Korea as it does to crank up the engine in China and India," he said, implying that Wal-Mart can't afford to do both.
A retail nirvana in the east
According to Goel, China and India have amongthe world's most lucrative retail markets, valued at $700 billion and $300 billion each.
China is ahead of India with 20 percent of its market characterized as "organized" with established retail chains, versus only 3 percent for India. India's remaining 97 percent is comprised of 12 million mom-and-pop shops.
"The $1 trillion Indian and Chinese retail sectors are much larger than Germany, Korea or even all of Europe put together," Goel said. Further, he estimates the retail sector in both countries will grow by at least 30 percent annually for the next decade.
Wal-Mart already operates more than 55 stores in China and is ramping up its growth strategy in the face of stiff competition from European supermarket operators such as French supermarket chain Carrefour and Germany's largest retailer Metro, which are expanding at a fast clip......
Find this article at:
http://money.cnn.com/2006/07/28/news/international/walmart_international/index.htm?section=money_topstories
By Parija B. Kavilanz, CNNMoney.com staff writer
July 31 2006: 7:23 AM EDT
NEW YORK (CNNMoney.com) -- Wal-Mart, a company that doesn't like to admit defeat, did so for the second time in months when it announced Friday that it would exit the German market where it's been hard-pressed to find success.
In May, Wal-Mart (Charts) announced it was pulling out of another challenging market - South Korea - where it operated 16 stores.
These setbacks may be humbling to the world's largest retailer, but some retail industry watchers say Wal-Mart is making some very clever moves at the same time......
Find this article at:
http://money.cnn.com/2006/07/28/news/international/walmart_international/index.htm?section=money_topstories
"It's a brilliant decision by Wal-Mart," said Love Goel, CEO of Growth Ventures Group, an investment firm focused on retailers. "Korea and Germany's retail market is too competitive. Secondly, consumers there really aren't aligned with Wal-Mart's core value proposition of offering bottom-barrel prices."
Freed of having to worry about cracking the difficult German and Korean markets, Wal-Mart will probably now aggressively forge ahead with its plans to enter and expand into more lucrative markets -- primarily India and China, Goel and others think.
This is more a necessity than a "would-like" for Wal-Mart given that the retailer is keen to capture international growth opportunities as it faces market saturation in the United States, where it already operates close to 4,000 stores.
In that regard, "Let's fish where the fish are biting," is becoming Wal-Mart's modus operandi, said Craig Johnson, president of retail consulting group Customer Growth Partners.
"Even for the largest retailer in the world, you're not going to hit a home run everywhere you play," Johnson said. "If it's not working in Germany and South Korea you have to redeploy your resources to a faster-growing situation with more opportunity."
India and China, he said, are the two biggest growth engines of the future for Wal-Mart. "Leaving Germany is smart. It takes just as much management attention to butt your head against the wall in Germany and Korea as it does to crank up the engine in China and India," he said, implying that Wal-Mart can't afford to do both.
A retail nirvana in the east
According to Goel, China and India have amongthe world's most lucrative retail markets, valued at $700 billion and $300 billion each.
China is ahead of India with 20 percent of its market characterized as "organized" with established retail chains, versus only 3 percent for India. India's remaining 97 percent is comprised of 12 million mom-and-pop shops.
"The $1 trillion Indian and Chinese retail sectors are much larger than Germany, Korea or even all of Europe put together," Goel said. Further, he estimates the retail sector in both countries will grow by at least 30 percent annually for the next decade.
Wal-Mart already operates more than 55 stores in China and is ramping up its growth strategy in the face of stiff competition from European supermarket operators such as French supermarket chain Carrefour and Germany's largest retailer Metro, which are expanding at a fast clip......
Find this article at:
http://money.cnn.com/2006/07/28/news/international/walmart_international/index.htm?section=money_topstories