What went wrong with Walmart in Japan, China, and South Korea? – Research by Dr. Deepak Halan from Jaipuria Noida

India does not allow foreign investment in multi-brand retail however, there are many countries that do so. Today Walmart operates about 10,500 stores and clubs in 20 countries. Getting here has been a long and demanding journey, with success in some countries and not-so-good-of-an-experience in others. While Walmart prospered in markets closer to the U.S., like Canada and Mexico, its presence in Asia and Europe was much more challenging to manage. It is crucial to study the challenges and issues encountered by retailers such as Walmart.

What were Walmart’s experiences in three major East Asian countries – Japan, China, and South Korea and why was the retailer not as successful as compared to several other countries?

Dr Deepak Halan from the Jaipuria Institute of Management, Noida (India), set out on a journey to comprehensively review relevant literature to gain rich insights. The content analyses of the literature review delivered 60 different reasons behind Walmart’s failure in Japan, China and South Korea.

Further studies revealed that about three-fourths of the insights were related to various normative aspects such as competition, consumer, human resources, supplier, manufacturer, the general public, media, and community forces acting on Walmart’s operations that diverted the global retailer away from success. Amongst these, almost half comprised those related to consumer-related forces, i.e. pertaining to the economy, consumer preference, location, price, product mix, and promotion.

In South Korea, customers found the shelves in Walmart stores at a considerably greater height than those in the domestic outlets, compelling them to use ladders or reach out uncomfortably for products. Also, shoppers wanted freebies such as product samples. However, Walmart could not meet this requirement as it was in conflict with its Everyday Low Price (EDLP) strategy.

Japanese culture is associated with ‘long-term thinking’ and inculcates making purchases in small amounts. However, Walmart’s model promotes bulk buying, wherein consumers tend to buy unnecessary items. Moreover, in Japanese households, most f ridges were almost two-thirds the size generally found in American homes. Also, Walmart was pushing products made in China into the Japanese market, which were perceived to be low cost and low quality, given the Japanese pride for manufacturing superior products.

Further, several of Walmart’s rival supermarkets in Japan were also running various promotional campaigns, and based on their timings, the shoppers decided when to purchase some particular items. However, since EDLP was the foundation of Walmart’s marketing strategy, it only offered a few sales promotions. Hence, despite the prices being attractive, Japanese shoppers could not appreciate Walmart’s marketing strategy.

In China, shoppers wanted dependability and high quality while shopping from overseas brands and did not mind paying a premium price. However, Walmart was perceived as risk-prone and tacky, given its EDLP positioning. Retail firms can learn immensely from the issues experienced by other retailers like Walmart while formulating their globalisation strategy.

The full research paper can be accessed here Halan, D. (2021) ‘A critical analyses of Walmart’s expansion into three Asian countries, International Journal of Business and Globalisation.’ https://www.inderscienceonline.com/doi/full/10.1504/IJBG.2021.117407.2021/01/01,

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