Why Wal-Mart's Business Model Failed in Germany

July 14th, 2014

Despite huge success in the USA, Wal-Mart was unable to succeed in Germany due to several localisation failures.

Why Wal-Mart's Business Model Failed in Germany | One Hour Translation

When we discuss aspects of the translation business such as localisation and globalisation, there’s a tendency to be very abstract and theoretical about it. After all, most translation workers like myself only work on small parts of these projects – very low level. It’s hard to see the larger part – in fact, we’re often not even informed that what we’re working on, ultimately, is a localisation project at all. All we see is translation services for a text.

So it’s interesting to pause now and then and consider a real-life localisation scenario – one in which one of the largest corporations in the world failed utterly to penetrate a new market, largely due to localisation and globalisation mistakes. While the story of Wal-Mart in Germany is a few years old now and doesn’t involve any direct translation anecdotes, it still serves to illustrate the real challenges of taking business global: It’s less about words than culture.

Wal-Mart in the USA

Wal-Mart is enormously successful in the American market, and the Walton family is immensely rich as a result. Wal-Mart has a controversial relationship with its American customers already: Many people view the company as a behemoth that destroys mall businesses and Mom-and-Pop stores, pays its workers poorly, and treats them even worse. Yet everyone likes the low prices that Wal-Mart offers, and the convenience of its ‘everything in one place’ retail strategy.

You can distil Wal-Mart’s success to a few basics:

  • Resisting unions and discouraging employee fraternization, and carefully calibrating employment opportunities to keep everyone part-time to avoid benefit investments.
  • Under-pricing competition using economies of scale.

Why didn’t this work in Germany? Simple: No one bothered to translate Wal-Mart into German culture.

German Attitude

Wal-Mart brought its anti-union stance to Germany, apparently unaware that in Germany unions are more widely supported, and employees expect far fewer restrictions on their behaviour – and this expectation is shared by customers. So instantly, Wal-Mart had a public relations debacle on its hands because it didn’t think to adjust its approach for the local culture.

Little things underscored this: Wal-Mart trained its workers to bag items for customers, unaware that German shoppers view this as intrusive and worry they are being charged a hidden labour fee for the service. Instead of addressing this, Wal-Mart just ploughed ahead with its usual way of doing things.

Finally, Wal-Mart made no effort to be ‘German.’ Its first CEO in Germany spoke no German, and in general the company behaved as if it was a conquering army. It never made any successes in Germany and eventually sold its stores to competitors and pulled up stakes – but remains an abject lesson in how not to go about localising a business. Even an extremely successful business. The USA might be the largest market in the world, but it’s still just one market. What works there may not work everywhere.

Image courtesy finweb-hnonline.sk

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