Shoppers buy fish on sale at a Wal-Mart in Shenzhen
Zhong Guoyan sifted through piles of fish at a Wal-Mart in Shenzhen, one of China’s largest cities. She studied the fins, to make sure they were bright red and firm. She peered at the eyeballs — were they bulging?
“When I come here, I have a look,” she said. “If it’s good, then I will buy it. If it’s only cheap, I won’t buy it.”
In American Wal-Marts, customers don’t get to fondle their fish. But America is not China, as the world’s biggest retailer has learned. If the Arkansas-based company wants to win over foreign consumers, it has to shed some of its American ways, and cater to very different customs and conventions that are fast changing.
Zhong eventually tossed a couple of fish into a plastic bag — a small victory in Wal-Mart’s struggle to build an international empire.
The stakes are high: The company can’t count on much growth in the U.S. — it’s facing challenges at home with intense competition from Amazon.com and dollar stores — so the retailer is depending more on its operations overseas.
China is the ultimate prize. The Chinese grocery market, already the world’s largest at USD1.1 trillion a year, is expected to grow to $1.5 trillion in sales in just the next four years, says IGD, a global consumer products research firm.
“China remains a strategic market for our future,” Doug McMillon, CEO of Wal-Mart Stores Inc. recently told investors.
Getting the food business right is critical for Wal-Mart. Shoppers buy groceries more often than anything else. If Wal-Mart can get them in the door to buy food regularly, perhaps they will visit more frequently for items like pajamas and coffee makers — and eventually become loyal online customers, too.
The company has taken some lumps trying to cross borders in food retailing. Overall international sales growth dropped 9.4 percent last year largely because of the strong dollar. And while Wal-Mart’s overseas business had a strong start to this year, it faces long-term challenges. Wal-Mart gave up in Germany and South Korea in 2006. It’s closing stores in Brazil.
Overseas, Wal-Mart lacks the scale to squeeze local suppliers on price as it does in the U.S. It also faces nimble competitors. And it has struggled to duplicate its bedrock strategy of constant bargains.
But Wal-Mart has learned over the years from its missteps, discovering that it needs to adapt to local ways and that patience pays off.
In Mexico, Canada and Japan, it’s won shoppers over time. In Chile, it launched acorporate culture campaign and worked closely with suppliers to coax them into its way of doing business.
“Wal-Mart,” says Bryan Roberts of the London retail consultancy TCC Global, “is a very determined organization.” AP
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