This Is Not America: Why Wal-Mart Left Germany (2006)
atlantic-times.com
atlantic-times.com
> Another fatal flaw was that Germany's retail market is already saturated with discounters such as Aldi and Lidl, meaning that any new arrival inevitably finds itself in the midst of a cutthroat price war.
Walmart's model is to do high volume at low margins with a highly optimized supply chain. But that is already exactly the model of Lidl and Aldi, and there's not a lot of room to beat them at that game.
When Aldi came to Dallas a few years ago (I'd like to say 2010-2011ish), they started a price war over milk that resulted in milk prices in Dallas plummeting to 1960 levels.
Edit: Source: http://www.wfaa.com/story/money/consumer/2014/08/10/13621020...
Your basic economic forces take it from there. Dairy farmers are like any other business in that many can stand to be more efficient.
Dairy farmers in the UK were complaining that some supermarkets were paying them less for a litre of milk than what it cost them to produce the milk. After protests from farmers, those supermarkets - which included Aldi, Lidl, Asda (owned by Walmart), and Morrisons - agreed to pay more for the milk price.
The cost of milk is pretty cheap in the UK. Four pints (2.27 litres) of fresh (not UHT) semi-skimmed milk is usually 90p to £1 in most UK supermarkets (that'a approx €1.37 or $1.50)
"Dairy farmers are like any other business in that many can stand to be more efficient."
I don't know if farming practices are inefficient in the UK, but it's worth asking: what does efficiency mean when it comes to farming and animal welfare? I don't want to see dairy farmers go out of business or for milk to be imported. And I don't want to see more "zero grazing" farms where intensive indoor grazing is the norm and cows have little or no outdoor access. Intensive farming methods like this are already used in the UK and continental Europe and look set to grow. Perhaps it's really for us as consumers to ask: what price are we prepared to pay for milk?
Or get rid of the stupid cows already.
I doubt that people will drink much more milk because it is cheaper. What happens is that supermarkets don't care if they loose money with one product because what counts is the average of the basket. So what happens is that milk producers will pay the price of a marketing operation.
http://www.chicagotribune.com/business/ct-aldi-expansion-hir...
ALDI Nord owns Trader Joe's in the USA, and that chain is doing great business as well.
FYI to those unfamiliar with Aldi: their (grocery) stores are fairly small, run in a seriously minimalistic manner. Products are usually presented either on their shipping palettes, and/or still in volume cases - customer does some of the unpacking. Most products are "made for Aldi" or otherwise sourced from bottom-price manufacturers. Variety is nearly nonexistent. Typically (at least in every store I've seen in USA) there are only two employees at any time - one acting clerk, other stocking/cleaning. Credit cards are not accepted; before debit cards, it was cash only. Aldi seemed the last store to use barcode scanners, clerks having literally memorized the codes for every product in the store and could process checkout nearly as fast (sometimes faster) than barcode scanning. Stores are very clean & simple.
You'd be hard-pressed to beat that cost-cutting business model.
Here in Spain, almost all of the shopping carts from every chain works with deposit, the coins accepted are 50 cents, 1 euro, 2 euro
And almost no chain gives you free bags
Aldi Nord owns Trader Joe's and Aldi Süd owns the North American grocery stores.
Q: "Why is my local Aldi store not listed in the phonebook?"
A: Because phones cost money for subscriptions, and store personnel that picks up the phone doesn't bring in money.
No, that's not what their FAQ says, but generally believed to be true. Shops also don't have toilets for customers, and I remember a story about a shop that didn't have one for its personnel, either, but that may have been an urban legend.
The pretend-premium version of cheap simply would not work in Germany, because kills trust in the value of the actual products sold. Over decades, the (maybe at most semi-true) idea that products bought at Aldi or Lidl will provide high value despite their low price because all the saving comes only from cheap presentation has taken deep roots in the public consciousness. And this is where cultural differences really put Walmart in a pinch: even if they are firmly in the proud-cheap camp (which neither I not the general public would know), transplanting American service ideas like excessive greeting or the whole bag-packing thing (even just getting a bag for free is considered borderline wasteful) would give the exact opposite impression. Premium presentation, that combines with cheaply sourced goods into a very toxic "faux-quality" image.
I hate to be defending Aldi's rep (or the allegedly faux idea), but as a regular shopper in Germany'S four major chains (Edeka, Rewe,Lidl, Aldi), I must insist: Aldi/Lidl ARE providing a good price-to-value ratio for customers :-)
Of course, with the organic & premium chains popping up the last decade(s) you can get better quality. But those high-quality shops are making up just a small share of the market [1].
Their competitors (REWE/EDEKA) will offer you a wide range of [lets say Beans], ALDI/LIDL will offer you just one. But while that one usually has the quality of the competitor's most expensive version it comes with the price-tag of the competitor's cheapest.
[1] http://de.statista.com/statistik/daten/studie/4916/umfrage/m...
Edeka and Rewe are already out of the cheap range. Mainstream with cheap options very chose to the discounters and very far from the prices in the tiny organic/luxury segment, but still clearly distinguishable from the strictly cheap places.
Ah, Germans. Gotta love the directness of the culture. Keeps things real.
I also have to ask what they entail at walmart? Ya for no heath insurance, Ya for working but having to be on food stamps, Ya for not enough hours to support my family?
I don't know any Spanish, Portuguese, French or Italian that doesn't find that ridiculous
When you write about "the directness of the culture" I find it telling, that Wal-Mart sees its methods as "people-centered" while the competitor's German CEO sees them as "all about budgets, not customers"
Well. Culture beats strategy
I love when people think they can learn about a new market from their comfy office an ocean away
http://www.theglobeandmail.com/report-on-business/small-busi...
Half of the shelves were actually empty. Clothes were of extremely low quality.
They just did not do anything right.
I think it's because Wal-Mart's been in Canada and people have grown used to the stores being there. Target was new, and it's way harder to overcome a screw up when new. Once the competition disappeared, things got more pricy in Wal-Mart so the Canadian consumer lost in various ways during this process.
I'm not sure they could have screwed up Target more if they tried. Perhaps this was all a tax write-off?
Locally walmart means absolute junk quality for poor people who wait in long lines. The description of Germany is a good fit for retail in general, but not walmart. This truth can't be stated in a commercial publication, walmart spends too much money on advertising, but I think it fairly obvious.
Now Target could have possibly made it. Or maybe walmart could have made it in far southern or eastern Europe in very poor areas.
We do have some more upscale supermarkets, but there's generally little variance in quality among the discounters. Although Lidl does have by far the best store brand (J.D. Gross) chocolate.
Of course, if you visit one in the red light district it's going to be a different experience.
Also, Germany has places like Kaufland and Rewe (in addition to Aldi) that have certain items much cheaper than Walmart. I found that milk, rice, bread and cheese were all cheaper there than in the US... and better quality for some reason too.
How often will grocery-buying customers from one country be shopping groceries while on vacation? And would a recognizable brand really leave the customer with an advantage? E.g.: If I were an American in Germany, yearning for Twinkies, which are nowhere to be found in regular stores in Germany, would I or Walmart be really better off, by also-not-finding-them in the German Walmart too?
Exactly because they want to do it their way
It's not about foreign people, it's about a different way of doing stuff
Walmart may be bad for groceries, but it sells a lot of other stuff, which is an area Aldi/Lidl doesn't touch
But when they do, sometimes they even beat direct-from-China pricing, by up to a 60%. Which is pretty impressive if you were to ask me.
But they pretty much don't guarantee availability of anything, it's what's on the shelves (at least on the smaller ones)
I guess they beat direct-from-China price by volume and cheaper freight