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Wal-Mart says <i>auf wiedersehen</i>

Lisa Napoli Jul 28, 2006

KAI RYSSDAL: The world’s biggest retailer is throwing in the towel. Wal-Mart said today it’s going to pack up and get out of Germany. It’ll take a loss of about a billion dollars for its failed eight-year European experiment. More from Marketplace’s Lisa Napoli.

LISA NAPOLI: Wal-Mart’s “If you build it they will come” model didn’t work in Germany for several reasons. First of all, before Wal-Mart arrived on the scene, there already were several other thriving discounters.

CLAUS ORDAMAN: Aldi and Lidl, which are huge retailers and they’re very, very tough in offering inexpensive products.

That’s Claus Ordaman, a German trade official in D.C. Gunter Dufey of the University of Michigan says in Germany, price trumps everything else.

GUNTER DUFEY: The German consumer, they think these extra services like baggers, free bags and somebody who helps you carry your stuff to your car, that this costs money and therefore you don’t get the best price.

In Germany, Wal-Mart also had to live by the country’s rigid labor policies, and it had a problem when it came to local business culture. German employees also didn’t appreciate American rules forbidding them to date other employees, or the ritual Wal-Mart sales pep talks.

DUFEY: That in Germany gives you the impression that this is simplistic, this is naive, this is not serious business.

International sales are serious business for Wal-Mart — it’s the fastest growing part of the business, with plans to open nearly 40 percent of its new stores overseas.

It might want to learn from its botched German adventure. Next time, take an immersion course in local culture — first.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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