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The impact of Wal-Mart's entry into the German and UK grocery markets

Author

Listed:
  • John Fernie

    (Heriot-Watt University, School of Management and Languages, Edinburgh EH14 4AS Scotland)

  • Barbara Hahn

    (University of Würzburg, Department of Geography, Würzburg, 97074 Germany)

  • Ulrike Gerhard

    (University of Würzburg, Department of Geography, Würzburg, 97074 Germany)

  • Elke Pioch

    (Manchester Metropolitan University, Business School, Manchester M1 3GH UK)

  • Stephen J. Arnold

    (Queen's University, School of Business, Kingston, Ontario K7L 3N6, Canada)

Abstract

Wal-Mart is the world's largest retailer with sales of $285.3 billion in 2004-2005; 20% of these sales are generated from international markets and it is two of these markets, Germany and the UK, that are the focus of the paper. The paper charts the entry of Wal-Mart into Europe within the context of increased competition in international markets among the “elite” group of transnational corporations which have the capability of disrupting the structure of foreign markets which they enter. Using a mixture of primary and secondary data sources, the purpose of the paper is to evaluate the success or otherwise of the implementation of the “Wal-Mart way” of doing business in Germany and the UK and to assess its impact on both markets. The results show that the German acquisitions have not been particularly successful because of the problems in integrating two disparate chains with different organizational cultures and a heterogeneous portfolio of stores. The highly competitive German grocery market has precluded Wal-Mart from realizing a key element of its global strategy-Every Day Low Prices (EDLP). Discounters, especially Aldi, are the price leaders in Germany. By contrast, the Asda acquisition in the UK has been much more successful. Asda was a good strategic fit for Wal-Mart and had already embraced aspects of the Wal-Martian retail proposition and corporate culture prior to the acquisition in 1999. The entry of Wal-Mart has led to a restructuring of the UK grocery market with low prices and value for money becoming key store choice attributes for UK consumers. [EconLit citations: F010, F230, L810]. © 2006 Wiley Periodicals, Inc. Agribusiness 22: 247-266, 2006.

Suggested Citation

  • John Fernie & Barbara Hahn & Ulrike Gerhard & Elke Pioch & Stephen J. Arnold, 2006. "The impact of Wal-Mart's entry into the German and UK grocery markets," Agribusiness, John Wiley & Sons, Ltd., vol. 22(2), pages 247-266.
    • Handle: RePEc:wly:agribz:v:22:y:2006:i:2:p:247-266
    DOI: 10.1002/agr.20083
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    References listed on IDEAS

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    Cited by:

    1. Rebecca Cleary & Jean-Paul Chavas, 2022. "Strategic supermarket pricing of private labels and manufacturer brands," Empirical Economics, Springer, vol. 62(6), pages 2921-2950, June.
    2. Herrmann, Roland & Möser, Anke & Weber, Sascha A., 2009. "Grocery retailing in Germany: Situation, development and pricing strategies," Discussion Papers 41, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    3. Hanf, Jon Henrich & Dautzenberg, Kirsti & Pall, Zsombor, 2009. "Making business with giants- impact of retail internationalization in Central and Eastern Europe," 2009 Conference, August 16-22, 2009, Beijing, China 50074, International Association of Agricultural Economists.

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