Walmart’s failure in Japan

Please share!

As Walmart tried to bring the most convenient experiences to the Japanese in 2002, the giant company still failed to attract Japanese consumers with a loss of $117 million in 2004 (Bloomberg.com). The main reason is the lack of understanding of customer behavior.

Walmart and American consumer behavior

According to Mckinsey, even though the American economy has been improving after the global recession, only 20% of Americans feel optimistic. Especially American millennial moms, who are trying to save as much as they can. They are very sensitive to price and try to reduce prices through “comparing prices, using coupons or loyalty cards more often, seeking out sales and promotions, shopping at several stores to find better deals, and buying more products in bulk.” (citation) This is a reason why Walmart is so successful in America due to its strategy of low cost pricing and big warehouse-like design with a large selection of products. Moreover, Walmart’s all-in-one stores are convenient and creates a shopping experience for Americans to shop around, look at various products and brands, and buy in bulk.

Walmart and Japanese consumer behavior

Different from Americans, the Japanese are extremely demanding. This is a result of lack of time and space. Firstly, Japanese culture is collective that Japanese want to belong and be loyal to their firms. Therefore, overtime work or study is the way for Japanese to show their good spirit and self-sacrifice. According to Yahoo! Finance, 22% of Japanese employees “work 50 hours or more each week on average, well above 11% in the U.S., and 6% in Spain.”

 

 

Antenna shop

 

 

 

Japanese rely mainly on railways such as bullet train and subway because the system of the high speed rail network in Japan has high punctuality with average delay of 20 seconds. With their busy schedule, Japanese find public transportation very convenient to take a quick nap on the way to the workplace or back home. Therefore, the Japanese prefer to shop in small specialty shops (antenna shops) that are close to transport stations or near home. These antenna shops offer specialty products and dining areas with local cuisine, which are very convenient and time consuming. Because of lack of space at home, Japanese love to eat fresh rather than pre-packaged, and consume within a day. Therefore, they often go to local retail chains to buy live seafood that fits with Japanese taste and preference. They do not buy in bulk but in small quantity. Secondly, Japanese culture treats a customer as a guest with high respect and courtesy. This raises expectation of quality in Japan that Japanese demands high quality products and services. According to Wiley, competitors in Japanese market lean toward “product focus, not price focus.”Therefore, Japanese consumers interpret price cut (Walmart) as a low quality or trouble selling.

Sources:

http://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/meet-todays-american-consumer

http://onlinelibrary.wiley.com/doi/10.1111/1468-5884.00181/pdf

https://globalmarketingtoday.wordpress.com/the-real-world/case-study-1/

http://www.gotokyo.org/en/tourists/topics_event/topics/110829/topics.html

http://www.japanpolicyforum.jp/archives/discussions/pt20100930163209.html

https://www.bloomberg.com/news/articles/2005-02-27/japan-isnt-buying-the-wal-mart-idea

http://finance.yahoo.com/news/working-towards-death-in-japan-140758364.html

 

Please share!