Wal-Mart and Aldi: Two Retail Giants in Germany

Abstract

Wal-Mart entered the German market at the end of 1997 but is still running at a loss in its 92 stores. This article tests the hypothesis that there are two main reasons for Wal-Mart's problems in Germany. First of all, Wal-Mart is competing against very strong and well established deep discounters, especially Aldi. Secondly, there is the difference between the so-called Wal-Mart culture and German customer values. So far, Wal-Mart has not managed to close this gap or create a positive image in Germany. The first part of the article describes the differences between the two retail companies Wal-Mart and Aldi, whereas the second part focuses on the consumer perspective. Four hundred people were interviewed on the phone about their shopping behaviour in the city of Würzburg (northern Bavaria, 140,000 inhabitants). This survey is part of an international study also undertaken in Canada, Great Britain and China.

On being local and being successful in Korea: Tesco and E‐mart

“…: this affected store sales densities. We re‐emphasise that Factor 1 in our analysis indicated that store products were the prime evaluative factor (see again Gerhard & Hahn, ), even though E‐Mart patrons also displayed generally higher satisfaction levels regarding convenience and accessibility. At E‐mart, products were seen as more authentically Korean and the Korean food shopper is well educated on quality and authenticity.…”

“…Also, for all three retail chains, diversification into overseas markets has involved a mixture of successes and failures. For example, WalMart entered and soon left Germany – where Gerhard and Hahn () found that locals preferred familiar products offered by Aldi. Also, Carrefour entered and left England and Wales and Tesco entered and left the USA.…”

Lahr, Germany, as a microcosm of urban change examined through the retail sector

“…In addition to this, no money is spent on attractive stores, floors, or lighting; ads always look the same because no marketing experts are employed; few retailing experts are employed -new ideas are tested at three stores, and if deemed a success, are copied in other stores; and there are no storage rooms, the goods being sold from the boxes on plain shelves. The average stores size is about 800 square metres, and for this space there are only 4-5 employees (Gerhard and Hahn, 2005). This devotion to keeping prices low is clearly appreciated by the customers, as Figure 7.4 demonstrates, it is the prime reason that people shop at Aldi, followed by best value and best special offers (and can likely be largely applied to other similar discounters, ie.…”

“…Retail literature also helps establish some patterns of change (ie. Wrigley and Lowe, 1996, Heinberg, 2001, Popp, 2004, and Gerhard and Hahn, 2005. The large stores of the Griine Wiese and the new Arena demonstrate that there are some retail changes occurring in Lahr, namely taking away the focus on the inner city as the main location of retail activity, which is occurring in many German cities (Heineberg, 2001).…”

“…This is, I believe, the reason the discounters are so popular since the conversion to the Euro. Gerhard and Hahn's (2005) article states that German consumers have evolved into hybrid consumers. These consumers are described as not wanting to spend a lot of money on necessities such as food, but will buy an expensive or luxury good from time to time.…”