Why Walmart Is Failing In Japan

Summary

Walmart, a dominant force in the US retail market, struggles in Japan due to cultural misalignments and intense competition. Despite initial investments, Seiyu, its Japanese subsidiary, has faced declining market share, hampered by consumers' preference for fresh, locally sourced food and a differing shopping approach. While competitors like Aeon thrive, Costco successfully offers a unique shopping experience. To revive its presence, Walmart has partnered with Rakuten for an online delivery service, aiming to cater to Japanese consumers' preferences. The success of this venture could determine Walmart's future in Japan.

Takeaways

• 🏆 Walmart dominates the US retail market, generating over $500 billion in revenue in 2018, with a significant portion from American consumers.
• 🇯🇵 Walmart has struggled in Japan, leading to speculation about selling its subsidiary Seiyu, a chain of supermarkets and hypermarkets.
• 📉 Seiyu has faced challenges in a crowded Japanese food retail market, competing against convenience stores, drugstores, and online marketplaces.
• 🔍 Analysts suggest Walmart's difficulties stem from a lack of understanding of Japanese consumer preferences and cultural nuances.
• 🥩 Japanese consumers prefer fresh, locally sourced foods, while Walmart's low-price strategy confused them, as they favor specific deals and sales.
• 🔄 Seiyu's market share in Japan is only 12%, significantly lower than competitors like Aeon (45%) and Ito Yokado (14%).
• 🌏 Walmart's international struggles aren't unique; other retailers like Tesco and Carrefour have also exited the Japanese market.
• 🛒 Costco stands out as a successful international retailer in Japan, attracting consumers with a unique shopping experience despite having fewer locations.
• 🚚 Walmart is attempting to pivot by launching an online delivery service in partnership with Rakuten, aligning better with local consumer habits.
• 📈 If Walmart can adapt its strategy to focus on local preferences and enhance its online presence, it may improve its performance in Japan.

Q & A

What is Walmart's revenue in 2018?

Walmart brought in more than $500 billion in revenue in 2018.

What percentage of Walmart's sales came from American consumers?

Americans accounted for more than three-quarters of Walmart's sales.

Why did Walmart consider selling its Japanese subsidiary, Seiyu?

Walmart faced challenges in the crowded Japanese retail market, where competition from convenience stores, drugstores, and online marketplaces was intense.

What strategy does Seiyu use that is similar to Walmart's in the US?

Like US Walmart locations, Seiyu uses an everyday low-cost business plan.

What were the sales preferences of Japanese consumers that Seiyu failed to meet?

Japanese consumers prefer fresh, locally sourced foods and enjoy seeking out specific deals and sales, rather than a uniform low-price strategy.

How did Walmart's understanding of Japanese culture affect Seiyu's performance?

Analysts believe Walmart's lack of understanding of Japanese consumer preferences hindered Seiyu's ability to compete effectively.

What was the market share of Seiyu in Japan compared to its competitors?

Seiyu had a 12% market share, while competitors like Aeon and Ito Yokado had 45% and 14% respectively.

What other international retailers have struggled in the Japanese market?

Tesco and Carrefour also faced challenges and exited the Japanese market, with Tesco selling its outlets to AEON and Carrefour selling its outlets in 2005.

How has Costco managed to succeed in the Japanese market?

Costco created a unique shopping experience that appealed to Japanese consumers, despite having fewer stores than Seiyu.

What recent partnership did Walmart enter into to potentially improve its performance in Japan?

Walmart partnered with Japanese e-commerce platform Rakuten to launch an online delivery service using Rakuten's platform and Seiyu's merchandise.