What makes one product or brand sell like water or oil in one country and sit on the shelf like its toxic in another country? Look around the world in the last 20 years of globalization and you will see many successes along with some failures. Three of the largest retailers in the world are the American based Wal-Mart, French based Carrefour, and British based Tesco. Each of them is an incredibly successful multi-national retailer that sells just about everything from food to jewelry to electronics to clothes to home goods. And…..they have each failed in a few markets. Strangely, in some places one or two have succeeded while the other or others have not.



Wal-Mart failed in Germany and South Korea, Carrefour failed in South Korea as well while Tesco does well there, Tesco has failed in Taiwan where Carrefour has been successful, and Tesco has struggled in the United States ever since it entered the market in 2006. These failures are not limited to these big retailers either. Best Buy, the biggest electronics retailer in the United States pulled out of China in February and Mattel closed its six story Barbie store in Shanghai in March.

In the case of Wal-Mart in South Korea analysts say that Wal-Mart did not understand the South Korean market well enough to localize properly. The degree of localization is how much you design the experience and products for the local market. South Koreans were not looking for an “American” experience, but instead a more local experience from a global retailer. Wal-Mart has been successful in many other markets around the world, in those markets they were able to figure out the right mix of localization to win.

Best Buy is a customer service centric electronics retailer. They staff their stores with helpful representatives to help with all of your electronics needs and offer installation and home services as well. Best Buy’s customer service focus led them to become the top electronics retailer at home in the United States. In China local people are used to going to large electronics malls with many vendors to negotiate the best price. Best Buy tried the same customer service centric model and charged a higher price than local chains offering fixed pricing in China. Best Buy also purchased the Chinese electronics chain Five Star and plans on reopening in China under the Five Star name.

Tesco entered the United States with a big splash, opening about 200 stores under the name Fresh and Easy in 2006. Their idea was to open small neighborhood stores with easy to make meals and fresh food. Tesco did a lot of market research including living with families in California. Timing (12-18 months before the great recession), not so great locations, and a miss read of the market has led Tesco to consider withdrawing by 2013 if Fresh and Easy does not turn a profit by then.

Wal-Mart is thought to be successful in China because it dipped its toe in the market first to get a handle on how to localize. Expansion and further investment followed after they believed that they had figured out the right localization mix. Of course, Wal-Mart also likely learned from its mistakes in Germany and South Korea.

By; M.F.


Sources&Data/Information Links:

Top 250 Retail Companies (2010)
http://www.stores.org/2010/Top-250-List
Wal-Mart Leaves South Korea
http://www.nytimes.com/2006/05/23/business/worldbusiness/23shop.html
Tesco Leaves Taiwan
http://www.guardian.co.uk/business/2005/sep/30/supermarkets.tesco
Mattel Leaves Shanghai
http://www.businessweek.com/globalbiz/content/apr2011/gb20110421_445230.htm
Best Buy Fails in China
http://www.cnbc.com/id/41882157/Why_Best_Buy_Failed_in_China
Tesco Struggles in the United States
http://hbswk.hbs.edu/item/6462.html