A Clash of Civilizations

The paradox of travel is that it can broaden your horizons while making your world seem smaller. And that can be a recipe for confusion. Last month, I spoke to a promotional marketing seminar in Frankfurt, Germany. Since Wal-Mart had just made the shocking announcement that it would be selling its 85 German stores and exiting the market entirely, I was curious to get a local take on this development. Braced for what I assumed would be typical Euro-grievances (Americans are arrogant, too much McFood, George Bush is a cowboy, etc.), I was surprised when the entire room -- almost in unison -- condensed the near-decade-long defeat of Wal-Mart in Deutschland into three little words: "Preis. Preis. Preis."Now hold on thar! I come from a land of "baseball, apple pie, Chevrolet and Wal-Mart, the low-price leader -- Always." Call us names if you want, but you'll see Greeks beating NBA All-Stars before any retailer undercuts Wal-Mart. Right?According to this roomful of locally experienced packaged goods marketers, asking employees to do things like "The Wal-Mart Cheer" didn't help, nor did having four different CEOs in the first four years, including some who evidently did not sprechen sie local dialect. Then there were the various Teutonic laws that restrict stores to 80-hour weeks, preventing Wal-Mart from operating 24/7 -- a feature that, along with maintaining a superior in-stock position, are key services we Americans take for granted. By more fully appreciating just how extraordinarily preis-sensitive German shoppers really are, seminar attendees argued that German chains like Aldi (Albrecht Discount) were able to marshal their local buying power more effectively than Bentonville could globally. The typical Aldi store lays out a mere 4,000 SKUs of packaged goods and produce next to special purchases of items like hangers, towels, computers and/or house-paint within a relatively tiny, no-frills store with low fixtures. This is considered "hard discounting" at its finest. Aldi is big on store brands, as is commonplace throughout Europe. The merchandise not only carries ultra-low prices, but also is said to be of very good quality. At the seminar I attended, one speaker even noted that in the eyes of at least some German shoppers, "Aldi equals Armani."(Talk about a clash of cultures: The Aldi outlet nearest my house in Chicago makes Wal-Mart look like Tiffany's.) Business Week and other publications have documented the various missteps Wal-Mart made in Germany. At the risk of over-simplifying what I am sure was a devilishly complex situation, this should suffice: Wal-Mart wound up in the "muddled middle" in Germany, failing to earn a reputation either for having the lowest prices or being tops in service.While a few competitors might be chuckling at Wal-Mart's predicament (they call that "schadenfreude," by the way), it should serve as an object lesson to any CPG marketer preparing to take their brands global. Yeah, Nike is a household name worldwide, and they are wearing Apple iPods all over Guangzhou these days. They are the exceptions, however. When it comes to retailing, the folks in Bentonville are as sharp as they come. Nonetheless, even they were tripped up by nuances in a country that, on the surface, would seem to be relatively familiar territory. Being from Wisconsin, a land of bratwurst festivals, sauerkraut factories, strudel shops, cuchen bakeries, gourmet pretzels, breweries, Oktoberfests, Rathskellers, Saengerbunds, Lutheran churches, New Berlins and Germantowns, I felt right at home in Frankfurt. Except for one little detail: Cheeseheads actually like their Wal-Mart stores. When it comes to extending your in-store marketing efforts internationally, you would be wise to always plan for the worst: Germans are from Mars, and Americans are from, well ... Arkansas.

A Clash of Civilizations

P2PI MEMBERS

JOIN P2PI

Business Topic

Company

P2PI MEMBERS

JOIN P2PI

Related Articles

Business Topic

Company