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As the recent news of Walmart’s struggles in Brazil (including the shuttering of over 60 stores) reveals, the size of your domestic success is no guarantee of success elsewhere.
As this report from Reuters highlights, there were myriad reasons why the US retail giant ran out of steam in Brazil, including labor problems, the strain rapid expansion put on the supply chain, tax and format issues. Some of these issues were clearly unforeseen, while others might have been identified with more thorough market analysis and investment in local expertise.
While Walmart has obviously made hugely successful forays into many different territories throughout the world, the trouble in Brazil is not the first time the company has proved to be a poor fit for a country.
Back in 1998, following the acquisition of companies Wertkauf and Interspar, Walmart launched in Germany. Less than a decade later, in June 2006, Walmart announced that they were closing all of their 85 stores in the country. As this article from the NYT reflected at the time, the root cause of failing to gain traction in Germany appeared to be a cultural conflict – for both staff and consumers. For example, the practice of starting the day chanting “Walmart! Walmart!” and being forced to smile at all times to shoppers sat oddly with staff, while the layout of stores designed for customers to linger were frustrating for shoppers used to buying quickly and efficiently.
Clearly for anyone looking to expand into a new market, whatever the industry, there are many valuable lessons to learn from Walmart’s issues.
At ARTÉMIA, we’ve been devising localization strategies for clients for many years – both US companies looking to launch overseas and companies seeking a foothold in the US. So if world domination is on your agenda, here are a few of my insights into getting started:
As I’ve already said, as Walmart found, just because a concept works brilliantly in one place does not mean it will automatically be embraced elsewhere. Conducting market analysis in a localization project goes far beyond understanding the competitive landscape, it means digging into the cultural landscape. This is a crucial step in establishing your brand messaging by territory. Does your product / service / offering bring something new to this market? Does it meet a need you hadn’t previously considered? What are the government regulations to consider? For example, if you operate in mHealth, what are the implications for breaking into a market covered by a national health service? Local, on-the-ground expertise can be invaluable here.
Culturally relevant communications
At ARTÉMIA, we partner with Magnum Group to ensure all messaging, content and marketing assets are both factually correct and take into account any nuances and potential missteps in meaning. Getting this wrong can make a brand look amateurish; at worst it can deeply offend and destroy any hope of building brand value and trust.
Understand the employer / employee dynamic
Another issue that cropped up for Walmart in Germany was its failure to understand the role unions play in the German workforce. What was the norm for Germany was seen as a potential conflict for the US retailer. Additionally, if you are setting up an office overseas, it’s important to get a handle on the corporate culture of that country to get the best out of employees. Of course, that doesn’t exclude anyone from bringing the most positive aspects of one culture to another.
Global expansion can be a costly endeavor. Whether you simply want to test the waters, or are ready to land, for more insights into building winning localization strategies, as ever, please get in touch.
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