Filed under: Deals, Wal-Mart (WMT)
The world’s largest retailer, Wal-Mart Stores, Inc. (NYSE: WMT), has received shareholder approval from Japan’s Seiyu Ltd. to go ahead and complete the buy of the Japanese grocery retailer. Wal-Mart already owned a majority of Seiyu and now will buy the rest of what it doesn’t already own.
Wal-Mart must believe in the future potential of the company since it had a disastrous 2007 and what could be considered to be a murky past and a potentially shaky future. Ever since it bought a stake in Seiyu back in 2002, the Japanese company has not turned a profit (interestingly enough), and Wal-Mart’s attempt to turn around Seiyu’s fortunes won’t be easy given its past history of ownership in the company.
Analysts believe that Wal-Mart’s “low prices” approach culturally won’t work in Japan, where consumers equate low prices with low quality. Wal-Mart’s inability to misunderstand the German and South Korean consumer culture led to the retailer’s exit in both those countries in 2006, so why does it believe it can succeed in Japan?
Wal-Mart executives think the low price model could solidify a fragmented consumer marketplace in Japan, saying “Japan is quite different from Germany or South Korea. We realize they aren’t going to sacrifice quality, and our goal is to provide the ideal value combined with the quality they anticipate.” That’s much easier stated than done, so this may yet end up being just another international experiment for the world’s largest retailer — more than anything.
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