Walmart entered Japanese market by acquiring a 46 million dollar stake in Seiyu (world’s fifth largest supermarket retailer)

Sumitomo corp (leading trading company in japan) helped walmart effectively enter and expand in the market. Sumitomo increased stake in seiyu

Walmart and seiyu have different approach to management strategy, operations and marketing o Walmart specializes in large-scale general merchandise stores in suburban areaso Seiyu focuses on profitable grocery stores in city center locations

Walmart is expected to open new open spaced outlets Walmart can effectively relate to seiyu’s employees Walmart’s success will hinge on its ability to understand cultural nuances and properly convey

its message to both Japanese consumers and employees alike

Walmarts international expansion

Walmart relies on long-term opportunities outside of its domestic market to expand sales “our challenge is to rake up one-third of the company’s sales, and take our global scale to the

local level” Japanese consumers often equate bad quality with low prices

o Walmart has to be able to capture a distinct place in the hearts and minds of the Japanese customer as a retail destination that offers an abundance of quality goods at rock-bottom prices

Timing was right for walmarts expansion to Japan o Japanese economy was in the midst of a recession o People needed a discount retailer who could provide lower-priced goods

Through seiyu ownership, walmart has been able to avoid up-front building costs, giving itself a swift advantage over hobbled Japanese retailers

Walmart’s ultimate challenge: convince Japanese consumers that its everyday low prices don’t translate into poor product quality

Retail Environment in Japan

Japan is second-largest and one of the wealthiest economies in the world With many of its global competitors struggling, walmart sensed an opportunity to strike in japan Carrefour (world’s second largest retail chain) entered japan a month before walmart

o Designed to steal market share from fledgling retail players before walmart had a chance to streamline with seiyu

Walmart is confident it has learned from past mistakes and knows that getting into the market faster doesn’t necessarily equate to being better

o The bit-by-bit approach is the way to go in japan o Ultimate goal is to supersede the current network of suppliers and wholesalers (japan’s

multilayered distribution networks have made selling merchandise more expensive for retailers)

o If walmart is eventually able to supersede the wholesaler segment, they will be in a much better position to distribute goods at a cheaper cost (changing the nature of the supply chain in japan will not be easy)

Entry strategy: too slow or just right?

Current strategy is the best way to avoid growing pains and mistakes made in Germany and mexico

In a land where department stores rule, walmart sees overwhelming potential o There is concertn that such a deliberate pace will give the competition time to create

barriers Walmart’s retail link operation

o Inventory replenishing system