Deloitte Research's viewpoint on WalMart's entry into Japan highlights WalMart's global presence, competitive edge, and transformational impact on the retail industry. Key points include:
Wal*Mart's Competitive Strengths:
- Global Consolidator: Known for merging retailers and suppliers worldwide, Wal*Mart's consolidation strategy extends to Japan, potentially reshaping the local retail landscape through mergers and acquisitions.
- Learning Organization: Wal*Mart continuously learns from its experiences, applying lessons across operations globally. This includes adapting successful initiatives like the "George" apparel brand from its U.K. acquisition, ASDA, and implementing them in new markets.
Wal*Mart Model:
- EDLP (Every Day Low Pricing): Central to Wal*Mart's strategy, EDLP ensures consistent low prices, challenging competitors and maintaining customer loyalty. Achieving this requires stringent cost control and disciplined pricing strategies.
Wal*Mart's Approach to Japan:
- Acquisition and Transformation: WalMart's purchase of Seiyu marks the beginning of a long-term strategy to transform the company and Japanese retail. This involves leveraging WalMart's strengths in logistics, supplier management, and retail practices.
- Challenges: Entering Japan presents challenges such as navigating a complex multi-tiered distribution system, addressing real estate constraints, and understanding high consumer expectations for quality and selection.
- Strategies: Wal*Mart aims to acquire a Japanese wholesaler while integrating its Retail Link systems, potentially facing a decade-long process for full implementation. The company also plans to solve real estate issues through strategic acquisitions, recognizing the need for innovation in store sizes due to real estate limitations.
Impact on Japanese Retail and Suppliers:
- Competition: Wal*Mart's entry will significantly impact Japanese retailers, wholesalers, and suppliers, necessitating strategic planning to compete effectively.
- Transformation: The shift towards lower costs, improved efficiencies, and competitive pricing will force changes in the Japanese retail sector.
- Opportunities: For suppliers, Wal*Mart offers a chance to collaborate with a global leader, enhancing their business through shared benefits and improved performance standards.
Conclusion:
Wal*Mart's entry into Japan represents a significant shift in the global retail landscape, promising to reshape the industry through its unique approach to retail consolidation, learning, and competitive pricing strategies. The impact on local retailers and suppliers is expected to be profound, driving changes in operations, strategies, and market dynamics.