Executive Briefings

'Always Low Prices' Doesn't Pay Off in Japan?

The world's largest retailer has spent more than $1bn in Japan, but its Seiyu stores are struggling to overcome consumer apathy and employee distrust. Will Wal-Mart stay the course?
The heart of the problem, the naysayers argue, is that Wal-Mart's model of "always low prices" may work in developing, under-retailed markets such as China and Mexico, but it doesn't work in a country like Japan, where consumers are willing to pay top prices for exclusive goods of the highest quality.
"They need to completely change their strategy, but it's too late," says Tadayuki Suzuki, who worked at Seiyu for 20 years, is a former Merrill Lynch retail analyst, and now runs the retail consultancy Clio Research. "They are doing it totally wrong. They should pull out of the country and focus on China."
Source: Fortune, http://money.cnn.com

The world's largest retailer has spent more than $1bn in Japan, but its Seiyu stores are struggling to overcome consumer apathy and employee distrust. Will Wal-Mart stay the course?
The heart of the problem, the naysayers argue, is that Wal-Mart's model of "always low prices" may work in developing, under-retailed markets such as China and Mexico, but it doesn't work in a country like Japan, where consumers are willing to pay top prices for exclusive goods of the highest quality.
"They need to completely change their strategy, but it's too late," says Tadayuki Suzuki, who worked at Seiyu for 20 years, is a former Merrill Lynch retail analyst, and now runs the retail consultancy Clio Research. "They are doing it totally wrong. They should pull out of the country and focus on China."
Source: Fortune, http://money.cnn.com