Wal-Mart's troubled journey in Japan started with the acquisition of one of the largest supermarket chains in 2002. Walmart initially acquired around 6% stake in Seiyu. Afterwards Walmart increased its stake in Seiyu making its own subsidiary (in December 2005). In 2007, Walmart made a tender offer and acquired all outstanding and issued shares in Seiyu. Walmart's stake in Seiyu increased to 95% from 60%. Walmart also took other steps for the acquisition of all remaining shares; as a result, Seiyu shares were delisted from Tokyo Stock Exchange in 2008. In the same year, Seiyu became Walmart's wholly-owned subsidiary. Walmart established Walmart Japan Holdings Godo Kaisha, in 2009(Ann & Hudson 2006, pp.7).
Walmart successfully expanded in Japan through the acquisition of Seiyu, but afterwards the strategy has hit back the company. Walmart faced many problems, similar to those which it faced in South Korea, and most of these problems were related to providing locally tailored services. Specifically speaking, there were two broad issues faced by the company in Japan, cultural issues and distribution problems. Company has made many efforts, but Seiyu acquisition has remained a big problem for the company. Company has not been able to make any profits from Japanese subsidiary. Japanese culture is unique, as the culture of most of the countries, and therefore, Walmart's tag of low priced everyday good, has not worked because low prices have resulted in low quality, unsustainable goods. In Japanese culture, high quality is related to high price, i.e. people tend to think that if a product is expensive, only then it has a good quality. Japanese consumers are also found out to be willing to pay high for quality products (Anthony 2007, pp.2).
Japanese people also readily pay higher for space; therefore, the low priced perishable goods sold by Walmart stores are not appealing to Japanese Lifestyle. Walmart, facing all these issues, has been pushed to develop monolithic strategies for each market in enters. In Japan, “Everyday low Price” is resulting in “worthless” or, even it is viewed as insult to Japanese culture. It can be asserted that the basis for all these problems is the failure of Walmart's management to understand the culture of The Rising Sun. Yet, another problem faced by Walmart Japan is the poor location of stores. Most of Walmart's stores are located at the outskirts of main urban centres, whereas urban population is dependent on public transport and finds it difficult to shop from outskirts (Anthony 2007, pp.2).
Other than these problems, Walmart has also faced the issue of logistics. The main issues are the Japanese grocery business is considerably different than of North America. Consumers in Japan rely on regionally harvested products, and local food preferences are different in various parts of Japan. Walmart has relied on centralized distribution system so far.
Walmart in North America enjoys a price advantage due to centralized distribution system, while Seiyu subsidiary is on the similar level as other ...