Managing in Troubled Times Case Study

Wal-Mart’s Struggle in Japan

OR

Abstract:
In the 1980s, the Japanese retail market was dominated by local players like Daiei, Aeon and Ito-Yokado. The Japanese government started to encourage foreign trade and foreign retailers. With the entry of these retailers, the domestic retailers witnessed decline in their sales. To protect the interests of the local players, Large Scale Retail Store Law (LSRSL) was amended by the Japanese government in the late 1980s which restricted the entry and expansion of foreign retailers in Japan. In the 1990s, when the LSRSL was amended to encourage foreign trade in Japan, a few players like Carrefour and Costco to enter Japan. To encourage more foreign investment, the Japanese government abolished the LSRSL in 1998 and a few companies like Wal-Mart and Tesco started studying the Japanese market to make an entry into Japan. In 2002, Wal-Mart entered Japan through an alliance with a local player, Seiyu. In spite of Wal-Mart’s efforts, it witnessed loss consecutively from the time it entered the Japanese market. It was pointed out that the decline was due to its low pricing strategy which proved ineffective in Japan. Seiyu’s ineffective management was also cited as another reason for Wal-Mart’s downfall in Japan. To strengthen its position as a leading retailer, Wal-Mart implemented several strategies. It increased its investment in Seiyu to more than 50% and made the local player a subsidiary of Wal-Mart. The retailer also implemented several inventory management practices and attempted to streamline their supply chain operations. In 2006, to succeed in the Japanese retail market, Wal-Mart decided to introduce both high and low priced items as its popular selling strategy ‘Everyday Low Pricing’ did not seem to take off.. Despite Wal-Mart’s attempts, it remained to be seen whether the giant retailer would succeed in Japan or make an exit like it did in Germany and South Korea.

Pedagogical Objectives:

• Wal-Mart’s strategies to enter the Japanese retail Industry
• Wal-Mart’s Inventory management and supply chain management practices
• Wal-Mart’s sales strategies through high priced and low priced products.

Keywords : Japan; Retail; EDLP; LowPrice; Rollback; Seiyu; Daiei; Aeon; SMART; Managing in Troubled Times Case Study; Supplier; Japnese Consumers; Discount; Inventory