Walmart in Brazil

Problems

From the case, we can find that Walmart didn’t operate as well as its managers expected. This result was mainly due to following reasons: the failure of establishing the brand name because of various competitions, the slow adaption to the Brazilian market, and the poor distribution operations

 The failure of establishing the brand name

Walmart failed to distinguish itself from other competitors. In detail, shoppers can easily find clothes and household goods in similar quality and price in Carrefour and higher-quality and fresher groceries in Supermercados Jumbo SA. This indicates that Walmart had no competitive edge when compared with other competitors. In other words, Walmart didn’t realize “everyday lower price” strategy in the Brazil market. As a result, being normal in the industry cannot establish a unique brand name and gain a sustain customer enthusiasm.

 The slow adaption to the market

Frankly speaking, Walmart was doing poorly in merchandise flubs and Brazil’s fast changing credit culture. To be more specific, the company initially imported items such as cordless tools and leaf blowers that were useless in the market. Also, it failed to take into account Brazil’s widely complicated tax system when applying bookkeeping system. Last but not least, compared with its competitors, Walmart slowly adapted to the postdated checks, which have become the most common form of credit in Brazil since 1995.

 Poor distribution operations

Walmart’s poor distribution operations are indicated from these tow aspects: the high cost in various merchandise stock, and the timely delivery issue. As the distribution problem is a key issue in the company’s operation, it will be discussed in detail in the next part.

Discussions

Cause of the distribution problems

High-level inventory was increasing the company’s operating cost and hurting its “everyday low pricing” formula. This fact is mainly caused by the lack of its own distribution system. In other words, Walmart cannot control deliveries nearly as well as it does in the United States. Apart from logistics issue, the company also met problems in communicating with local suppliers. Some local suppliers have difficulty meeting Walmart’s specifications for easy-to-handle packaging and quality control, forcing the retailer to rely heavily on imported goods. Eleven South American suppliers have taken umbrage at Walmart’s aggressive pricing policies and for a time refused to sell goods to the chain. As a result, the goods price is highly reflected by Brazil’s economic stabilization policies. In addition,