GeoJournal (2005) 62: 15–26 © Springer 2005

DOI 10.1007/s10708-004-1930-5

Wal-Mart and Aldi: Two retail giants in Germany

Ulrike Gerhard and Barbara Hahn∗

Geographisches Institut, Universität Würzburg Am Hubland, 97074 Würzburg, Germany; ∗ Author for correspondence
(Tel.: 0931-8885550; E-mail: barbara.hahn@mail.uni-wuerzburg.de)

Key words: Aldi, consumer behaviour, Germany, internationalization of retailing, Wal-Mart

Abstract
Wal-Mart entered the German market at the end of 1997 but is still running at a loss in its 92 stores. This article tests the
hypothesis that there are two main reasons for Wal-Mart’s problems in Germany. First of all, Wal-Mart is competing against
very strong and well established deep discounters, especially Aldi. Secondly, there is the difference between the so-called
Wal-Mart culture and German customer values. So far, Wal-Mart has not managed to close this gap or create a positive
image in Germany. The first part of the article describes the differences between the two retail companies Wal-Mart and
Aldi, whereas the second part focuses on the consumer perspective. Four hundred people were interviewed on the phone
about their shopping behaviour in the city of Würzburg (northern Bavaria, 140,000 inhabitants). This survey is part of an
international study also undertaken in Canada, Great Britain and China.

Introduction
Since the 1960s, but especially since the 1980s, more and
more retailers have been opening stores abroad. The interna-
tionalization of retailing has been accompanied by a growing
number of studies analyzing this process. One of the first
studies was published by Hollander in 1970. He described
how international retailers try to adapt to foreign markets
and analyzed why some companies do not succeed. One im-
portant reason for failure in a foreign market could be the
growing competition from local retailers who successfully
copy the new retailer. Later on, Kacker (1985) described
the differences between European and US-American retail-
ing. The internationalization literature since the late 1980s is
very well summarized by Akehurst and Alexander (1996a)
and Sternquist (1997), reflecting a broad variety of studies.
Treadgold (1988, 1990) and Alexander (1997), for example,
looked at the reasons for internationalization. These can be
the saturation of the home market, administrative restric-
tions in the country of origin, or the wish not to depend
on only one country. Due to Alexander (1990) and Ake-
hurst and Alexander (1996b), pull factors are more important
than push factors. The main reason for internationalization
is good opportunities on foreign markets rather than satu-
ration of the home market. Treadgold (1988, 1990) as well
as Dawson (1994) and McGoldrick and Davies (1995) de-
fine types of retailers and look at different strategies used
when entering foreign markets. E.g., retailers can form
partnerships with other national retailers, buy out other com-
panies or imitate successful competitors. Sternquist (1997)
emphasizes the importance of location advantages such as
cultural proximity, market size, competitors’ moves, geo-
graphical proximity and low cost land and labour. Hofstede
(1989) stresses the importance of cultural factors, too. When
comparing two international companies he discovered that
businesses have to be culturally aware when considering in-
ternationalization. ‘Cultural awareness is one of the subtle
factors of competition on world markets, and firms which
are better at it have a distinctive advantage over their com-
petitors’ (p. 390). He claims ‘that soft culture factors can be
measured and made visible beyond the level of assumptions;
if not with the precision of engineering measurements, at
least with the degree of accuracy of many other items of
management information’ (p. 397).
Since then, several studies on cultural differences have
been undertaken. For example, Myers (1995) analyzed the
importance of national borders and cultural differences by
interviewing 21 directors of large food retail companies,
and Severin, Louviere and Finn (2001) compared shopping
centre patronage in Canada, the United States and Norway.
However, there is a definite need for more case studies.
Our study looks at the acceptance of Wal-Mart in Ger-
many. Wal-Mart is not as successful in Germany as in most
other countries in which it operates. The first hypothesis is
that strong competition from deep discounters which domi-
nate the German market is the main reason for Wal-Mart’s
problems. Aldi is the oldest and most powerful of these dis-
counters. The other German discounters, of which especially
Lidl is catching up fast, are more or less following Aldi’s
strategy. For these reasons, Wal-Mart is compared to Aldi in
this article. Wal-Mart seems to have difficulties in gaining
the same image as Aldi or Lidl as a particularly low-price
store. It is important to learn what German consumers like
or dislike about Aldi and Wal-Mart. E.g., it is possible that
16
consumers think that Wal-Mart is more expensive than Aldi,
that they prefer smaller stores, or that Germans go shopping
several times per week and thus prefer stores they can walk
to.
The second hypothesis is that there are big differences
between the so-called Wal-Mart culture and German cus-
tomer values. Wal-Mart has tried to introduce its own ideas
such as the Wal-Mart Cheer, the Ten Foot Rule or exceeding
customer expectations by being grateful to the customers for
shopping at their stores. Seemingly, some aspects of the Wal-
Mart culture do not work in Germany or are not appreciated
by the German customer. In order to test these hypothe-
ses, 400 households were interviewed about their grocery
shopping behaviour following a standardized questionnaire.
Furthermore, the authors and their students have talked to
Wal-Mart managers and spent many hours in Wal-Mart and
Aldi stores viewing associates and patrons.
The retail sector in Germany – an overview
The German market with its 82 million consumers is domi-
nated by a few major players. In 2002, the top ten retailers
(food and non-food) had a market share of 55.1 percent (see
table 1). Aldi ranked at position 4 and Wal-Mart at position
13. Most of these retailers own several chains focusing on
different product lines and on different consumer groups.
Metro, the biggest German retailer has a very diversified
portfolio: Real hypermarkets, the department stores Galeria
Kaufhof and Galeria Horten, the home improvement chain
Praktiker and the wholesale chain Metro are part of this con-
glomerate. The Rewe-Group is, among others, the owner
of the Rewe and Minimal supermarkets as well as of the
Toom hypermarkets and the discounter Penny. Aldi and the
Schwarz Gruppe (Lidl, Kaufland, Kaufmarkt) only operate
in the discount sector, whereas Plus, another well-known
discounter, belongs to the Tengelmann-Group.
Germany has a mature and well-defined discount channel
and price differences are mostly lower than in other Eu-
ropean countries (CAP Gemini and Ernest & Young 2002,
p. 18). Since the 1990s, German retailers have increasingly
focused on low prices. They hardly ever stress good quality
or service in their advertising. Thus, most consumers today
take low prices for granted. For basics they often prefer dis-
counters, which have been extremely successful over the last
few years. This trend was reinforced by the introduction of
the Euro at the beginning of 2002. Due to an unfavourable
exchange rate (1 ¤ = 1.95583 DM), it appeared that prices
had gone up, even if this was not the case. Because the econ-
omy slowed down simultaneously, consumers became very
cautious and restricted their food budget. Discounters were
the winners. Aldi gained 15.7 percent while Wal-Mart lost
0.5 percent in comparison to 2001 (see Table 1) (Lebensmit-
telzeitung 2003, p. 3). The response of traditional retailers
was to refocus on price-competitiveness which was not easy
because in food retailing profits only amount to 0.8 percent
of sales in West Germany and to 0.5 percent in East Germany
(Greipl and Träger 2001, p. 32).
Store brands are one possible way of reducing prices
and make them less comparable. AC Nielsen estimates that
store brands in 2002 had a market share of 33.4 percent
if Aldi is included (1994: 23 percent) and of 20.8 percent
without Aldi. A study of the GfK (Gesellschaft fuer Kon-
sumforschung/ Association for Consumer Research) came
to the result that overall store brands amounted to 30 per-
cent (1994: 20 percent) (cited in: LZ, press release 16.04.03,
Ahlert et al. 2000, p. 36). Because it is hard to compete with
discounters it is generally agreed that non-discounters will
have to focus on promoting quality and freshness of products
instead of low price.
Another characteristic feature of the German retail mar-
ket is the dominance of middle-sized stores. In order to
prevent the retailing sector from suburbanization and to
keep retailers in the neighbourhoods, building codes have
been restricting the gross leasable area (GLA) for more than
three decades. Up to the 1960s, large retail facilities could
be easily built in the outskirts of the city. In 1968, the
German zoning law (the so-called Baunutzungsverordnung
BauNVO) restricted shopping centres and large retail facili-
ties (hypermarkets) to inner cities and especially zoned areas
(Sondergebiete) only (§11 BauNVO). The law has not had an
immediate impact, though, because all existing permissions
for building big units could still be realized. In 1977, the
law was specified: Retail facilities larger than 1,500 square
metres (16,129 square feet) were only permitted in special
zoning areas when their impact on surrounding facilities,
traffic, population and landscape was expected to be minor.
This proved to be a major hindrance for large retail invest-
ments. The threshold value was further lowered in 1986
to 1,200 (12,903 square feet), which even includes storage
and staff rooms. In practice, this limit equals a GLA of ap-
proximately 800 square metres (8,602 square feet) (Rudolph
2001, BauNVO §11 (3)).
At the end of the 1990s, hypermarkets with a GLA of
more than 2,500 square metres only generated 23 percent of
the sales and small stores with less than 100 square metres
had a share of seven percent (Rudolph 2001, p. 33).
Wal-Mart and Aldi: Two different success stories
Wal-Mart is not only the top retailer in the United States,
but also the global leader. Stores can be found in Argentina,
Brazil, Canada, China, Germany, South Korea, Mexico,
Puerto Rico, the United Kingdom, the United States, and
– most recently – also in Japan. Aldi, in contrast, ranks
only number 31 worldwide. However, the international share
of Aldi’s total turnover is bigger than Wal-Mart’s interna-
tional share (see Table 2). There are Aldi stores in Australia,
Austria, Belgium, Denmark, France, Germany, Luxemburg,
Netherlands, Republic of Ireland, United Kingdom and in
the United States (Deloitte Touche Tohmatsu, 2002, G7–
G9). The differences of the two companies are striking and
they both follow very different strategies. With increasing
globalization in retailing, the different strategies need to be
understood.
 17
Table 1.

Rank Company sales 2002 change market food nonfood

(¤million)1) 2001/02 (%) (%) share (%)

1 Metro-Gruppe 32,022 − 0.5 9,7 45 55

2 Rewe-Gruppe 28,622 − 2.4 8.9 69 31
3 Edeka/AVA-Gruppe 25,177 − 1.2 7.8 83 17
4 Aldi-Gruppe∗ 25,000 15.7 7.8 81 19
5 Schwarz-Gruppe∗,o 17,150 9.5 5.4 80 20
6 Karstadt Quelle∗ 16,050 − 2.1 5.0 6 94
7 Tengelmann-Gruppe◦ 12,463 4.3 3.9 62 38
8 Lekkerland-Tobaccoland 8,170 21.6 2.7 85 15
9 SPAR AG 7,539 − 2.6 2.4 92 8
10 Schlecker∗ 5,300 11.5 1.5 95 5

TOP 10 177,493 3.3 55,1

13 Wal-Mart∗ 2,875 − 0.5 0.9 50 50
Total 321,225∗ − 2.2 100
∗ Estimates, fiscal year, not calendar years, Source: Lebensmittelzeitung (2003), p. 6–8, EHI 2003,
p. 105,150, Statistisches Bundesamt 2004.
1) Due to the huge changes in exchange rates, the ¤has not been transferred into US §.
At the end of 2001 the rate was: 1 US §= 1.13 ¤, at the end of 2002: 1 US §= 0.95 ¤, at the end of Nov.
2003: 1 US §= 0.84 ¤.

Aldi not operate a press office. Until recently, figures on sales

In 1946, the Albrecht family’s small grocery store in the
former industrial town of Essen (North-Rhine/Westphalia)
was taken over by the two sons Theo and Karl. By 1950,
when they started to focus on low prices in combination
with a limited assortment, they had opened another twelve
grocery stores in the area. Until the early 1960s, the number
of stores grew to about 300. The two brothers split the stores
up into two regional companies in 1961: Aldi Nord and Aldi
Süd. The division line runs right through the densely popu-
lated North-Rhine/Westphalia. The Aldi Nord headquarters
is still in Essen and the Aldi Süd headquarters is located
only a few miles away in the neighbouring town of Mül-
heim. Theo became the owner of the stores in the German
north and Karl the owner of the south German stores. It
was also Karl who opened the first ‘real’ Albrecht discount
store in Dortmund in 1962, which was named Aldi (Albrecht
+ discount).
Even though there are two Aldi Companies in Germany,
they co-operate and follow similar strategies. The differ-
ences between the two companies are of minor importance.
Each of the two parent companies falls into smaller regional
companies which operate independently. The number of re-
gional companies is constantly growing. Whenever a critical
mass of 60 to 80 stores is reached, they are divided into two
smaller companies with 30 to 40 stores. This way the dis-
tances to the warehouses are constantly minimized and are
hardly ever more than 50 kilometres. In 2003, Aldi Süd was
divided into 26 and Aldi Nord into 35 regional companies,
totalling a number of 3,800 stores throughout the country
(Brandes 2001, p. 130; Lebensmittelzeitung 2003, p. 17).
Aldi is a very secretive company. Family members or
managers never give interviews which they consider to be
a waste of time. Aldi does not publish any reports and does
and profits could only be estimated. Due to the limited size
of the regional companies there was no obligation to pub-
licize. This only changed in 2000 when German laws were
modified (LZ, press release 13.02.03). Important informa-
tion was also given by the two former managers Brandes und
Roeb who started to publish articles and books on Aldi after
leaving the company (Brandes 2001, Brandes 2003, Roeb
1997).
Even though Aldi Süd and Aldi Nord follow the same
strategies, there is some evidence that Aldi Süd is better
organized than Aldi Nord. Aldi Nord also operates stores
in East Germany which are less profitable. Aldi Nord owns
more stores than Aldi Süd, on average the stores are a
bit smaller, but turnover/square metres is much lower (see
table 2).
When the Euro was introduced in 2002, Aldi reacted very
cleverly. Whereas most retailers increased prices slightly,
Aldi’s prices went down by about two percent on average
(LZ, press release 27.12.01, 24.10.02). This was part of
the reason why Aldi’s turnover grew by an astonishing 15.7
percent in 2002 (see Table 1) compared to strong decreases
among other retailers.
Aldi is always as cheap as possible and offers only a
limited assortment of about 700 different goods (Brandes
2003, p. 27). These are the most essential products and Aldi
never offers a choice. With very few exceptions, all goods
are store brands bought from independent producers (Roeb
1997, p. 357). Many of these produce well-known brand
articles for other stores as well. Due to its size, Aldi is able
to negotiate very good prices with suppliers, but is gener-
ally considered to be a fair partner. Because Aldi buys huge
quantities, each single article has a buying power of more
than ¤ 30 million per year in comparison to Wal-Mart with
a buying power of only ¤ 1.5 million for goods bought from
18
Table 2.

Wal-Mart Aldi

International Data
annual turnover 1) 218 billion § 32 million ¤
- share of international turnover1) (%) 16 38
- share of food1) (%) 34 85

Germany Wal-Mart Aldi Nord Aldi Süd

market share (%)2) 0,9 7,9

no. of stores1) 92 2,366 1,425
total GLA (million sq.m)1) 0,75 1,73 1,11
(million sq. ft.) 8,06 18,60 11,94
average sq. m / store1) 7,980 730 780
sq. ft. /store 85,806 7,849 8,387
annual turnover (billion ¤)1) 2,98 12,5 12,6
annual turnover / sq. m (¤)1) 3,970 7.278 11.232
no. of employees1)3) 17,000 19,500 19,000

1) EHI 2003, p. 152-154, 202

2) Lebensmittelzeitung 2003, p. 11
3) LZ, press release 13.02.03

German producers (Brandes 2003, p. 7). In Germany, the car park has become a familiar sight. In 2002, 76.4 percent
independent Stiftung Warentest constantly tests the quality of all consumers in Germany shopped at Aldi (1997: 65.6
of food and publishes the results in its monthly magazine. percent) (LZ, press release 18.09.02, Roeb 1997, p. 358).
If Aldi goods do not get the highest (very good) or second
highest mark (good), they are de-listed from the assortment.
Besides the regular assortment, Aldi offers about 30
Wal-Mart
additional articles, that change from week-to-week and
are advertised in newspapers under the headline ‘Aldi in-
Sam Walton started his career at about the same time as
formiert’ (‘Aldi informs’). These special offers are often
the Albrecht brothers. Like the Albrechts, he is a self-made
arranged around a common theme, which can be cycling,
man. In 1962, he opened the first Wal-Mart Discount City
the barbeque season or ‘back to school’. There are only a
in Rogers, Arkansas, a city of only 6,000 residents. In 1970,
limited number of these goods in the stores and often cus-
Wal-Mart went public and was listed on the New York Stock
tomers queue up outside before the stores open to purchase
Exchange. At that time, earnings amounted to ¤ 44 mil-
them. The newspaper ads always look the same because the
lion, but grew to ¤ 1.2 billion by 1979. Most of the stores
company employs no marketing experts and only very few
were located in small towns with up to 5,000 inhabitants.
retailing experts. Whenever someone seems to have a good
In the 1960s and the 1970s, Wal-Mart offered no groceries.
idea at Aldi, this idea is tested in just three stores. If it works,
These were only added when the first Supercenters with
the innovation is copied in all other Aldi stores.
more than 200,000 square feet (18.600 square metres) and
To sum up, Aldi’s main strategy is to be as cost effec-
more than 75,000 articles were opened in the 1980s. At the
tive as possible. The company does not spend anything on
same time Wal-Mart started to invade the big metropolitan
attractive stores, floors or lighting. Aldi stores have no stor-
areas. In 1983, the first SAM’S CLUB was opened. These
age rooms. Goods are sold right out of boxes, which can be
membership clubs sell a much smaller number of articles
found on simple shelves. The average store has only four to
(2,500 to 3,000 articles compared to more than 50,000 in a
five employees. The most important workers are the cashiers
traditional Wal-Mart store) at a very low price level. SAM’S
who are said to be the fastest in the world. Due to the limited
Club proved to be a very successful retail format in the USA.
assortment, they used to know all the prices by heart until
The first Neighbourhood Markets were opened in the late
scanners were introduced recently. In order to reduce the
1990s. Their average size is about 3,000 to 4,000 square me-
time looking for the code bar, Aldi forced producers to put
tres, offering about 20,000 products (Graff and Ashton 1994,
the codes onto three or even four sides of the product, instead
Ortega 1999, Schneider 1998, Vance/Scott 1992, Wal-Mart
of only one.
Stores Inc. 2003). At the end of the fiscal year 2002, Wal-
Furthermore, Aldi has recently lost its old image of being
Mart operated 1,568 Discount Stores, 1,258 Supercenters,
a store for the lower middle class and poor people. Many
525 SAM’S CLUBS and 49 Neighbourhood Markets in
Germans have become hybrid consumers who do not want
the United States. Wal-Mart strategies are EDLP (everyday
to spend a lot for necessities like food, but do not mind
low price), wide assortment, good customer service and a
buying expensive and luxurious goods from time to time
generous return policy (Wal-Mart Stores Inc. 2003).
(Schmalen 1996). A BMW or Mercedes parked in an Aldi

Whereas Aldi is a private company, Wal-Mart is a public
company listed on the New York Stock Exchange. For this
reason, Wal-Mart can not work as secretively as Aldi. In
contrast to Aldi, the American discounter has to publish an-
nual reports and hold public annual meetings. A Wal-Mart
museum in Bentonville documents the history and success
of the company. In its publicity, Wal-Mart underlines its
image as a company belonging to the people. The company
works on a low-cost, rural, down-to earth image based on
traditional US-values (Schneider 1998, p. 292–295).
Both companies work to the rules of lean management.
Wal-Mart’s head office is very basic and expense accounts
are minimized. But whereas Aldi uses as little technology as
possible, Wal-Mart is a high-tech company using satellite
communications and sophisticated inventory control sys-
tems. The system controls the distribution centres, handles
credit card approvals and gathers all kinds of data (Schneider
1998, p. 295, Vance and Scott 198, p. 249). In contrast to
Wal-Mart’s high tech system, Aldi refuses to accept anything
other than cash.
Wal-Mart entered the German market when it bought
21 Wertkauf hypermarkets at the end of 1997 and 74 In-
terspar hypermarkets a year later. Wal-Mart probably chose
Germany for its entry into the European market because it
is the biggest market in Europe and has a central location.
From Germany, it is possible to expand in every direction
within the European market. However, with all its regula-
tions the German market is considered to be difficult and
profit margins are lower than in other European countries.
Whereas Wertkauf was a homogeneous and successfully
operating company, Interspar was a very heterogeneous en-
terprise. Many stores were not working profitably and most
of the stores were in need of renovation (Berggoetz and
Laue 2002, p. 6). Most of the Wertkauf stores were located
in the southwest of Germany, whereas most of the Inter-
spar stores were concentrated in North-Rhine/Westphalia, in
Lower Saxony and in the German south (see map 1). On
average, Wertkauf stores had a GLA of 10,000 square metres
(107,526 square feet) and were thus about the same size as
a traditional Wal-Mart location in the US, whereas the In-
terspar stores differed in size and were mostly smaller. The
Interspar headquarters in Wuppertal became the seat of Wal-
Mart in Germany. The names of the stores were gradually
changed to Wal-Mart by September 1999. At that time, some
of the stores had not yet been renovated. This proved to be a
problem because customers began to associate the name of
Wal-Mart with the image of run-down stores.
Since its entry into Germany, Wal-Mart has not expanded
its store network. At the end of the 1990s, there were ru-
mours that Wal-Mart was going to acquire the German retail
chains Globus or Metro, but this did not materialize (Fernie
and Arnold 2002). In 2000, the company announced the con-
struction of another 50 Wal-Mart stores within the next three
years. By August 2003, however, Wal-Mart had opened only
four new stores in Germany, while closing seven others.
Obviously, Wal-Mart underestimated the strict zoning laws
which permit new large stores only in special zoning areas
(see above). The closures were part of a network rational-
19
ization since some stores were located in close proximity to
each other or because an old store was replaced by a new
one. In total, there are 92 Wal-Mart stores in Germany today
(August 2003). In April 2003, Wal-Mart again announced
the opening of 60 new stores in Germany over the next cou-
ple of years. Due to the scarcity of construction sites and the
restrictive German zoning laws, new stores with a GLA with
less than 5,000 square metres are now being considered as
well (LZ press release, 03.04.03).
Reported annual losses since the late 1990s ranged be-
tween ¤ 100 million (Newsweek, cited in Slater 2003,
p. 140) and ¤ 200 million (Business Week 03.09.01). In
2002, the company announced that the financial situation
in Germany had improved (Slater 2003, p. 141), but Ger-
man experts are still sceptical (LZ, press release 19.06.03).
The company no longer publishes any information about the
expected break-even point. It seems that Wal-Mart is still
experimenting in Germany and there are evidently manage-
ment problems. In May 2001, K. Hafner became CEO of
Wal-Mart Germany after three predecessors since entering
the German market in 1997. He is the first German CEO and
the first one who has not worked for Wal-Mart previously
(Gotterbarm 2004, p. 157).
In US Supercenters, food accounts for about 40 per-
cent of the stock. In the Interspar and Wertkauf stores food
amounted to 50 to 60 percent (O’Connor 1998, p. 56). Wal-
Mart kept this ratio – in contrast to its home stores in the
US – but slightly changed the assortment of about 60,000
different articles in order to consider the German consumer
as much as possible. German Wal-Mart stores, for exam-
ple, offer more pork than American stores and sell a wide
assortment of local wines and beers. German refrigerators
are usually much smaller than American ones and Germans
tend to have less storage room. Germans, therefore, are not
used to buying huge quantities of food or other items. For
this reason, Wal-Mart offers smaller sizes in Germany. As a
result, Wal-Mart stores in Germany differ slightly from the
US model.
Even though Wal-Mart is constantly increasing the share
of store brands, they still account for only 15 percent of
all articles (LZ, press release 23.10.03). So far, Wal-Mart
has not become a brand name in Germany. While Wal-Mart
has an immense buying power in the United States and is
therefore able to negotiate the best prices possible, it has
only limited power when buying German products. Due to
the small number of only 92 Wal-Mart stores, the company
is at a disadvantage when compared to Aldi. So far, the
company only has two warehouses (Bingen and Kempen)
in Germany, both located in the west of the country. It is
nearly 500 kilometres from these warehouses to the stores
in southern Bavaria or Berlin (see Figure 1, figures for Aldi
see above). Also, the distances between the individual stores
can be far. Thus, Wal-Mart needs more stores in order to
become an important player in the German retail landscape
(Fernie and Arnold 2002). Retail experts estimate that the
sales of Wal-Mart in Germany have to grow considerably
in order to work to its strength (cited in Gotterbarm 2004,
p. 186).
20
Consumer perspectives – the Würzburg case study
The general picture of the two retail giants in Germany
is strongly supported by the results of the consumer sur-
vey of 400 residents in Würzburg undertaken in winter
2002/03. The Würzburg retail market is very fragmented
(see Table 3). Eight major players can be identified, three
of which are deep discounters (Aldi, Lidl and Norma) and
two are supercentres (Toom and Wal-Mart). The Neukauf
Verbrauchermarkt GmbH owns a conglomerate of several
traditional chains, of which Kupsch und Edeka are the most
prominent ones in the Würzburg area. Kupsch is a former lo-
cal neighbourhood store and Tegut is a regional supermarket
chain.
Even though Wal-Mart and Aldi only account for two
respectively nine stores out of a total of 76, they are among
the shops visited most often. When asked which single store
people patronize the most, Aldi ranked highest with 20 per-
cent of all answers. It was followed by Kupsch (16 percent),
Tegut (15) and Lidl (13), Wal-Mart ranked sixth with nine
percent of the counts (see Figure 2).
Aldi and Wal-Mart in the eyes of the consumers
Within the last six months before the survey was carried out,
Aldi had been visited by 310 out of 400 consumers. It is
regarded as the store with the lowest prices, the best value,
the fastest cashiers and the best special offers (see Figure
3). These results correspond perfectly with the Aldi market-
ing strategy (see above): very economical, no-frill stores, a
limited number of staff, etc. but good value. Customers obvi-
ously appreciate this strategy: prices are the most important
reasons for preferring Aldi. The results also correspond with
the findings of the Cap Gemini survey (see above).
When asked about other reasons for choosing a grocery
store (e.g., store atmosphere, customer service and selection
of food), Aldi was not often mentioned. Here, more ‘radi-
tional’ stores such as Kupsch or Tegut obtained better results
than the discounters. People prefer them because they sell
local or organic products, they are close to their homes, and
the quality of fresh products is better – and they are also
willing to pay a higher price for these advantages. However,
people prefer Aldi when they want to buy basic groceries
and want to do economic shopping, even though it does not
qualify for one-stop shopping trips.
Due to the size of the two Wal-Mart stores – more than
ten times larger than an average Aldi outlet – Würzburg
consumers shop at Wal-Mart when they are looking for
something in particular, when they want a big selection or
when they want to do one-stop shopping (see Figure 4). This,
however, is not necessarily related to the particular Wal-Mart
image but rather to the sheer size of the store. Regarding
the small success Wal-Mart has had on the German retail
market the observed lack of a specific store image displayed
by the consumers in Würzburg might be part of the reason.
This interpretation is emphasized by the fact that 79 percent
of the respondents were existing customers who have not
changed their shopping behaviour since Wal-Mart took over
the former Wertkauf store. Also, Wal-Mart’s EDLP-market
strategy is not generally acknowledged by the customers.
They do not regard Wal-Mart as a particularly low price
store as is the case in North America. When the interviewers
compared prices for a random choice of products at different
stores in Würzburg this impression was verified: Taking into
account the difficulties in price comparisons due to different
product sizes, brand names and weekly specials, Wal-Mart
did not prove to be the store with the lowest prices. This
position was mainly held by Aldi, Lidl and Edeka – two of
them very successful German discount chains.
In comparison to other stores, especially Aldi, Wal-Mart
was regarded as distributing the most powerful ads and do-
ing the best advertising. This might be due to the fact that
Wal-Mart also advertises on television which is not very
common for other food retailers. Wal-Mart also showed
some strength regarding their fresh food selection as well
as store atmosphere.
Customer service, which is successfully marketed in the
United States as an outstanding characteristic of Wal-Mart,
is not related as closely to Wal-Mart in Germany: only 8.7
percent reported Wal-Mart as having friendly and helpful
staff, compared to 7.5 percent for Aldi (to emphasize the
rather small advantage of Wal-Mart: Aldi does not have any
sales personnel besides the cashiers!). According to the ob-
servations of the students conducting the survey, Wal-Mart
employees offer help when they are asked about the location
of a certain product. However, they hardly ever followed the
‘take the customer to the product’-strategy which is highly
praised by the company. Thus, the image of an especially
customer-friendly store cannot be supported.
Return policies have also been tested anecdotally. Dur-
ing the field work several heated debates on returning goods
were observed. This again does not demonstrate Wal-Mart’s
gratitude to the customers as announced in their core values
(see http://www.walmartstores.com/wmstore/wmstores/
Mainabout.jsp). At the same time Aldi is well-known
for accepting all returned goods immediately without any
discussion. Therefore it is highly questionable whether Wal-
Mart has really ‘lured the German customer with service’, as
announced by the company at the time of the market entry
in Germany (Pfäffle 1997).
Striking are the personal remarks respondents made
when asked to compare Wal-Mart with the former Wertkauf
store. Out of 75 answers, only 21 gave Wal-Mart a positive
connotation. Several respondents used the term ‘American’
as a negative metaphor. This rather diffuse description ex-
presses the fear of some Germans of American companies
taking over the German market. These and other individ-
ual comments are certainly of no scientific value because
they are subjective statements by individuals. However, they
reflect an atmosphere in the German retail landscape that in-
fluences the consumer behaviour and thus the success/failure
of retailers in Germany.
Such atmospheric criteria are of importance when com-
paring different cultures in retailing. Greeters or the morning
cheer of the employees were not adaptable to Germany. Ac-
cording to the answers given by the Würzburg respondents,
 21

Figure 1. Wal-Mart locations in Germany in 2003

Figure 2. Grocery stores in Würzburg and vicinity visited most often by interviewees.
22
Table 3.

Store name Numer of stores by location Total Average GLA (in sq.m.)

Aldi Würzburg: 7 9 approx. 800

vicinity: 2
Lidl (Schwarz-Gruppe) Würzburg: 6 7 700–800
Veitshöchheim: 1
Neukauf Verbrauchermarkt Würzburg: 20 35 500-900
GmbH (includes the following vicinity: 15
store chains:18 Kupsch, 13
Edeka, 2 Neukauf, 1 Diska, 1
Main-Center Filiale)
Norma Würzburg: 8 11 800
vicinity: 3
Rewe (Rewe-Gruppe) Würzburg: 1 4 750-1000
vicinity: 3
Tegut Würzburg: 5 7 1070
vicinity: 2
Toom (Rewe-Gruppe) vicinity: 1 1 8000
Wal-Mart Würzburg: 2 2 9.800/6.500
Total 76
∗ Including the following locations: Eibelstadt, Eisingen, Erlabrunn, Estenfeld, Gerbrunn, Hettstadt,
Höchberg, Kist, Margetshöchheim, Randersacker, Reichenberg, Rimpar, Rottendorf, Sommerhausen,
Theilheim, Veitshöchheim, Zell) Data collected by Gerhard, May 2003

customers do not give Wal-Mart credit for community in-
volvement or philanthropic activity (on a scale of one to
seven, these two criteria achieved a median value of 3.44
and 3.24 respectively which were the lowest values of a total
of 20 different reasons). For a more detailed comparison of
Wal-Mart core values and their acceptance among German
customers see Table 4.
Characteristics of Wal-Mart and Aldi customers
The frequency of visiting a store is much higher at Aldi than
at Wal-Mart. Whereas Aldi shoppers mostly go to their store
once a week, Wal-Mart customers go to their store only one
to three times a month (see Figure 5). Also, Wal-Mart is used
for comprehensive one-stop shopping trips, whereas Kupsch
seems to be more a kind of traditional neighbourhood store
that is visited even two to three times a week.
These observations correlate with the means of transport
people use to go to the store (see Figure 6). Whereas 94 per-
cent of the Wal-Mart customers take the car, this is only true
for 67 percent of Aldi customers. Kupsch, Lidl and Norma
are visited frequently by pedestrians (48 to 63 percent). On
average the distance travelled to all stores only amounts to
2 km, ranging from 1.1 km to get to Kupsch and up to 3.8 km
to get to Wal-Mart. Aldi customers cover a median distance
of 2.9 km to get to their store. This is obviously a result of
the density of the store networks.
The age structure of the customers tells us something
about store images as well (see Figure 7). Customers of all
age groups shop at Aldi and Wal-Mart, the share of visi-
tors between 25 and 44, however, is bigger at Wal-Mart.
The reason might be Wal-Mart’s family orientation. Kup-
sch, in contrast, appeals to the elderly, Lidl and Norma
to younger people, probably students. Wal-Mart shoppers
spend larger amounts on food per week than visitors to the
other stores. This supports the argument that people go to
Wal-Mart for extensive one-stop shopping trips when price
is not necessarily the biggest pull factor.
The overall outcome of the consumer survey underlines
the fragmentation of the German retail market. Consumers
seem to have a very clear picture of the strengths and weak-
nesses of the single chains and they deliberately choose a
specific store which can differ according to their purposes
and momentary convenience.
Conclusion
This survey proves the hypotheses that it is hard for Wal-
Mart to compete against the well established German deep
discounters, especially Aldi, and that there are big dif-
ferences between the so-called Wal-Mart culture and Ger-
man customer values. Most importantly, Wal-Mart failed to
achieve price leadership. Possibilities to reduce prices were
limited because of the low profit margins and it is illegal
to sell below the buying price in Germany. Whenever Wal-
Mart reduced prices, competitors did so as well. In the end,
all retailers met on a lower level (Fernie and Arnold 2002,
Gotterbarm 2004). In Germany, retailers can only offer low
prices if they have a vast supply network and producers ba-
sically depend on the one major retailer. This is certainly the
case for Aldi, but not for Wal-Mart. Wal-Mart has to increase
the number of stores considerably in order to negotiate better
prices and to improve logistics. However, expanding their
store network is not that easy. Due to the scarcity of new
development sites, Wal-Mart is looking for appropriate part-

Figure 3. 15 most important reasons for preferring Aldi to other stores∗.
Table 4.
Selected Wal-Mart Core Values∗
The Wal-Mart Cheer
Ten Foot Rule
Helping People Make a Difference
Exceeding Customer Expectations
“(...) we know it is not good enough to be
grateful to our customers for shopping at our
stores – we want to demonstrate our gratitude in
every way we can!”
Service to Our Customers (one of the three Basic
Beliefs)
“We want our customers to trust in our pricing
philosophy and to always be able to find the
lowest prices with the best possible service. (...)”
∗ Selected from http://www.walmartstores.com/wmstore/wmstores/Mainabout.jsp (April 28, 2004)
23
Acceptance among German Customers
After entering the market, Wal-Mart store
managers introduced the morning cheer.
However, employees did not join in the cheer
leading and it did not seem to work (see
Bergmann 2000).
The sales personnel in German stores hardly ever
approach customers when they come within 10
feet of a sales person – at least not in a food
store. German customers would even be
surprised or feel observed if it happened to them.
This is partly due to a smaller number of sales
staff in the stores.
When asked in the Würzburg survey about how
customers value the involvement in the local
community or which store is best in philanthropy,
German customers did not know what to answer:
They had actually never thought about it because
it is of no public importance.
German Wal-Mart associates do not feel grateful
to the customers. Rather the opposite! This is due
to a weakly developed corporate identity among
retail employees as well as a lower customer
service.
As shown by the survey in Würzburg, customers
do not trust Wal-Mart’s pricing policy. German
customers prefer to track down their own price
comparisons and then decide individually which
store to go to. The affiliation of customers to a
particular store is not very developed.
24

Figure 4. 15 most important reasons for preferring Wal-Mart to other stores∗.

Figure 5. Frequency of shopping trips to Aldi, Wal-Mart, Kupsch and

Figure 6. Customers preferred means of transport.
Tegut.

ners on the national market. So far, this strategy has not

worked out. Most of the existing companies either do not
fit into the Wal-Mart concept or are not for sale.
The company also has not succeeded in becoming
renowned for its good service. A manager of one of the two
Würzburg Wal-Mart stores admitted that it is hard to train
associates to be always as friendly as the Wal-Mart ideology
requires. The only obvious difference between Wal-Mart
and other retailers is that Wal-Mart’s shopping bags are Figure 7. Consumers age structure.
free. This, however, is not enough to create an outstanding
service, especially when the return policies are questionable.
So far, Wal-Mart has not managed to create a positive Obviously, cultural differences between US-American
and well-known image or to find a place of its own in the and German consumers prevent the successful acceptance of
fragmented German retail market. The survey proved that the Wal-Mart culture in Germany. Wal-Mart has learnt that
the other stores in the Würzburg area all occupy important as well. In 2001, the company confirmed that it had been
market niches. Kupsch, for example, is attractive because much more difficult to understand the German retail culture
the stores are located in neighbourhoods where people, espe- and to consolidate the two companies than anticipated (Zell-
cially the elderly, can easily walk to for their daily groceries. ner and Schmidt 2001). One year later two senior managers
Tegut is widely known for its fresh and especially organic of Wal-Mart in Germany were quoted as saying:
food selection and very high quality. Norma and Lidl are ‘Corporate culture not only requires supportive action
discount stores that lower income people and students prefer (intercultural training, coaching) but also time and pa-
for their basic shopping. tience in order to grow within an acquired company with

a cultural history of its own. There is no such pill as a pill
for cultural transformation’ (Berggoetz and Laue 2002,
p. 8).
Maybe, it was a mistake not to reduce the share of food
in the stores when taking over Wertkauf and Interkauf. It
was probably also wrong to take over the already estab-
lished German retailers instead of forming a joint venture.
Recently, Wal-Mart has entered Japan in a partnership with
an established Japanese retailer. If the partnership is suc-
cessful, Wal-Mart has the option to completely take over the
Japanese partner.
However, due to huge profits in the United States and
other countries, Wal-Mart has enough staying power to cover
the losses in Germany, whilst meanwhile working on a
stronger store image and appeal to the German consumer.
Wal-Mart is known for its ability of learning fast from its
mistakes. Despite all the problems, Wal-Mart executives re-
main positive, suggesting profitable German store operations
by 2004 or 2005 by the latest.
In the meantime, Aldi has to struggle with alert com-
petitors, too. The constant growth of other discounters such
as Lidl shows that the German grocery market is highly
competitive. Furthermore, it is constantly in flux. Therefore,
Aldi’s leading position is tested by several retail chains –
only one of which is Wal-Mart.
Acknowledgements
We would kindly like to thank the Social Sciences and Hu-
manities Research Council of Canada for their generous
research funds as well as Prof. Dr. Steve Arnold, Queens
University, Canada, for chairing and supporting the inter-
national survey. We also thank the other members of the
international team Prof. Dr. John Fernie and Dr. Elke Pioch.
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