V Wal-Mart Stores is finding out that what plays in Peoria isnǯt

necessarily a hit in suburban Sao Paulo

Ú Tanks of live trout are out; sushi is in
Ú American footballs have been replaced by soccer balls
Ú American-style jeans price at $19.99 have been dropped in favor of
$9.99 knock-offs

V ddapting to local tastes may have been the easy part

Ú Three years after embarking on a blitz to bring Dzeveryday low pricedz to
the emerging market of Brazil and Argentina
Ú Wal-Mart is finding the going tougher than expected

V xowever Wal-mart produced red ink

Ú Brutal competition
Ú Donǯt achieve efficiency through economies of scale
Ú Own mistakes
 V Wal-Mart has revised its merchandising in Brazil and
drgentina and made other changes
Ú ñ newest stores are smaller than the initial outlets in San Paulo and
Buenos Aires
Ú It located at Mid size cities where competition isnǯt so force
Ú 8 stores are planned to open in both Argentina and Brazil next year,
doubling the number now in each country

V Wal-Martǯs global expansion drive, which is targeting

not only South dmerica but also China Indonesia
Ú The markets of China and Indonesia are promising and pitfalls
Ú The growth is dwindling in America
 V he six-year-old international operation is relatively
tiny
Ú It accounted for only ñ.8 percent of Wal-Martǯs 1996 sales
Ú Most of the companyǯs international revenue comes from Canada

V Mr. Glass expects international growth to account for a

1/3 of War-Martǯs annual increase in sales and profits
within three to five years
 V Sd, expect Wal-Mart to lose $20 million to $30 million in
Brazil this year, on top of an estimated $48 million in losses
since starting up in South dmerica in 1995
Ú Some store in Buenos Aires, a few shoppers are in the store during
peak hours one Sunday
Ñ èittle difference between the goods at Wal-Mart and those at near by
Carrefour
Ñ Competitorǯs chain supermarket supply fresh meat

V Carrefour drives xard bargains with its suppliers, can afford

to play low-ball because it has the critical mass that War-
Mart lacks here
Ú Carrefour holds down overhead by stocking far-narrow selection of
merchandise
Ñ ÿx) Carrefour in èa Plata, Argentina, stocks 22,000 items, while the
Wal-Mart next door carries 58,000 items
 V Wal-Martǯs effort to stock such a wide variety of
merchandise is hurting it
Ú Squeezing out costs in the supply chain is crucial to itǯs ÿDè pricing
formula

Ú Bumper-to-bumper traffic of San Paulo

V he biggest issue Wal-Mart is shipping product on time

and getting on the shelf
Ú Wal-Mart recently built a warehouse in Argentina and Brazil to
reduce distribution problem
 V Wal-Martǯs troubles in South dmerica stem partly from
its own mistakes

Ú Some goods are useless in San Paulo

Ñ ÿx:- èive trout, American footballs, Cordless tools

Ú Wal-Mart brought in stock-handling equipment that didnǯt work with

standardized local pallets

Ú Installed a computerized bookkeeping system that failed to take into

account Brazilǯs wildly complicated tax system
V Wal-Martǯs Mr. Glass characterized the missteps are
regarded as temporary problems and inevitable in
entering a new market.