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Walmart spreads wings to Nigeria/Ethiopia/Next
Rank: Elder Joined: 3/18/2011 Posts: 12,069 Location: Kianjokoma
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Now this reminds me of one of the directors in the Tuskys case who claimed that the current disagreement in the firm is the work of a major foreign supermarket chain whose intention is to buy off Tuskys.
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Rank: User Joined: 5/3/2011 Posts: 559
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essyk wrote:Sasha wrote:@essyk: On the contrary, Ethiopian retailers will actually benefit when competitors come in. They will open up the market and will bring in some retail nous and will bring with them products previously unavailable in the country. The only issue is how those retailers will respond to this entry. My view on this is very diff. cz I ask myself,why are the products not available since most of what walmart sells can easily be manufactured by ethiopians if they have the expertise,money and facilities. But you know the African mentality 'Foreign is good quality'.One would rather buy frozen vegetables from China than buy fresh from local retailer. The goverment should create a conducive biz environment to enable to enable local investors compete with these big giants. That to me is progress. Quote:They will open up the market and will bring in some retail nous Ok I just read that again and I somehow disagree. Allow me to ask. Who better understands the behaviour of Ethiopian market? Isnt it the local retailer? The investor relies on market research stats, but there's this local touch they miss out. Many foreign investors hardly understand the 'african market'.Many assume they can use the same yard stick here but it flops big time over a period of time. Instead of adjusting to the local working system,they instead prefer a complete overhaul and that marks the beginning of a downfall and a shake up in the wrong direction. Those who succeed (like the chinese) do so because they work with what is there however remote.If anything,they assimilate the local culture giving them an edge over the others because they become accepted fast. After acceptance biz grows. So if you are talking about retail nous,I think it should be reverse. Walmart has few things to learn from locals,after all isn't the success brought about by the local retailer the reason Walmart is setting biz there? Call them opportunists if you may.: Ok In summary they are not bringing any retail nous.Just to ride on what is there. You're making some wild assumptions about Walmart, and I think it is based on what you think the market should look like and how the forces of market should act, unfortunately you're wrong in all of them. First Walmart has the best business model in the world when it come to retail, forget about what you've heard about Walmart, 90% of it come from people who do not understand or have never been to any strategy lesson. I am not naive, if Walmart was to walk into Kenyan Markets alot of other business will close down but ultimately the Kenyan consumer and economy will benefit. Secondly, for anyone to understand how to benefit from entry of Walmart to a Market, they first must understand the Walmart supply chain, unlike other business, Walmart has been very successful because of it's efficient supply chain, Looking at Walmart supply chain, there is no business reason why Walmart would source vegetable to an international supplier! Walmart supply chain model is designed in such a way that the most effecient, the fastest and the cheapest supplier win the tender, alot is tilted to a local supplier it is upto that supplier to meet Walmart demands! Thirdly, Walmart have damn good business and strategic analysts, the question of who is best to understand Ethiopian consumer will be answered fully and exhaustively!
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Rank: Elder Joined: 11/15/2011 Posts: 4,518
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Drunkard wrote: if Walmart was to walk into Kenyan Markets a lot of other business will close down but ultimately the Kenyan consumer and economy will benefit.Huh! Drunkard? can you read that again?
Oh ok I know them.I wouldnt mind if one major chain shuts down because they don't benefit the kenyan economy, but have you given thought to the employees and suppliers Aren't they Kenyan manufacturers? I think what you said up there will cause a ripple effect and trust me,you and I will feel it in the long run.
Drunkard, Quote:Wal-Mart was responsible for $27 billion in U.S. imports from China in 2006 and 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. Wal-Mart’s trade deficit with China alone eliminated nearly 200,000 U.S. jobs in this period.The manufacturing sector and its workers were hardest hit by the growth of Wal-Mart’s imports.
Walmart has been very successful because of it's efficient supply chain, Looking at Walmart supply chain, there is no business reason why Walmart would source vegetable to an international supplier! Walmart supply chain model is designed in such a way that the most effecient, the fastest and the cheapest supplier win the tender,a lot is tilted to a local supplier it is up to that supplier to meet Walmart demands! Mh that's not bad at all.But guess what? veges aside,the costs here are too high.
Locally manufactured goods are more exp than the cheap chinese made ones.Its no wonder walmart sources from china.
I was sourcing some goods for a foreigner because he needed to sell to a neighbouring country.Their former supplier was china.Ala!The cost of making what he needed was 3 times the the cost of the chinese.
The local told me there was nothing they could do because they source raw material for that very product from china.
And you wonder why Toys,Jewelry,pops and some other 'poison laden' chinese goods sell easy?
Thirdly, Walmart have damn good business and strategic analysts, the question of who is best to understand Ethiopian consumer will be answered fully and exhaustively! Quote:Buy in high volumes to sell cheap. It works because of the number of stores they have spreadout through their country.
But when they step outside the country, all logistical operations, partnerships, unawareness of political and government legal adherances etc come to play.
It also under prices some of its products and advertises them to the public. When they do this, they have to pay the price to stock the product. When they under price, they are selling the product for less then they had to pay to stock the item. That gets more people in the store. The customers then realize that the other prices arnt that bad either, so they buy that too.
YOU CANT BEAT WALMART IN PRICE.NO WAY
If they sell cheap I will DEF.buy because the common kenyan doesn't give thought about the manufacturer at the time of buying. All he wants is something affordable so the manuf.can go sort themselves out.  "The true measure of a man is how he treats someone who can do him absolutely no good.
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Rank: User Joined: 5/3/2011 Posts: 559
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@essyk
I recognize that we hold two different school of economics, you look at the economy in small parts and I look at it in totality and I don't think you're wrong based on your line of thinking. I believe the reason why companies source from China is because of price disparities which will eventually close up through the forces of market. You cannot stop the market from searching for alpha it is a defeating strategy. Economy grow because of the ability of a population to save and invest so you can easly offset the effect of cheap chinese good to america economy by pointing at the fact that the population was able to save money and therefore invest because they bought cheaper goods.
Now back to Walmart, again Walmart supply chain is very unique in that Walmart basically bid their shelves and supplier come in and stock the shelves and through their EPR systems suppliers can keep track of the stock in the shelve and know what time to pull the tracks and re-stock again. Walmart itself hold almost no stock in their warehouse unlike all their competitors who have to store good somewhere, pay for transportation and warehouse labor, Walmart do not go through that process.
Best buy the electronic chain is struggling right now yet they source to China too, why? because they cannot match Walmart supply chain strategies, Circut City went out of business 2 yrs ago, Supervalu is struggling to make money. Target is walking in a tight rop and in expanding to markets that Walmart are not yet there so you cannot point at sourcing as the reason why Walmart is successful, it is Walmart Strategy that is damn good!
FYI, I spend 1 yrs following retail industry and I am not a trained economist!
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Rank: Member Joined: 8/29/2008 Posts: 573
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DRUNKARD: Americans have not saved any money from buying at Walmart.They spend more and more...furthermore,when you get addicted to shopping at Walmart,and assume they are the cheapest,they raise the prices after they vanquish their competitors.
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Rank: Elder Joined: 11/15/2011 Posts: 4,518
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Drunkard wrote:@essyk Economy grow because of the ability of a population to save and invest so you can easily offset the effect of cheap chinese good to america economy by pointing at the fact that t he population was able to save money and therefore invest because they bought cheaper goods.That's a very big misconception drunkard.
Without proper knowledge of investment opportunities and survival techniques many businesses fail to finish the race.
What evidence is there to prove that a % of the pop invested what they managed to save by going walmart? Save they may have,invest is another story.
And even if what you said was true,then my investment would be worth nothing if after investing,I face very stiff competition from a giant,established and experienced multinational.
They will still beat me in attracting clients causing my struggling biz to go down the drain.
But again,If walmart ever decides to set camp the Brand itself will sell because of psychology.
There's a pride that comes with buying goods from a famous and international brand
I therefore see kisumu as the best location. 
FYI, I spend 1 yrs following retail industry and I am not a trained economist! Well who is anyway? LOL I just speak my mind "The true measure of a man is how he treats someone who can do him absolutely no good.
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Rank: Veteran Joined: 9/5/2007 Posts: 627
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@essyk: I'm afraid like Drunkard said, you are making some misplaced assumptions. Ethiopia does not have the capacity to manufacture the products that Walmart will be able to bring in. Costs of manufacturing are higher than here in Kenya (raw materials, labour and energy) and their tax regime is extremely prohibitive. When you say "easily manufactured by Ethiopians", you've gone off the boil.
Again, true that the Ethiopians understand their market better than any foreigner would. Of course Walmart will need to learn (using what you call market research) the Ethiopia market to be successful. When you say they will not bring in any retail nous, I again wonder if you understand consumer markets. Drunkard has pointed out that Walmart have one of the best supply chains in the world (alongside Parmalat, Zara and Ferrero). The partnerships they create across the whole supply chain is now an MBA case study in itself. Consumer business success is hinged on supply chain (i.e. Supplier-Buyer-Consumer) partnerships which will definately benefit Ethiopian businesses (e.g. transporters, labour), and with these partnerships created, other Ethiopian retailers will now learn how to make their own supply chains efficient. So obviously, unless you are saying that Ethiopian retailers (and businesses for that matter) have better business models that Walmart, then it is they (Ethiopians) who will have more to learn from Walmart.
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Rank: Elder Joined: 11/15/2011 Posts: 4,518
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[quote=Sasha] Quote:1.Ethiopia does not have the capacity to manufacture the products that Walmart will be able to bring in.
2.Costs of manufacturing are higher than here in Kenya (raw materials, labour and energy) and
3.Their tax regime is extremely prohibitive.
4.Walmart has better business models than Ethiopia so it is they (Ethiopians) who will have more to learn from Walmart.
I get you now. Thank you. "The true measure of a man is how he treats someone who can do him absolutely no good.
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