Blog: Leonie BarrieCan Wal-Mart sway Seiyu?

Leonie Barrie | 23 October 2007

Wal-Mart’s investment in Japanese supermarket chain Seiyu Ltd could have gone one of two ways: either exiting the Japanese market altogether as it did last year in South Korea and Germany, or piling in the funds in an attempt to turn around the money-losing chain. It went with the second option yesterday, deciding to spend around US$862m on buying out the business’ minority shareholders.

The retailer certainly knows what it’s up against, having already invested more than $1bn in Seiyu since 2002 yet still failing to ignite sales. Fickle shoppers and tough competition in the Japanese market have already led to a number of foreign casualties, among them France's Carrefour, but Wal-Mart remains confident it can turn the Japanese unit around.

Reversing losses in Japan – the world’s second largest economy – would be a significant boost for Wal-Mart's fast-growing international business, particularly at a time when US growth is waning. Sales outside the US have risen from 4.8% to 30% of the total over the past decade, driven by strong demand from China, Brazil, India and Central America.

Although Wal-Mart has yet to reveal how it will engineer a turnaround in Japan, taking full control will certainly make it easier to run Seiyu and make faster changes without having to manage minority partners. And now that rumours of Wal-Mart abandoning the market have firmly been put to rest, the retailer will undoubtedly find it easier to do business with local suppliers too.

Both speed and cost control across the supply chain are key to Wal-Mart’s deep discounts model, its so-called ‘Everyday low prices’; all that remains is to convince the Japanese customer that low prices don’t necessarily mean low quality.

Wal-Mart to take control of retailer Seiyu


BLOG

Industry welcoming move to renegotiate NAFTA

The US textile industry has welcomed President Donald Trump's decision to renegotiate NAFTA, saying it is in America's national interest to modernise the trade agreement....

BLOG

Cutting edge technology defining apparel industry

Cutting-edge textile processing products including a new technology for dyeing yarns in a more sustainable manner and a digitalised sewing machine set up via a touchscreen or app, were among the most ...

BLOG

Ethiopia apparel and textile industry making massive gains

just-style's editor Leonie Barrie recently visited Ethiopia to see for herself the massive developments taking place to elevate this East African nation into a compelling new garment and textile sourc...

BLOG

Collaboration remains a challenge

Collaboration between retailers, brands and their suppliers is a mission critical element in developing a slicker and more cost-effective supply chain. But in an increasingly complex fashion environme...

just-style homepage



Forgot your password?