Japan would appear to be a promising market for big-box retail, but not for Wal-Mart (WMT). Japan is one of the world’s largest economies and wealthiest nations, but too few people want to shop at Seiyu Ltd., Wal-Mart’s unit there.
The world’s largest retailer has just announced that it will have its sixth year of losses in Japan, a market where its has burned through over $1 billion. But, things are no better and the locals like Aeon have it by the throat.
Seiyu is a public company, but Wal-Mart owns over 50% of its shares. It has not been able to apply its retail wizardry to fixing the Japanese companies problems. And, that is not likely to happen. The Wal-Mart formula does not work everywhere. The company has had to exit German and South Korea due to poor results. But, the WMT formula appears to work well in other markets including China and Mexico.
Time for Wal-Mart to sell it interest to the public investors in Japan or a private equity concern and move on to more fertile ground.
Douglas A. McIntyre
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