Wal-Mart Struggles in Japan

Seiyu's performance improved marginally with a reduction in losses from $754 million in 2002 to $67 million in 2003. By the first quarter of 2004, Seiyu announced that it had cut down 3.6% of costs compared with the same period the previous year.

It had laid off 25% of its full time employees though voluntary retirement schemes. The company announced that it expected to make profits of $4.6 million with sales of $10.2 billion for 2004.

The company's share prices on the Tokyo stock exchange also showed an improvement as compared to the year 2003...

As of 2005, Seiyu said that it did not hope to make any profits till 2006. The opening of the next Super Center would also be taken up only after 2006. The company had realized that it was not able to cut costs enough to allow it to offer really heavy discounts necessary to make customers shop regularly at its stores.

In Japan, as compared to the US market, Wal-Mart was still to achieve big efficiencies by leveraging Retail Link and increasing its purchasing. As Marra remarked, "In the U.S., Wal-Mart's information technology and huge buying power allows the company to undercut rivals by some 15% across the board...