Wal-Mart in Russia
Prepared by: Crista
October 2008, Riga
The first question we have to ask ourselves is: "Should Wal-Mart enter Russian market?" However, that was not the right question. The right one was: "How to do it?"
After the PEST, Porter's five forces, and SWOT analyses have been performed and data collected, there were disagreements about which strategy to use to entrance and crack the market. Therefore, two different strategies have been developed. By combination of those two, a single hybrid strategy appeared.
The most feasible strategy to enter Russian retail market is a mix of the "hard discount" strategy and the "supermarket" strategy. On one hand, we have a completely new business segment absolutely inexistent in Russia before, on the other hand, a chain of supermarkets implanted in the different regions of the CEI, where the retail market is not developed yet. Both strategies are to be developed in the same time.
The "hard discount" strategy, which represents the 1st tier market located in Moscow or St Petersburg, permits to enter a new niche where Wal-Mart does not need to compete with other retailers. In this way they have the first mover advantage in a part of retail market where other retailers have already implanted other forms of business.
The "supermarket" strategy will be more focused on the retail market of non-food products. This strategy permits to develop retail market of high added value product in the smaller cities of Russia. This way provides the possibility to avoid direct confrontation and high marketing cost when competing with the other supermarkets already existing in the area.
Implementation of such hybrid strategy allows Wal-Mart to penetrate a huge and growing market with reasonable costs and a possibility to develop a new consumer shopping habit. At the same time, development of new shops in smaller cities permits introducing...