The retreat of Wal-Mart, the worlds biggest retailer, from Germany, which is one of Europes largest markets, poses a question over the success of its US model elsewhere.

When on July 28, this year, the US-based Wal-Mart, the largest retailing company in the world, announced that it would pull the curtains down on its operations in Germany; it came as a big blow to those who believed that the retailing juggernaut is simply invincible. It also came as a shocker to those who believed that globalization has just resulted in a borderless world. However, as the retailing juggernaut's German fiasco exposes flaws in such beliefs, there is a realization that practicing domestic model in other foreign markets may not work always.

For the US-based Wal-Mart, whose annual sales dwarf even the GDPs of several nations, though, it was not for the first time that it had to pull out from an overseas market. Its German misadventure came close on the heels of its decision in May, this year to sell its loss-making 16 stores in South Korea as the company found it difficult to penetrate the local market. Two months later facing similar situation in Germany, the world's most feared retailer said that it will be selling its 85 Supercenters to Metro AG, Germany's largest retailer, which would cost it a pre-tax loss of about $1 bn. Having learnt its lesson, the retailing behemoth has now decided to retreat from those overseas markets where it finds difficult to grow profitably. For a company of the size of Wal-Mart, which seeks to move from mature markets to emerging markets in search of growth, the move makes imminent sense.

Indeed, doing the unconventional has been the very hallmark of Wal-Mart's strategy if history is any guide. The Sam Walton-promoted firm, which grew from nowhere in 1962 to become the most valuable company in the US, opted to grow through its presence in obscure Southern and Midwestern towns in Arkansas, Missouri and Oklahoma, instead of big cities. The strategy paid off well as in little over a span of four decades of its existence, it has emerged as among the most valuable organizations in the world. It became a $1bn company within 17 years of its operation and reached $100 bn mark in the next 17 years in 1996; to its credit, it recorded the biggest single day sales in history: $1.43 bn on the day after Thanksgiving.

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