Is There Walmart in Australia? An In-Depth Look at Why Walmart Has Failed to Enter the Australian Market
With over 10,000 stores worldwide and sales of over $500 billion annually, Walmart is not only America‘s largest retailer but also the world‘s biggest corporate giant. However, despite Walmart‘s global reach into 27 countries, the retail behemoth has been unable to gain a foothold in Australia. This article takes an in-depth look at why Walmart does not operate down under.
A Brief History of Walmart‘s Attempts to Enter Australia
Walmart has tried repeatedly to expand into Australia over the past 20 years, but each attempt has been thwarted by a mix of fear over competition, cultural differences, and concerns about Walmart‘s corporate practices.
In 1994, Walmart looked to acquire the Australian retailers Kmart Australia and Coles Myer. However, Takeovers Panel ruled that such acquisitions would substantially damage competition.
In the early 2000s, Walmart again explored acquiring several major Australian retailers, including Woolworths Limited. But none of these potential deals ultimately went through.
Most recently in 2018, rumors circulated that Walmart was considering purchasing Australian discount chain Kmart. But Walmart did not end up acquiring Kmart Australia.
Why Walmart Faces Major Obstacles in Australia
There are several key factors that explain why Walmart has continually struggled to enter into the Australian market.
Threat to Local Australian Retailers
The Australian retail industry has strongly resisted Walmart establishing stores down under, fearing that Walmart would undercut prices and drive local companies out of business. Major retailers like Woolworths, Coles, and Aldi control over 70% of Australia‘s grocery sector, so the market is already intensely competitive even without Walmart.
| Australian Grocery Market Share 2022 |
|-|-|
| Woolworths | 33% |
| Coles | 28% |
| Aldi | 10% |
| Other | 29% |
And in general merchandise retail, Australian chains like Kmart, Target, and Big W hold significant market power. These incumbent retailers have campaigned hard to shut out foreign competitors. Introducing a new massive player like Walmart would disrupt the entire retail landscape.
Strict Australian Labor Laws and Work Culture
Walmart‘s labor practices have clashed with labor regulations overseas, and Walmart would face this challenge in Australia as well. Australia has higher minimum wages, greater union representation, and stricter labor laws compared to the U.S.
For example, Australia‘s minimum wage is currently $21.38 AUD per hour, over twice the U.S. federal minimum wage of $7.25 USD. Australian employees also have much greater access to paid vacation and sick leave. Walmart‘s cost-cutting model built on low wages, limited benefits, and minimal worker protections does not align with Australia‘s work culture.
| Labor Practice | Australia | Walmart (U.S.) |
|---|---|---|
| Minimum Wage | $21.38 AUD ($15.50 USD) | $7.25-$13 USD |
| Paid Leave | 4 weeks annual leave; 10 days paid sick leave | No mandated paid leave |
| Unions | ~15% of workforce unionized | Staunchly anti-union |
Other Corporate Controversies
Beyond labor issues, Walmart has faced constant controversy over its broader business practices, including anti-competitive behavior, gender discrimination lawsuits, foreign bribery scandals, and environmental record. Walmart attempting to bring these issues to Australia has faced understandable pushback.
Could Walmart Adapt to Win Over Australia?
Given the major competitive and cultural barriers, the question is whether Walmart could modify its business model enough to succeed in the Australian market.
Walmart would need to dramatically improve wages and benefits offered to Australian employees to meet local norms. Operating with union labor in Australia would also be a shift for Walmart. And the company would need to significantly scale back its aggressive pricing strategy to avoid destroying local retailers.
Making these kinds of fundamental changes would cut directly against Walmart‘s core cost-cutting approach. Our analysis suggests it would be extremely difficult for Walmart to operate profitably in Australia while adhering to local expectations.
The Outlook for Walmart in Australia
Given its history of failed prior attempts, Walmart expanding into Australia still seems an unlikely prospect in the near future. While Walmart executives surely still dream of tapping into Australia‘s $310 billion retail sector, actually doing so with a model that aligns with Australian values poses major challenges.
Barring major structural changes at Walmart itself, our assessment is that Walmart will continue focusing its international growth efforts on markets with fewer restrictive trade practices and lower labor costs than Australia. Australian shoppers will likely be shopping at Woolworths and Kmart for years to come rather than seeing a Walmart open down under.
