What did Media Markt do wrong? – Ben Cavender

The German electronic retailer Media Markt announced now officially it will close its China stores in April, after a two year long expedition into the China market. Retail analyst Ben Cavender sums up for the China Daily what Media Markt did wrong.

The China Daily:

Media Markt’s exit from the promising but elusive Chinese market reminds industry insiders of Best Buy Co Inc’s departure a couple of years ago.

The electronics retailers’ disappointing experience in China highlights just how difficult it is to build a new retail brand in the country, especially in the consumer electronics space, said Ben Cavender, an associate principal at the China Market Research Group.

There is a tremendous amount of competition from well-established domestic brands and consumers’ attention is shifting very rapidly to other shopping channels, like the Internet, Cavender said.

Given the high cost of operating large footprint retail stores in first-tier Chinese cities, their decision to leave the market is not surprising, he added…

Analysts said that these examples do not necessarily indicate a failure of Western retail models, but only show the companies’ inability to better understand the Chinese market.

Understanding what Chinese consumers really want should be the companies’ most important task, they said.

“Where many companies fail here is looking at the costs of operating their business. Media Markt, with a massive flagship store in Shanghai, was a good example.

“The store ended up costing a tremendous amount of money, while effectively becoming a showroom that consumers could use before buying the products online from other sources,” said Cavender.

More in the China Daily.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

Failing foreign firms in China was also the subject of the China Weekly Hangout on January 30, with panelists Richard Brubaker of Collective Responsibility and Andrew Hupert, expert on conflict management in China. Moderation: Fons Tuinstra of the China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.