Tough labour market conditions and the increasing hold of discounters have taken its toll on Wal-Mart in Germany, according to market analysts who said that even the world’s biggest retailer cannot defeat local conditions through sheer size or muscle power.

Following last week’s announcement from Wal-Mart that it would sell its stores to Metro, analysts say Wal-Mart’s retreat from Germany shows that a one-size- fits-all strategy wouldn’t work if local conditions do not allow such strategies. “It couldn't cope with the rigidity of the labour market and lost its leading price strategy because of severe competition with discounters,” said Tim Attenborough, a BNP Paribas analyst in London.

Wal-Mart, which prohibits its US workers to have unions clashed with German workers over labour issues. Discounters like Aldi and Lidl also dented Wal-Mart’s low-price strategy with their exceptional logistic operations. Germany is not the only country where Wal-Mart is struggling to make a profit. Wal-Mart withdrew from South Korea two months ago, and in the UK, Asda, Wal-Mart’s biggest overseas operation, has lost market share to Tesco. Under the deal, Wal-Mart will sell its 85 stores to Metro at a $1-billon loss. The deal will expand Metro’s store network to 1,512 stores in Germany.