From what I've read a big part of the Walmart model in the US is based on dirt cheap fuel leading to dirt cheap trasportation and distribution. Fuel is expensive in Europe which I imagine throws the cheap distribition part of the Walmart model out of kilter. the European chains have grown up in this environment and probably have methods to mitigate the high fuel costs on distribution.
Interesting thought, but in most parts of Europe, the population density is just so high that you can dot the map with more markets and still reach enough people for your stores to be viable. I would dare to say that this is more decisive.
To underline my point to an extreme- I haven't seen a Walmart in Manhattan either.
Also, at least since 2008, American fuel isn't that ridiculously cheap in comparison more either.
2.74$ for a gallon (today's average as to gasbuddy.com) => 0.71$ for a liter, i.e. 0.85€ per liter (taking a ratio of 1$=1.20€ as a fair value, the actual $/€-cross is quite overrated).
In Germany, you pay about 1.40€ per liter, but different taxation leads to different prices. Austrians, for example, pay less than 1.20€ per liter, Spanish about 1.13€ (according to ADAC).
Now remembering my first trip to the USA in '99, I paid just 1$ for a gallon in some places whereas I already paid almost 2DM, i.e. 1€ for a liter in Germany.
Another possible issue with Walmarts box stores is that in the US there are 765 cars per 1000 people but Europe seems to be about 500. Slapping a box on the edge of town relies on 3 out of 4 people having a car to get there, but when only 1 in 2 people has a car this model may not be viable.
Again, to a certain degree a viable argument - but does that make such a difference? You can put two people in a car (especially in American ones

).
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Personally....in my case (and most people I know agree there), I prefer to drive two minutes to the local "Rewe"-market (which is certainly a lot less than 1000m² large, even small by Rewe-standards). Most days, their offerings are absolutely sufficient. They are picked up within 5-10 minutes.
Maybe once a week there is reason to drive to a hyperstore which is of Walmart-like dimensions, but you have to drive 10-15 minutes to reach one of them (there are three within this range).... and back again. Also, shopping takes considerably longer due to the size of the store - time and again my wife and me are a bit surprised about the fact how much time we spent there despite a rather modest shopping-list and other appointments waiting. (And it is not just all my wife's fault.)