Walmart

Wal-Mart Stores Inc.

• Founder: Sam Walton.
• Distinction: Parlayed retailing innovations into worldwide dominance.
• Primary products: Softgoods, hardgoods, electronics, groceries.
• Annual sales: $165.013 billion.
• Number of employees: 1,140,000.
• Major competitors: Costco Wholesale, Kmart, Target.
• Chairman: S. Robson Walton; Chairman of the Executive Committee: David D. Glass; CEO and President: H. Lee Scott Jr.
• Headquarters: Bentonville, Ark.
• Year founded: 1962.
• Web site: www.wal-mart.com.• Distinction: Parlayed retailing innovations into worldwide dominance.• Primary products: Softgoods, hardgoods, electronics, groceries.• Annual sales: $165.013 billion.• Number of employees: 1,140,000.• Major competitors: Costco Wholesale, Kmart, Target.• Chairman: S. Robson Walton; Chairman of the Executive Committee: David D. Glass; CEO and President: H. Lee Scott Jr.• Headquarters: Bentonville, Ark.• Year founded: 1962.• Web site: www.wal-mart.com.

 Wal-Mart Stores Inc.

In a crisp fall day in 1983, just about all of the 9,300 residents of Bentonville, Ark., turned out to toast the neighbors who made good. It was Sam and Helen Walton Appreciation Day. A rousing parade with bands and floats had been organized to honor the locals who changed the course of retailing—and the town they called home. Portraits of the couple were everywhere. The newspaper printed a special souvenir edition. President Reagan phoned to offer congratulations. And the Waltons happily soaked it all up from a reviewing stand on Main Street, directly across from the site where they opened a five-and-dime store in 1950.

Things, of course, had gone rather well during the ensuing three decades for Sam Walton and the Wal-Mart discount chain he later founded from this spot in the Ozarks. He was already considered the king of retail. And in just two years, Forbes magazine would declare him America’s richest man.
But the start of Wal-Mart may have caused Walton to wonder whether he had indeed chosen the proper career path. The very same year he broke ground on his first Wal-Mart Discount City in Rogers, Ark., three other major chains—Kmart, Woolco and Target—also opened their doors. And when Walton launched his second store in nearby Harrison, two truckloads of promotional water melons that were spread along the sidewalk exploded ominously in the summer heat.

Still, Walton persevered and his vision proved a winner long before his death in 1992 at age 74. By the turn of the century, his company was selling everything from sporting goods and apparel to auto accessories and groceries. Its three types of stores (traditional discounters, superstores, and membership warehouses) were omnipresent across the globe, with some 4,000 operating in all 50 states and nine countries from Canada to China. Along with a fledgling Web site with tremendous potential, the combination solidly cemented Wal-Mart’s position as the world’s number-one retailer.

While some critics have blasted it for destroying small mom-and-pop stores, Wal-Mart has nonetheless done much to benefit neighbors and employees. And, for better or worse, it has certainly changed the face of retailing.

It seems that Samuel Moore Walton always was destined for greatness. The son of a far m-mortgage broker, he was the youngest Eagle Scout ever in his native Missouri. He was also president of his high school student council, as well as quarterback of its state-champion football team. As a young boy he dreamed of becoming U.S. president, and as a teenager yearned to seek an M.B.A. from the prestigious Wharton School. Economic realities got in the way, however, and three days after his 1940 graduation from the University of Missouri he accepted a management trainee position at a J.C. Penney store in Des Moines, Iowa.
The work was hard and the salary was just $75 a month. But the challenge and potential convinced Walton from the start that business in general—and retailing in particular—was the key to his future. He became even more confident of that when the chain’s founder, James Cash Penney, dropped in one day and personally taught the young man how to tie an appealing package with minimal twine and paper. The dual lessons of hands-on management and corporate frugality impressed Walton greatly. These lessons would stay with him for the rest of his life.

Walton left the business world briefly for a stint in the Army. Upon his release in 1945, he bought a Ben Franklin variety store in Newport, Ark. (He wanted to open in St. Louis, he said later, but Helen wouldn’t move to a town with more than 10,000 residents.) Walton quickly became the consummate small-town merchant, catering to his neighbors’ specific tastes and needs. At the same time, he began seeking out sources around the region who offered these goods at prices lower than his official suppliers. After working in the store all day, he would hitch a trailer to his car and drive across the state line into Tennessee and Missouri in search of the products desired by his customers. He’d then price them as cheaply as possible and quickly sell out his entire inventory.

Walton, of course, had discovered the essence of discounting: by cutting prices, sales increased and profits soared. The folks at Ben Franklin didn’t like it, but customers certainly did. In less than five years, Walton’s store had become a huge success. His landlord, however, decided that it would make a perfect business for his own son. He refused to renew the store’s lease. Walton—who had no place else to move in the tiny town—was forced to sell out and start fresh somewhere else. He settled on the even smaller Bentonville, he noted in his memoirs, because it offered access to the hunting seasons in four states.
Around this time he read of two “self-service” discount stores in Minnesota, and decided after visiting them that his new Bentonville shop should also feature open merchandise racks with checkout registers at the front. He called it “Walton’s Five and Dime,” and promoted it with specials, such as a dozen clothespins for 9 cents. Eager customers came from day one, and kept coming every day after that.

By 1960, Walton and his younger brother, James L. “Bud” Walton, owned 15 such stores tallying $1.4 million in total annual sales. But Mr. Sam, as he liked to be called, wasn’t satisfied and began considering new ways to expand. He found one in the massive discount stores cropping up in urban areas from coast to coast, which were selling more types of items at lower prices than any of their competitors. When one encroached on his Arkansas territory, Walton knew he had to act. And on July 2, 1962—at the age of 44—he opened Wal-Mart No. 1 in Rogers.

Everyone thought Walton’s dream of bringing the discount concept to small rural towns was crazy. He and Helen were forced to co-sign all the loan notes, pledging their home and property as security. But the idea caught on. Within five years he had 19 such stores, including one in his old haunt of Newport (where the landlord’s son’s Ben Franklin had since closed). By contrast, Kmart opened in 250 locations during the same period. It steadfastly ignored towns with populations under 50,000, which gave Wal-Mart free rein to exploit its chosen niche.

Walton focused on utilizing everything he had learned over the past two decades. Each store catered to local tastes and featured locally made goods. All honored hometown achievements and supported neighborhood charities. Employees were called “associates” and offered generous profit-sharing plans. Shoppers were personally greeted upon arrival. Building designs were minimal; product variety was paramount. And, most importantly, prices were the absolute lowest they could be. The combination helped Wal-Mart flourish. And in 1970, it went public.

The subsequent cash influx pushed the company’s growth into high gear. It funded a self-contained ordering and distribution system, which helped serve the increasingly out-of-the-way locations that traditional suppliers wouldn’t touch. It also made the founders very rich, but didn’t alter their values or plans one bit. Like his former boss James Cash Penney, Walton strove to visit every store at least once a year. And even though he bought airplanes to do so (he piloted them himself), he still drove around Bentonville in a Ford pickup. “What am I supposed to haul my dogs around in, a Rolls-Royce?” he once asked.