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Walton, Sam - Overview, Personal Life, Career Details, Social and Economic Impact, Chronology: Sam Walton

stores mart store united

(1918-1992)
Wal-Mart Stores, Inc.

Overview

Sam Walton redefined the shopping experience for residents living in rural areas throughout the United States by opening a chain of Wal-Mart discount stores in towns previously served only by hardware and five & dime stores. His strategy of monopolizing the discount shopping market in rural areas made his stores the largest retail chain in the United States.

Personal Life

Sam Moore Walton was born in Kingfisher, Oklahoma, on March 29, 1918, as the oldest of two boys of Thomas and Nancy Walton. His father, a farm-mortgage banker, moved his family to his native state of Missouri, where they lived in a succession of rural communities for three years and then settled in the medium-sized university town of Colombia. His father believed in saving money, so when the bottom fell out of the economy, his family suffered less during the Great Depression than many of their neighbors. The younger Walton was a standout at Hickman High School in Columbia. He made a name for himself as a quarterback on the school football team, captain of the basketball team, class president, and student council president. His high school year book of 1936 described him as having distinguished himself in “leadership, service, and ability.”

Walton financed his education at the University of Missouri with money earned from a paper route. He graduated with a degree in economics in 1940. Walton was unsure of what he would do with his life after leaving college. At one point, he told the Washington Post, “I thought I wanted to be President of the United States.” Instead, he took his first retailing job at a J.C. Penney store in Des Moines, Iowa, where he was a sales trainee. He recalled the day that James Cash Penney, the company’s founder, paid a visit to that store: “He taught me how to tie a package with very little twine and very little paper and still make it look nice.” But that job was short-lived, as Walton was drafted in early 1942 as a communications officer in the Army Intelligence Corps, an assignment that enabled him to remain stateside for the duration of World War II. While in the service, he married Helen Robson on February 14, 1943. The couple had four children.

Walton rose to become one of the wealthiest men in the world, but chose to live in Bentonville, Arkansas with his family. He enjoyed riding around in his pickup truck, eating breakfast with friends at the local Ramada Inn, and attending potluck suppers at the Presbyterian church. Even when he was diagnosed with incurable bone cancer, he continued to lead an active life, rising every day before dawn. He would spend about 80 percent of his time visiting stores and the other 20 percent at meetings at the corporate headquarters. Those sessions customarily began with the singing of “The Star-Spangled Banner.”

Among the honors Walton received were the Gold Winner in Financial World’s CEO rating, 1986; National Retail Merchants Association’s gold medal for the most distinguished retailing performance of the year, 1988; Financial World’s CEO of the Decade, 1989; U.S. News & World Report’s Excellence Award in Business, 1990; and Advertising Age’s Adman of the Year Award, 1991. The Presidential Medal of Freedom from President George Bush in 1992 was the award that Walton deemed “the highlight of my entire career.” Even though he was in a wheelchair, Walton led his sales associates in a rousing Wal-Mart cheer. He died on March 29, 1992 of bone cancer at the age of 74, three weeks after receiving the medal from Bush.

Career Details

The retail industry seemed a natural place for Walton to make his mark, but he had no interest in being in someone’s employ. In 1945, with a borrowed $25,000, he and his brother, James, opened a five-and-dime store, called Ben Franklin, in Newport, Arkansas. Walton was forced to move five years later when his landlord refused to renew the store’s lease, and he travelled across the state to Bentonville, which is now headquarters to the Wal-Mart empire.

Walton started having doubts about the future of dime stores and started paying close attention to chains like K Mart and Zayre. Those retailing giants avoided rural areas, preferring to place their stores in suburban or urban locations. Walton decided that it was time to start his own chain. In 1962, he and brother James opened the first Wal-Mart outlet in Rogers, Arkansas, about five miles from Bentonville. The two brothers thought large stores could be successful in small towns. “There was a lot more business in those towns than people ever thought,” Walton explained.

From the beginning, the Wal-Mart concept was to join a friendly, general-store atmosphere with high-quality name-brand merchandise at low prices. The idea caught on, but slowly. The stores were pretty basic and many resembed barns, with merchandise overflowing from plastic bins or metal racks. Along with a top management team, Walton visited a half-dozen to a dozen Wal-Mart stores every week. At one store, he might solicit suggestions on how yard goods could sell faster flat-folded than on bolts. Or he might give advice on increasing deliveries of automotive supplies. At all of his stores, he gave reassuring speeches that kept employees striving for improvement and higher sales.

By 1970, the year Walton took the company public, there were about 25 Wal-Mart stores. By 1972, the chain had more than doubled to 64 stores with sales of $125 million. The rate of growth was phenomenal. In 1981 alone 161 Wal-Mart stores were opened. By 1983, the chain had become the eighth largest retailer in the United States, with 642 stores in 19 states and annual sales of $4.2 billion. That same year, Forbes magazine estimated Walton’s net worth to be $2.1 billion, making him the second richest person in the United States, behind oil magnate Gordon P. Getty. At that time, Walton decided to explore another path and opened stores in such medium-sized cities as Little Rock, Arkansas, Springfield, Missouri, and Shreveport, Louisiana. He also opened stores in the suburbs of several large cities, including Kansas City, Missouri and Dallas, Texas. The strategy seemed to work. By 1987 Wal-Mart had 1,108 stores, located from Colorado to Virginia, with sales of over $20 billion. By 1989 there were 1,326 stores, with sales of almost $26 billion.

Walton continued to try innovative ways to attract new customers. In April of 1983 Walton launched the first Sam’s Wholesale Club, which was aimed at small-business owners and others who wanted to buy bulk merchandise. The warehouses employed only a few laborers. The goods were priced just eight to 10 percent over cost. By 1991 there were more than 200 Sam’s clubs in the United States. In December 1987 he introduced another new retailing concept with the opening of the first Hypermart USA store in Garland, Texas. Encompassing some 220,000 square feet of retail space, about four times the size of the standard Wal-Mart store, these “malls without walls” devote about the same amount of space to food and non-food products. Wal-Mart Supercenters, another Walton innovation, have both a supermarket and a regular Wal-Mart under the same roof.

Social and Economic Impact

Wal-Mart is a success story that redefined how retailers viewed growth markets. Walton had showed the world that consumers, no matter where they lived, preferred the variety and discount pricing that his chain offered. Walton was constantly searching for ways to better serve his customers. He was always walking around competitor’s stores to educate himself. He was not above getting down on his hands and knees to look under display cabinets. “Anyone willing to work hard, study the business, and apply the best principles can do well,” Walton said in the New York Times.

In addition, the company was firmly committed to a “Buy American” program. Walton built his firm into the fastest growing and most influential force in the retail industry with stores averaging an annual growth rate of more than 35 percent for more than a decade — a rate more than three times that of the retail industry in general. An investor who spent $1,650 for 100 shares of stock in 1979 would have had $700,000 worth of stock in 1987.

A conservative employer, Walton admitted that in the early days of the Wal-Mart operation, his employees were making minimum wage. It was his wife who convinced him to offer his employees various incentive bonuses, including discounts on stock and profit-sharing plans. As a result, some Wal-Mart associates have retired hundreds of thousands of dollars richer.

The economic impact on Bentonville, home to the Wal-Mart corporation, has been tremendous. Walton and his wife have built tennis courts, a recreation hall for senior citizens, a day care center, a library, an athletic center, and a health club in Bentonville. Walton, or “Mr. Sam,” as some called him, was unpretentious. He did not believe in company perks like limousines. Executives at a chain acquired by Wal-Mart lost their coveted parking spots near the front door for their leased Cadillacs, which were also eliminated by the thrifty Walton.

But despite all of the success, Walton and his chain of discount stores are not without their detractors. Chief among them are the small town merchants who, ultimately, were driven out of business by the Wal-Mart stores. They knew they could not compete with the low prices and extensive variety of merchandise. Jack D. Seibald, a retail analyst at Salomon Brothers once said that Wal-Mart “moves into town and in the first year they’re doing $10 million. That money has to come from somewhere, and generally it’s out of the small businessman’s cash register.”

Regardless, Walton revolutionized the concept of discount stores in America and reshaped consumer shopping patterns across the United States. Walton tells his story in a book, Made In America, that he wrote with the assistance of Fortune magazine editor John Huey.

Chronology: Sam Walton

1918: Born.

1940: Hired at J.C. Penney.

1945: Opened first Ben Franklin store.

1962: Opened first Wal-Mart store.

1970: Took the Wal-Mart public.

1983: Founded Sam’s Wholesale Club.

1985: Estimated richest man in the United States.

1992: Published autobiography Sam Walton: Made in America, My Story.

1992: Died.

Without a doubt, Walton was the epitome of modern retailing, adapting to contemporary demographic trends. He built his empire not in the large urban areas of the North, East, and West — the politically and economically dominant regions of the first two-thirds of the twentieth century — but in the South and Midwest, the former depressed and neglected regions of the nation. He pioneered retailing where others did not want to go, and because of his willingness to go to uncharted areas, he reaped astounding financial benefits, propelling this humble man to one of the world’s richest and most respected businessmen of his time. Sam Walton’s legacy continues. Five years after his death, Wal-Mart had grown to over 2,300 stores with annual revenues of $104.8 billion.

Walworth, Ellen Hardin (1832–1915) - Historic Preservation [next] [back] Walton, Lester A.(1882–1965) - Diplomat, journalist, Career as Journalist, Begins Political Career, Chronology, Explores the Entertainment Sphere, Community Interests

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