Walton, Sam 1918-1992

WALTON, SAM 1918-1992

Retail magnate

Empire

During the 1980s Sam Walton became America's richest man, combining innovation, business savvy, and a down-home style to achieve his success. Walton built his chain of discount stores into the largest in the country, surpassing even K-Mart, while promoting them with small-town values.

Growing Up

Walton grew up during the Great Depression of the 1930s. Despite the dismal climate of the Depression, Walton enjoyed success in his hometown of Columbia, Missouri, as an adolescent. In 1936 The Crescent, the Hickman High School annual, proclaimed him to be the Most Versatile Boy. In fall 1936 Walton began studying business administration at the University of Missouri. Working his way through college, Walton began to demonstrate his entrepreneurial skills. Upon graduating from college in 1940, Walton entered the army reserves as a second lieutenant. While in the reserves Walton decided on retail as his career and took his first job with J. C. Penney for eighty-five dollars per month. Sam received crucial training while working at J. C. Penney, some of it from the company's founder, John Cash Penney, before entering the military full-time to serve in World War II. Because of a nerve problem Sam was rejected for overseas duty.

Discount Chains

Following the war Walton purchased the franchise of a Ben Franklin five-and-dime store in Newport, Arkansas. For the next several years he lived in Newport and other small towns in Arkansas as he worked to advance his retail businesses. In the 1950s Walton began thinking of owning a chain of stores, in part enticed by the availability of airplanes to cut traveling time. The Ben Franklin stores specialized in rural markets, and after some success at running several franchises, Walton proposed that the Ben Franklin stores enter the urban market as a discount chain. The Ben Franklin company rejected Walton's proposal, but Walton was determined to piggyback the success of such rising chains as K-Mart, the discount version of Kresge. In the early 1960s Walton left the Ben Franklin stores behind and began his own discount store, named Wal-Mart.

Number One

Walton might have entered the discount chain store business with the idea of imitating the success of other franchises, but, in a pattern that was characteristic of the rest of his life, Walton and Wal-Mart eventually became leaders of the field. Relying on volume sales and direct purchasing from manufacturers, Wal-Mart undersold the competition. Walton combined old-fashioned P. T. Barnum-style promotion with down-home charm, charisma, good business sense, and competitiveness to build his new chain. David Dayne Glass, a financial officer whom Walton was trying to hire away from another company, described his first visit to the second Wal-Mart store: "It was the worst retail store I had ever seen. Sam had brought a couple of trucks of watermelons in and stacked them on the sidewalk. He had a donkey ride out in the parking lot. It was 115 degrees, and the watermelons began to pop, and the donkey began to do what donkeys do, and it all mixed together and ran all over the place." Despite his initial exposure to Wal-Mart, however, Glass eventually became Wal-Mart's chief executive and credited Walton's success to his willingness to improve each and every day. By 1985 Wal-Mart had more than 750 stores and more than 80,000 employees; by 1990 the company had more than 250,000 associates. Walton stressed input from his associates to further high productivity and encouraged change. By the end of the 1980s Sears and K - Mart both had more stores in operation and led Wal-Mart in total dollar volume in sales. However, Wal-Mart had a faster rate of growth and in 1988 and 1989 passed both of its competitors in profits earned. Wal-Mart was clearly on the rise while K-Mart and Sears struggled. Walton also introduced a new chain called Sam's Wholesale Club that brought in $96 billion in annual sales by the end of the decade. In 1990 Walton's personal fortune was estimated to be between $9 billion and $13 billion.

Bad Luck

Walton had built his business with his family. His brother Bud had always been an important element in Sam's success and he relied heavily on other family members. His daughter Alice was involved in several car accidents in the late 1980s, and Sam himself was diagnosed as having multiple myeloma, a bone disease. In 1982 he was diagnosed with leukemia. Walton died in 1992, the head of the dominant retail chain in the United States.

Sources:

Vance H. Trimble, Sam Walton: The Inside Story of America's Richest Man (New York: Dutton, 1990);

Sam Walton with John Huey, Sam Walton, Made in America: My Story (Garden City, N.Y.: Doubleday, 1992).