Walton, Sam Moore

views updated May 29 2018

WALTON, SAM MOORE

Sam Walton (1918–1992) 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-and-dime stores. His strategy of monopolizing the discount shopping market in rural areas made his stores the largest retail chain in the United States.

Sam Moore Walton was born to Thomas and Nancy Walton in Kingfisher, Oklahoma, on March 29, 1918, the eldest of two boys. His father, a farm-mortgage banker, moved his family to Missouri, where they lived in a succession of rural communities before settling 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 (1929–1939) than did many of their neighbors.

Walton financed his education at the University of Missouri with money earned from a newspaper route. He graduated with a degree in economics in 1940. He took his first retailing job at a J.C. Penney store in Des Moines, Iowa, where he was a sales trainee. That job, however, 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 (1939–1945). While in the service, he married Helen Robson on February 14, 1943. The couple had four children.

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. He traveled across the state to Bentonville, which became headquarters to the Wal-Mart empire.

Walton started having doubts about the future of dime stores and, in the 1950s, started paying close attention to larger chains like K Mart and Zayre. These retailing giants avoided rural areas, preferring to place their stores in suburban or urban locations. In 1962 Walton and his brother 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.

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 slowly caught on. The stores were simple and basic, and many resembled 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 and continued to improve under Walton's leadership. In 1983 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 he opened stores in medium-sized cities such 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, and 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 1983 he 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, and the goods were priced just eight to ten percent over cost. By 1991 there were over 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 an almost equal amount of space to both food and non-food products. Wal-Mart Supercenters, another Walton innovation, have both a supermarket and a regular Wal-Mart under the same roof.

Wal-Mart is a success story that redefined the way retailers viewed growth markets. Walton 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.

Walton's business success has impacted Bentonville, Arkansas, home to the Wal-Mart Corporation. 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, and he did not believe in company perks like limousines.

Despite all of the success, Walton and his chain of discount stores were not without their detractors. Chief among them were the small town merchants who were ultimately driven out of business by the Wal-Mart stores. They knew they could not compete with the low prices and extensive variety of merchandise.

Regardless, Walton revolutionized the concept of discount stores in the United States and reshaped consumer shopping patterns. 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 and 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 which propelled him 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.

Among the honors Walton received in his lifetime 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 and 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 (1989–1993) 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 age 74, three weeks after receiving the medal from Bush.

See also: Chain Store, Retail Industry, Wal-Mart

Sam Moore Walton

views updated May 18 2018

Sam Moore Walton

Businessman Sam Moore Walton (born 1918) built Wal-Mart into one of the nation's largest retailers and became one of the richest Americans.

Sam Moore Walton was born in Kingfisher, Oklahoma, March 29, 1918. The older of two boys, his father was a banker. A product of the Great Depression of the 1930s, he graduated from the University of Missouri in 1940. He married Helen Robson after graduation and eventually had four children. He served three years as an Army intelligence officer during World War II.

Walton had started in retailing with the J. C. Penney Company in Des Moines, Iowa, as an $85-a-month trainee. He spent the period 1938-1942 with them. After his army service, in 1945 Walton used his savings plus a $25,000 loan to buy a Ben Franklin store in Newport, Arkansas, where his brother joined him. In 1950, when his landlord failed to renew his lease, Walton moved to Bentonville, Arkansas, now a town of about 10,000 and headquarters to the Wal-Mart empire.

From 1945 through 1962 he operated Ben Franklin stores; by 1962 he had nine stores—Walton's 5 & 10— operated under a franchising agreement with the Chicago-based Ben Franklin. Then began what became one of America's most successful retail operations—Wal-Mart, which he co-founded in 1962.

At that time Walton decided that the future of retailing was in discount stores, not dime stores. He studied chains such as K Mart and Zayre and then proposed to the Ben Franklin management the starting of a discount store. When they showed no interest, he, along with his younger brother James, opened his first Wal-Mart outlet in Rogers, Arkansas, five miles from Bentonville.

Walton avoided publicity about himself, preferring that his stores occupy the spotlight, and he took a direct role in the administration of those stores at all levels. He was, indeed, perhaps a corporate evangelist, and in his articulation of a vision for his firm is a good example of the conscious creation of a corporate culture—a set of shared values which define a business and those who work in it. Preferring to be called "Sam," or "Mr. Sam" at most, he might appear at a Wal-Mart checkout, or loading dock, or at a rally at a new store opening.

His business has been described as an extremely well managed one. Although the stores tended to operate as relatively inexpensive, no-frills units and appeal to a lower-middle-class market, the company was quite willing to invest at the cutting edge of technology. The stores were clustered around warehouses in order to permit one-day delivery of goods, and advertising costs were minimized. An early innovation was the decision to buy directly from manufacturers rather than through wholesalers. 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 1970, when the firm went public, would have had $700,000 worth of stock at 1987 prices. In the process, Walton became one of the richest men in the world, with estimates of his worth varying widely and growing constantly.

This early and phenomenal growth—Wal-Mart stood behind only Sears and K Mart in the retail field and was challenging them—was achieved as essentially a regional chain, operating in the Sunbelt. In later years it created a chain of warehouse stores—Sam's Wholesale Club—and was moving into the hypermarket area, Wal-Mart Supercenters. In 1990 there were more than 1,000 stores and more than 150,000 employees.

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 20th century—but in the South and Midwest (the former once depressed and neglected, the latter the "heartland" of the nation). His strategy was not to take on the large chains and department stores of the urban centers, but rather to compete with the local chains and individual merchants of smaller urban areas and their rural surroundings. When his stores did approach larger population centers, they went first to the periphery of the urban area. That strategy changed in the 1980s with the extension of stores to the other geographic areas of the nation—in order to build a truly national chain—and the movement in toward the center of the urban areas.

Sam Walton died on April 5, 1992 at 74 years of age. He left behind a fortune that amounted to over $23 billion in Wal-Mart stock alone. Before his death, Walton penned a book in 1992 entitled Sam Walton, Made in America. By 1997, five years after Walton's death, Wal-Mart had grown to over 2,300 stores with annual revenues of $104.8 billion per year.