Walton, Sam(uel) Moore
Walton, Sam(uel) Moore
(b. 29 March 1918 near Kingfisher, Oklahoma; d. 5 April 1992 in Little Rock, Arkansas), retail executive who was the founder and chief executive officer of Wal-Mart Stores.
Walton was one of two sons born to a young farm couple, Nancy Lee and Thomas Gibson Walton. In 1923 the family moved from Oklahoma to Missouri, where Walton’s father worked as a farm-mortgage broker and his mother was a homemaker. In his youth Walton lived in several different rural communities in Missouri. Growing up during the Great Depression, the hardworking young Eagle Scout helped out on the family farm by doing chores such as milking the family cow after school and delivering the milk. At Hickman High School in Columbia, Missouri, he was quarterback of the state-champion football team, and in his senior year he was elected president of the student body and voted “most versatile boy.”
After graduating in 1936, Walton entered the University of Missouri at Columbia. He put himself through college by waiting on tables and delivering newspapers. With his outgoing personality and ability to work well with others, Walton made friends easily and became involved in a variety of campus- and church-related activities. His busy schedule garnered him the nickname “hustler,” and his classmates elected him the permanent president of the senior class. In 1940 he graduated with a degree in economics. Three days after graduation he went to work as a management trainee for a J. C. Penney store in Des Moines, Iowa.
From 1942 to 1945 Walton served in the U.S. Army Intelligence Corps, achieving the rank of captain. On 14 February 1943 he married Helen Robson of Claremore, Oklahoma, the daughter of a successful banker, and by 1949 they had three sons and one daughter. In 1945 Walton combined $5,000 of savings with $20,000 borrowed from his father-in-law and purchased a struggling Ben Franklin variety store in Newport, Arkansas. As a result of Walton’s competitiveness and hard work, the store soon turned a profit. Walton assumed a prominent role in the life of the small town, regularly attending services at the Presbyterian church and serving in various civic organizations. Walton and his family were content in the small community, but in 1950 the landlord of the store, who wanted the now thriving business for his son, refused to renew Walton’s lease.
Although disappointed, Walton lost no time in finding another small-town Ben Franklin store to buy, this time in Bentonville, in northwest Arkansas. Walton relocated his family to the tiny Ozark community and renamed the store Walton’s 5 & 10. In 1952 Walton opened another variety store in Fayetteville, Arkansas, this one with self-service, a novel retail concept in that day. By 1962 Walton, along with his brother, Bud, owned sixteen units located throughout Arkansas, Missouri, and Kansas, making the business the largest independent variety-store chain in the United States.
Walton kept abreast of developing retail trends, and he became convinced that his business would soon be threatened by a relatively new form of retailing known as discounting. Discounters keep operating costs down by maintaining low overhead expenses and buying goods in volume; they pass those savings on to consumers in the form of low prices in order to generate high overall sales and profits. Walton believed that a full-size discount store could succeed in a small rural market. He asked Ben Franklin’s management corps to join him in a small-town discounting venture, but the retail executives refused. “They just couldn’t see the philosophy,” Walton explained. Undeterred, Walton decided to launch his own discount operation.
Skeptics abounded regarding Walton’s discounting idea. As Walton stated in his autobiography, “Nobody wanted to gamble on that first Wal-Mart.” Walton financed 95 percent of the venture himself, a move that plunged him deep into debt. He opened his first Wal-Mart store in Rogers, Arkansas, in 1962. In that same year the S. S. Kresge Company opened its first Kmart discount store, and the Dayton Corporation established its Target discount operation.
Walton’s store was a resounding success. Consumers flocked to Wal-Mart for its low prices, and Walton began to open additional Wai-Marts in small towns in Arkansas and later in Missouri. During the early years many brandname manufacturers were reluctant to do business with the discount chain, and the quality of the goods sold in those early Wal-Marts was often inferior. But customers found value in Walton’s rock-bottom prices, and the chain grew steadily. In 1969 Walton opened a general headquarters and distribution facility in Bentonville to service his eighteen-store chain. In 1970, needing money to finance his future expansion plans, Walton authorized the public sale of Wal-Mart securities. Two years later Wal-Mart Stores was listed on the New York Stock Exchange.
During the 1970s Walton expanded Wal-Mart by locating his stores close to highly automated distribution centers. That shrewd location strategy ensured that stores could be replenished rapidly with goods. The quality of Wal-Mart’s merchandise improved markedly during this period as formerly reluctant manufacturers now solicited Walton’s business, and Wal-Mart’s sales and earnings increased at an annual rate of about 40 percent. Walton continued to open stores in small towns that other retailers ignored. “There’s a lot more business in those communities than people thought,” Walton observed. In 1974 Sam Walton relinquished his position as chairman of Wal-Mart but returned two years later and reclaimed the leadership post. In 1979 Wal-Mart recorded its first billion-dollar year in sales, becoming the youngest retail firm and the only regional retailer ever to reach that volume.
During the 1980s Walton accelerated his firm’s pace of growth through diversification. Determined to keep his business from stagnating, Walton embraced change and flexibility and was willing to experiment with innovative business concepts. In 1983 he introduced one of his most successful departures, Sam’s Club, a no-frills wholesale club. In 1987 Walton launched giant stores called Hypermart USA. But operation of the 225,000-square-foot behemoths, which sold everything from car batteries to butter, proved unwieldy, leading to one of Walton’s rare setbacks in retailing. In 1988 Walton threw his boundless energy and enthusiasm into another new retail format, the Wal-Mart Supercenter. Walton had great confidence in the 150,000-square-foot combination grocery and discount store, believing correctly that the Supercenter would be the instrument of Wal-Mart’s future growth.
In the mid-1980s Walton began to enter urban markets and launched a campaign to expand his firm nationwide. By 1987 Wal-Mart had become the third largest retail firm in the United States, behind Sears and Kmart. In 1988 Walton, then sixty-nine, relinquished the job of chief executive officer to David D. Glass while retaining the title of chairman of the board. During the 1980s Wal-Mart’s annual sales grew from f 1 billion to over $25 billion and the number of stores increased from under 300 to more than 1,500. Wal-Mart became a national retail chain and passed Kmart to become the nation’s second-largest retailer. In 1991 Wal-Mart overtook Sears to become the nation’s leading retail firm, with annual sales of $32.6 billion.
Wal-Mart’s phenomenal success was based squarely on the business skills and personality traits of Sam Walton. A consummate merchant, Walton diagnosed the rising demand by consumers for brand-name goods at reasonable prices and devised innovative methods for cutting costs and passing the savings on to his customers. In his quest for cost cutting and efficiency, he made bold investments in sophisticated distribution and technology systems. In 1987 Wal-Mart launched its own satellite communications network. The largest privately owned system in the United States, the technology cost $20 million, a sum that astounded the notoriously frugal Walton. “It blows my mind that we spent $20 million for a satellite outfit,” he marveled. But his disclaimer belied Walton’s unwavering commitment to elaborate marketing and communications systems that allowed his firm to maintain operating costs that were well below other retail firms.
Another advantage that Wal-Mart enjoyed over its competitors was Walton’s talent for eliciting amazing loyalty from his workforce. He forged a partnership with his personnel, whom he called “associates,” by sharing information with them and giving them a wide range of decisionmaking responsibilities. He demanded hard work and hired individuals based largely on their stamina and willingness to submit to the rigors of Wal-Mart’s grueling pace. At the same time he rewarded employee effort through generous financial incentives, such as profit sharing and stockpurchase plans that made some employees rich, and incentive bonuses, such as rewarding employees if “shrinkage” (the loss of merchandise due to damage or internal theft) was reduced. The amazing buoyancy of the firm’s stock in particular imbued Wal-Mart’s personnel with a high level of energy and dedication that Walton described as “Wal-Mart fever.”
Walton was a charismatic leader with an unassuming, folksy demeanor. He enthralled Wal-Mart’s small-town workers and customers alike through spontaneous promotional stunts, such as walking a pig down a Dallas street in 1986 or dancing the hula on Wall Street in 1984 to fulfill a pledge made to his employees when they attained recordbreaking profits for the firm. Nowhere was his flamboyant showmanship more in evidence than at Wal-Mart’s annual shareholders’ meetings. He converted those gatherings into huge pep rallies, complete with songs, awards for outstanding performance, and, of course, favorable price comparisons with competitors.
Walton would typically rise before dawn and work into the evening. By 6:30 A.M. on most days he was in the air piloting his own twin-engine Cessna to visit stores. For many years Walton fulfilled his objective of visiting every store in his chain at least once a year. Even after his empire expanded beyond his ability to maintain that goal, he continued his hectic pace, sometimes visiting two and three Wai-Marts a day. Terming his store visits “the most important thing I do,” he would arrive unexpectedly, lead his associates in the Wal-Mart cheer, talk to employees, stress the importance of greeting and helping customers, and genuinely solicit their ideas on ways to improve the firm. Walton was an avid tennis player and quail hunter and usually carried cages for his bird dogs in the back of his 1985 Ford pickup truck. When his favorite bird dog, Ol’ Roy, who often accompanied him on store visits, died, Walton mourned the death in an open letter to his employees.
As Wal-Mart’s success grew, Walton garnered numerous honors and awards, including being named chief executive of the decade in 1989 by Financial World magazine. He refused to take credit for his firm’s astounding growth, insisting that his employees were the real source of Wal-Mart’s success. The self-effacing Walton was especially dismayed when in 1985 Forbes magazine declared that his fortune of $2.8 billion, derived mainly from his 39 percent ownership of Wal-Mart stock, made him the richest man in America. Walton disdained what he saw as a dubious honor and showed far more interest in his firm than in his growing wealth. When, for example, his fortune plunged by $1.8 billion in the stock-market crash of 1987, he shrugged off the loss, saying, “It’s paper anyway.” Walton held the richest-American distinction until 1989, when, in part to deflect the unwanted publicity that the title had generated, he and his wife divided their fortune with their four children. By 1990 the Walton family fortune was valued at $12.5 billion; in 2000 it was $85 billion.
As Walton’s fame and popularity spread, his business increasingly became an object of controversy, especially its impact on Main Street merchants in the small towns that Wal-Mart inhabited. Local retailers complained that they could not compete with Wal-Mart’s low prices, and critics blamed Walton’s aggressive price-cutting for putting smalltown merchants out of business. Walton deflected those criticisms by insisting that he was merely meeting the demands of consumers for quality merchandise at bargain prices.
In 1990 Walton was diagnosed with multiple myeloma, an aggressive form of bone cancer. He had suffered from leukemia since 1982, but that disease was in remission. In 1992 President George Bush presented Walton with the Medal of Freedom, the nation’s highest civilian honor. A few days later Walton died at the age of seventy-four. He is buried in Bentonville. At the time of his death, the family fortune was valued at $23.6 billion.
Walton was one of the twentieth century’s leading entrepreneurs. Many of his business practices, especially his empowering management techniques based on sharing information and profits with his employees and his use of state-of-the-art distribution and technology systems, have been widely copied. His single-minded focus on providing customers with quality, value, and service transformed the expectations of consumers. Manufacturers and other retailers alike were compelled to incorporate Walton’s regimens of cost cutting and efficiency into their businesses in order to compete in the consumeroriented, valuedriven marketplace that Walton himself did so much to create.
Walton’s autobiography, Sam Walton, Made in America: My Story (1992), written with John Huey, senior editor of Fortune magazine, is anecdotal and informative but lacking in insight. A journalistic account of Walton’s life and achievements is Vance H. Trimble, Sam Walton: The Inside Story of America’s Richest Man (1990). For a balanced, in-depth account of Walton’s role in the birth and development of Wal-Mart, see Sandra S. Vance and Roy V. Scott, Wal-Mart: A History of Sam Walton’s Retail Phenomenon (1994). One of several journalists who are critical of Wal-Mart’s impact on small-town America is Bob Ortega, who wrote In Sam We Trust: The Untold Story of Sam Walton and How Wal-Mart Is Devouring America (1998). Of the many magazine articles on Walton and Wal-Mart, two noteworthy examples are Arthur Markowitz, “Mr. Sam: Wal-Mart’s Patriarch,” Discount Store News (18 Dec. 1989), and John Huey, “Discount Dynamo: Sam Walton,” Time (7 Dec. 1998). Obituaries are in the New York Times (6 Apr. 1992) and the Wall Street Journal (6 Apr. 1992).
Sandra S. Vance