Walton, Samuel Moore ("Sam")

views updated

WALTON, Samuel Moore ("Sam")

(b. 29 March 1918 in Kingfisher, Oklahoma; d. 5 April 1992 in Little Rock, Arkansas), retail merchant who transformed mass merchandising and revolutionized the shopping habits of the American consumer in the 1960s. Walton, president of Wal-Mart, Inc.—the largest retail chain in America—founded his first superstore in the 1960s.

Walton was one of two sons born to Thomas Gibson and Nancy Lee Walton, a farm couple living near Kingfisher. Thomas Gibson was a banker and a farmer and became a farm loan appraiser in 1923. To earn much-needed money during the Great Depression, Walton's mother bottled milk, which Walton delivered. Having learned early the value of a dollar, he sold magazine subscriptions from the age of seven and had paper routes throughout his college years. Walton also raised and sold rabbits and pigs.

In 1936 Walton graduated from Hickman High School in Columbia, Missouri, and then studied at the University of Missouri, where he earned a B.A. in economics in 1940. He began his career in retailing that same year by going to work for J.C. Penney in Des Moines, Iowa, as a management trainee for a salary of $85 a month. During World War II he served in the U.S. Army from 1940 to 1945, where he achieved the rank of second lieutenant. In 1943 he married Helen Robson of Claremore, Oklahoma; they had four children.

In 1945 Walton became a retail store owner by opening the first of several Ben Franklin five-and-dime franchises in Arkansas. The lease was not renewed, because the landlord saw the success of the store and wanted it for his own son. With his pride only a little damaged, Walton started a store in Bentonville, Arkansas, where he negotiated a ninety-nine-year lease. It was also a Ben Franklin franchise, but he called it Walton's Five and Dime. Walton was a poor boy from a poor state, but through hard work, ingenuity, and a commitment to provide customers with low-priced, high-quality merchandise, his small business in rural Arkansas began to grow.

In March 1962 the S.S. Kresge Company opened its first Kmart discount store in Garden City, Michigan. In May the Dayton Corporation opened its first Target discount store in Roseville, Minnesota. Arkansas City Products Corporation, the parent company of the Ben Franklin chain of variety stores, rejected Walton's franchise proposal for a discount store in Arkansas. Undaunted, he took on the project himself. Walton opened his first Wal-Mart store, naming it Walton's Family Center, in Rogers, Arkansas, in 1962. In July he opened the first Wal-Mart Discount City, a larger variety store, in Rogers. The Rogers outlet was a sixteen-thousand-square-foot building. Spelled out in huge letters across the building was "Wal-Mart," an amalgam of Walton's name and the word "mart," which means a "place where goods are sold." The grand opening attracted tens of thousands of consumers. He had demonstrated that a store in a small town could attract a large number of customers from a significant distance and generate a substantial volume of business, if it offered a wide variety of goods at reasonable prices. His first store specialized in providing consumers with name-brand products at low prices.

By 1962 Walton and his brother, James, owned and operated sixteen variety stores in Arkansas, making theirs the largest independent variety store chain in the nation. From 1960 to 1962 Walton, presenting himself as the "little country boy from Arkansas," traveled the nation, examining the successful practices of the nation's leading retail enterprises. From this effort Walton realized that he could succeed by using a practice of modest overhead expenses with low retail prices and efficient distribution. In 1964 Walton opened his second unit in Harrison, Arkansas. He located the store in a building that had been used as a cattle-auction yard. The grand opening took a downward turn when the day's heat (115 degrees) caused the promotional watermelons to pop, thus frightening the donkeys that were part of the ride promotion and causing them to flee. The grand opening was not a complete disaster; numerous shoppers came to the store because the prices were 20 percent below those of competitors. The success of the Harrison store provided the funding needed to build several other stores and served as the training ground for future managers. Some analysts believe that without the success of the Harrison store, there would not be a Wal-Mart company today.

Although many poorly managed retail firms failed in the early 1960s, by 1965 the discount industry continued to expand and capture the attention of the majority of America's shoppers. In the mid-1960s discount merchandising included many small retail businesses, but their importance was declining as the industry became dominated by larger chains. By 1964 Walton was worried that other discount chains would adopt his concept of discounting in small towns and began to establish Wal-Marts as rapidly as financing would permit. He opened one store in 1965, two stores a year in 1966 and 1967, and five a year in 1968 and 1969, for a total of nineteen Wal-Marts by the end of the decade. Eleven of the stores were in Arkansas, and the others were located in Missouri and Oklahoma. In 1969 Walton's firm incorporated.

Walton's success with expansion in the 1960s was matched by continued growth in the discount industry, which caught up with and exceeded the growth of department stores nationwide. By the end of the decade Walton's total workforce numbered 650 full-time and 150 part-time employees, including competent executives to assist in managing the company's increasingly diverse interests. Walton's company performed well during the 1960s. The number of units in his variety and discount store chains had doubled from fiscal year 1966 to 1970, and both net sales and net income had shown gains of about 400 percent. Walton's success in the 1960s retail industry can be attributed to his strategy of copying successful business practices of competitors; using small-town locations; pushing to expand business interests; employing innovative business techniques; and demonstrating a willingness to share the profits with managers. Walton's decision to shift the focus of his company away from his variety store chain to his expanding discount store chain and the consolidation of business interests into a single, publicly held corporation provided the means of facilitating future growth in the decades to come.

Wal-Mart stores spread across rural America. Walton's employee-oriented management style helped fuel growth as Wal-Mart went public in 1970. A decentralized distribution system created further growth in the 1980s. Wal-Mart's "superstore" concept was successful in competing against smaller, traditional mom-and-pop stores. By the early 1990s Wal-Mart became the largest retailer in America, with 1,700 stores. Walton was known by many as a modest, simple family man who devoted endless hours to his family, community, employees, and customers. He once reflected on whether he made the right choices in life: "I am absolutely convinced that the only way we can improve another's quality of life … is through what we call free enterprise—practiced correctly and morally." Walton was active in managing the company as the chief executive officer and president until 1988 and was chair until his death. Walton died from complications arising from a bone disease and leukemia. He is buried in Little Rock. Walton left his family a fortune estimated at $23.5 billion.

Biographies and autobiographies of Walton include Austin Teutsch, The Sam Walton Story (1991); Sam Walton and John Huey, Sam Walton: Made in America (1992); Sandra S. Vance and Roy V. Scott, Wal-Mart: A History of Sam Walton's Retail Phenomenon (1994); and Bob Ortega, In Sam We Trust (1998). Obituaries are in the Detroit Free Press (6 Apr. 1992) and Time (20 Apr. 1992).

Reed B. Markham