Sam Walton: Success Story of Walmart Founder

This week, March 29, would have been the 105th birthday of Walmart founder. In less than 80 years, Walmart has grown from a small franchise store to the largest supermarket chain in the world. It was created by Sam Walton, a man who was praised as the ideal American businessman and criticized as a “killer” of local communities and anti-union.

Eagle Scout

The story of Sam Walton can be called the classic embodiment of the American dream – it is in this spirit that he himself told it in his autobiography. Now the Walton family takes first place in the list of the richest families in the United States, and her fortune is estimated at $ 224.5 billion. And despite the fact that he himself was born into a family of farmers in 1918.

In the official biographies of Sam Walton, it is emphasized that he achieved considerable success as a child. In the eighth grade, for example, he received the highest rank in the Boy Scout hierarchy, becoming the youngest holder of this rank in the history of Missouri. And at the end of school, he was noted as “the most versatile gifted boy.”

When the boy was 11 years old, the Great Depression began. Sam had to start working. He was instructed to sell to his neighbors the milk of Walton’s only cow, which he also milked himself and bottled the milk himself. He also delivered the local city newspaper from house to house.

After graduating from school, Sam Walton entered the University of Missouri, the Faculty of Economics, and the training courses for reserve officers.

Walton University graduated in 1940, and three days after graduation he got a job at the JCPenney department store. His first salary is $75 per month. A year later, he went to work at the DuPont defense plant, and in 1942 he joined the US Military Intelligence Corps. Not a spy, of course. The scope of his activity was the security of military factories. Walton served in the corps until 1945, retiring with the rank of captain.

First business

Even during the war, in 1943, Sam married Helen Robson, the daughter of a successful banker. A year later, their first child was born. And in 1949 there were already four children. And this marriage, which lasted until the death of Sam Walton, brought him the funds to open the first store. When he retired, he borrowed $20,000 from his father-in-law, added $5,000 he had saved during his service, and bought a small shop in Newport.

So at the age of 26, Walton became the owner of the store – he will be engaged in this business all his life. The Newport store was part of the Ben Franklin franchise of fixed-price stores that spanned across the United States. At that time, Walton was still an extremely inexperienced entrepreneur, and therefore signed an agreement under which he agreed to pay 5% of sales for a franchise, and even on unfavorable terms.

As Harvard professor Richard Tadlow later wrote, “Sam Walton’s first store was a second-rate store in a second-rate city in the state that no one would call first-class. During the 20th century, millions—literally—small stores in America went bankrupt… Of course, anyone who analyzed the situation in 1945 would have thought that Walton was a likely candidate for failure.”

Nevertheless, the store was doing well, and soon Walton became the owner of another store on the same street. For three years, the revenue of stores increased from $80,000 to $225,000.

In 1951, Walton sold the franchise for $50,000. And in the same year he opened his first truly own store, Walton`s Five and Dime. By the early 1960s, he already had 16 stores.

Walmart as we know it

The company, which by that time had become a family business, received its current name in 1962. Interestingly, for the first two years of its existence, it was written in the same way as it is now, but in 1964 it was replaced by Wal-Mart. The retailer returned to its original name in 2017. The first store called Walmart opened in Arkansas, in the city of Rogers. Like other chain stores, it was a discounter.

In the 1960s, huge shopping centers and supermarkets were actively built in the United States, which became important places of attraction. This format suggested that residents of small towns get into a car on a day off and go to a bigger city. Go shopping.

Sam Walton challenged this model. In his opinion, a large store can be in small towns.

Walton’s innovation was not discounters per se, but the idea that they could appear everywhere. As he wrote in his autobiography, he wanted to “create a well-stocked discount store in small towns that everyone else was ignoring.”

Wal-Mart has developed five variants of stores – different sizes and assortments for cities of different sizes. The common thing was a fairly wide assortment even in the smallest of them and low, close to wholesale prices. The network actively developed where modern stores had rarely opened before – in the South and Midwest.

Wal-Mart also carefully thought out the logistics system, which was based on 20 huge warehouses in different parts of the country – they accounted for 85% of the company’s warehouse space. Such warehouses made it possible to reduce the cost of storage and create a centralized delivery system. Back in the 1960s, the computerization of warehouses began, and since then, the active use of technology has become another feature of Wal-Mart.

It cannot be said that Walton conceptually invented anything. Rather, he improved and brought to the ideal. This also applied to the optimal arrangement of goods, and systems against theft, and the rules for the work of employees. One of them is to always look customers in the eye.

Walton often handled the placement of the stores personally, choosing locations for stores on the outskirts of cities, where rent was cheaper. In general, he delved very carefully into all aspects of the activities of his network, retaining the post of general director until 1988.

In 1970, Wal-Mart became a public company. The Walton family, however, retained a controlling stake.

By 1980, the company had 276 stores with over 21,000 employees. It was in this year that Wal-Mart’s sales for the first time exceeded $1 billion. In 1983, the company began to open stores of another format – Sam`s Wholesale Club – huge hypermarkets of small wholesale trade.

American dream and exploiter

Wal-Mart stores created new consumption patterns that spread across the US. At some point, researchers and critics began talking about the “Walmartization of rural America.” This is understood as a very different effect, and this difference reflects a different view of the work of the company and the personality of Walton himself: from a great self-made businessman to a hard capitalist, mercilessly exploiting workers and destroying local communities for profit.

Some talk about how the proliferation of Wal-Mart stores has “killed” traditional local commerce and maybe even small-town life itself. After all, earlier small shops, the owner of which knew every customer, often became the center of local life. Of course, such stores could not withstand fierce competition from the network. Walton himself once spoke rather sharply about this, stating that “small stores were simply destined to disappear, because the whole process is led by customers who are free to choose where they buy.”

Others, referring to “Walmartization,” speak of Wal-Mart’s inherently rigid and aggressive model of low wages, aggressive supply chain management, and keeping prices very low. Critics say that in the early days of the chain, Walton required store managers to work 16-hour days. And, as he himself later admitted, at first he underpaid employees in order to make the stores profitable. The network is still being criticized for low wages, poor working conditions, tough and increasingly technological control over workers, and the fight against trade unions.

But at the same time, quite quickly, a new for that time practice of participation of ordinary employees in profits appeared in the chain stores: if sales in the store grew, sellers received a percentage of sales. Managers, on the other hand, were attracted by the opportunity to invest a small amount in the network – up to $1,000 – and earn on it.

Some use the word “Walmartization” more neutrally or positively – as a synonym for the emergence of large family-friendly stores in various places, where people of all social backgrounds can come. Walton himself, defending himself from criticism, wrote that Wal-Mart has always tried to participate in the life of local communities, holding charitable events, creating special scholarships for graduates of local schools, etc.

Like many very wealthy people obsessed with their business, Walton was quite modest in everyday life. On his trips to Wal-Mart, he stayed in budget hotels and first rented budget cars and then drove a simple Ford pickup truck for years. They also talk about his industriousness – about how he himself got up at 4:30 in the morning or traveled around six of his stores in a day to check.

Walton did not like publicity, social events and rarely gave interviews. In 1985, he became the richest American according to Forbes. Then he said that he “seems stupid all this hype around … fortune” and that the recognition of his richest American “made his life harder.”

In 1989, renowned journalist John Huey was able to convince Walton to write his autobiography, Sam Walton: Made in America.

The book was published after the death of Sam Walton. He died in 1992, at the age of 75. By this time, the Wal-Mart network included 2 thousand stores, and the company’s annual revenue was $ 52 billion. And in 1998, Time magazine included Sam Walton in the list of 100 most influential people of the 20th century.

After his death, the chain of stores continued to expand, so that at some point Walmart became the largest retailer in the world. Now the company has 10.5 thousand stores in 20 countries, they employ 2.1 million people. Walmart finished last year with $611 billion in revenue and $20 billion in operating income.

Yana Rozhdestvenskaya