Walmart Was Built Out Of Frustration

Sam Walton

With over 11,300 locations globally. Walmart draws almost 140 million shoppers employees over 2 million associates around the world. What’s the story behind Walmart? How did a man with the vision of reducing the cost for his customers, build a retail empire.

Sam was born towards the end of World War I and then the country had to go through the great depression, this was a hard time for everyone, but particularly for farmers. For landowners, things were about to get worst, as in the 1930s the country also went through the dust bowl. The high winds and dust swept the region and affected people, crops, and livestock. Farmers couldn’t do any business and Sam’s father had to repossess failed farms that were in families forever. Sam as a child went along with his father and saw his father talk to farmers. Maybe this had some effect on young Sam, as he did not want his family to go through what the farmers went through.

As a child, Sam would sell milk after football practice. Sam also once joined boys scout, where he saved a boy’s life after he had fallen into the river. In 1936 he entered university and graduated in economics. After graduation, he worked at J. C. Penney for $75/month. As the story goes, he was good with customers but his book was never organized. His bosses threatened to fire him saying that:

“He was not cut out for retail”

In 1942, the US joined World War II, Sam decided to join the army. He was put off on a noncombat reserve list, one-night while bowling he met his wife Helen. By now Sam was called for duty and before he left he proposed to Helen. The couple got married on Feb 14, 1943, I wonder why on Feb 14. They had their first child on October 28, 1944, less than a year later the War ended, Sam now with family decided to run his own store. In 1945 with savings of $5000 and a loan of $20,000 from his father in law he bought a Ben Franklin shop that was losing money as he thought he could turn it around. Sam knew if he sold cheap items he would generate profits. One day while at the shop, he saw that the store across from his was selling ladies’ clothing and they ran out. The next day, Sam drove to the suppliers and bought all they had. The store across couldn’t order any more as the supplier was out, and the customers started to come Sam’s way. He even found a way to beat his rival on the popcorn, he would place the popcorn machine outside his store and the smell would attract customers. Within 3 years he was able to pay back the loan he had acquired from his father-in-law.

However with profits come jealousy, the owner of Sam’s building had an eye on him and he got greedy, when the time came to renew the lease the owner refused. Forcing Sam to leave, Sam search for a new location and he found one in Bentonville. Moving to Bentonville with a wife and 4 kids was not easy, but the price was too good. Learning from the past, Sam bought the store with 99 years lease.

In July 1950 he opened doors to the new store. In the same year Sam was introduced to self-service, where instead of a sales clerk handing out the merchandise to customers, customers could pick and choose themselves. This concept was new at the time and Sam realized the with fewer employees his expenses will decrease. Using self-service, the store’s sales tripled and he had enough money to expand. In the coming 10 years, he bought 16 stores, with that many stores comes the management. As driving back and forth was proving to be inefficient, Sam bought a plane giving him the freedom to visit any store any time. In one of his flights the Federal Aviation Administration (FAA) told him that he should change his attitude, Sam thinking about business turned off his radio.

Sam was operating under a franchise, from Ben Franklin. He approached Ben Franklin with the idea of buying items in volume for less price, as this would eventually reduce the consumer price. But Ben Franklin didn’t though much of Sam’s idea. Sam frustrated, decided to set up a chain on his own.

In July 1962, he leased a store in Rogers, Arkansas. He was told that “this store is one of the ugliest looking store”, this was the first Walmart store. The store exceeded his own expectations, bringing in sales of $1 Million in one year. In 1964 he opened two more stores. In 1969 he opened a store in the town he was run out off 18 years ago, the store he lost the lease on, lost its customers due to Walmart.

He would occasionally walk into his competitive stores and if he saw a price that was cheaper than his he would call his store and ask them to lower the prices right away. His wife Helen suggested that he should make profits available to all his employees and in 1972 Walmart opened its profit-sharing program. By 1978 Walmart had 195 stores in 10 states and was opening stores at a rate of about 100 a year. By 1985 Sam Walton was the richest man in the United States. But then in 1987 with the large stock market crash, Sam lost over a billion dollars in a matter of hours his reply; “its paper anyway”. In 1990 the Sam was diagnosed with bone cancer and on April 5th, 1992 he passed away, days after his 74th birthday.

Sam was up before dawn, he would come home only to have dinner and to catch up on his reading. He once said that “I never really understand, How we succeeded” He did not know the business but decided to read a book from Ben and Fraklin. He applied the principles he learned from the book in his own life. Sam wanted to improve the shopping experience for everyone, and boy did he. In 2019, Walmart’s total revenue was $514.4 billion, thanks to Sam Walton people in 11 countries can enjoy shopping with ease.