Sam Walton

American businessman

• Born: March 29, 1918
• Birthplace: Kingfisher, Oklahoma
• Died: April 5, 1992
• Place of death: Little Rock, Arkansas

Walton built Wal-Mart, the world’s largest retailer, from a small store in Arkansas to a multibillion-dollar business with thousands of stores and close to two million employees around the world. By the time of his death in 1992, Walton was the richest person in the world, famous for his business success and his numerous philanthropic endeavors.

Early Life

Sam Walton was born to Thomas Gibson Walton and Nancy Lee Walton in Kingfisher, Oklahoma. In 1923, his father gave up farming and moved the family to Missouri, where he became a mortgage broker. From early childhood, the young Walton was taught to be self-reliant and to set goals and work hard to achieve them. As an eighth-grader in Shelbina, Missouri, Walton became the youngest Eagle Scout (Boy Scouts) in the state’s history. At Columbia, Missouri’s Hickman High School, he excelled in both basketball and football. In 1935, as starting quarterback, he led the football team to the state championship. He was a natural leader, an honors student, and was elected president of the student body in his senior year. Throughout the Depression of the 1930’s, he delivered newspapers and did odd jobs to help meet his family’s financial needs.

In 1936, Walton entered the University of Missouri-Columbia. He paid his tuition by delivering newspapers, working as a lifeguard, and waiting tables in exchange for meals. He joined the professional business fraternity and was voted permanent president of his graduating class. From 1936 to1940 he was a Reserve Officers’ Training Corp cadet and was made captain during his senior year. In the summer of 1939, he spent six weeks in Kansas, training with other artillery officers. In 1940 he graduated from college with a degree in business administration and a commission as second lieutenant in the U.S. Army Reserve.

Three days after graduating from college, Walton became a management trainee in a J. C. Penney store in Des Moines, Iowa, making $85 per month. He was impressed with the so-called Penney idea, a seven-point business philosophy that would influence his own Ten Rules for Success for Wal-Mart employees. In 1942, anticipating military service, Walton left Penney’s for a job at a DuPont munitions plant near Claremore, Oklahoma. There, he met Helen Robson, daughter of L. S. Robson, a prominent banker and rancher. Sam and Helen were married on February 14, 1943. They had four children Samuel Robson (Rob), John Thomas, James C. (Jim), and Alice.

During World War II, Walton served with the Army Intelligence Corps, supervising security at aircraft factories and prisoner-of-war camps. After he was discharged on August 16, 1945, he and his wife and baby Rob moved from Salt Lake City, Utah, to the small town of Newport, Arkansas, where Walton would restart his chosen career in retailing.

Life’s Work

From 1945 to 1962, Walton operated franchise variety stores. His first store was Ben Franklin in Newport, a franchise of Butler Brothers. With Ben Franklin, Walton gained considerable management experience and studied the operations of competitors. His goal was to serve consumers by providing quality merchandise at affordable prices. He bought merchandise from low-price suppliers and sold it at discount prices, making his profit on greater volume of sales rather than on margin. By 1950, Walton’s store led Butler Brothers’ six-state region in sales and profits.

However, Walton faced failure when his landlord, P. K. Holmes, refused to renew the lease on the store’s building. Walton realized that he had been duped into a lease with no renewal option and an exorbitant annual rent of 5 percent of sales. Walton had made the store so profitable that Holmes wanted it for his son, so Walton sold the store’s inventory and fixtures to Holmes for $50,000 and left Newport to seek another small town and another store.

On May 1, 1950, Walton arrived in Bentonville, Arkansas, where he opened Walton’s Five and Dime. Bentonville would become the Walton family’s hometown and the headquarters of the multibillion-dollar Wal-Mart enterprise. As an incentive to maximize profits and improve managerial skills, he offered store managers the opportunity to invest a maximum of $1,000 in new outlets as they opened. By 1962, Walton and his brother James L. (Bud) Walton were operating Wal-Mart stores in sixteen small towns in Arkansas, Missouri, and Kansas.

In 1962, Walton implemented his vision of a retail world in which discounting was “king.” He opened the first Wal-Mart Discount City in Rogers, Arkansas the same year that two competitors, Kmart and Target, entered the industry. In 1969, the eighteenth Wal-Mart opened in Newport, Arkansas, the same town where Walton had lost his Ben Franklin store.

By 1970, when Wal-Mart stock was first offered to the public, the retailer had thirty-two stores. As new stores were opened, Walton established regional distribution centers so that stores could restock merchandise almost immediately. By 1980, there were 272 Wal-Mart stores, with total sales reaching $1.2 billion.

In the early 1980’s, Walton turned to technology to increase efficiency. Wal-Mart was one of the first retailers to use bar codes to automate its inventory process, but, more important, it was the first to use the system efficiently. In 1987, the company developed the Wal-Mart Satellite Network, the largest private satellite communications system in the United States, to speed credit card transactions, track delivery trucks, transmit audio and video signals, and report sales data.

As Wal-Mart became a dominant retail force, it inevitably drew criticism. Unions attacked the company for having a nonunion workforce. Activists opposed to free markets charged Wal-Mart suppliers with being nothing more than sweatshop operators. Competitors criticized the superstores for displacing local “Mom and Pop” shops. The groups against urban sprawl claimed that Wal-Mart created more development, including suburban malls. Some public education advocates claimed that Wal-Mart’s support for school reform undermined public education. A number of class-action suits charged various forms of company-wide discrimination. To counter these criticisms, proponents argued that Wal-Mart’s presence attracted other businesses, which created more local jobs, and that Wal-Mart was a benevolent corporate neighbor in the community.

Walton’s management style inspired loyalty and hard work among his employees, whom he called “associates.” He insisted that every Wal-Mart store support its local community and reflect its values. He personally interviewed managers and selected those he thought best suited for the communities they would serve. All Wal-Mart stores were expected to maintain local outreach programs, contribute to local charities, and offer scholarships to local high school graduates. Beyond the local, Walton wanted to counter the trend toward communism in Central America. In 1985, he began funding scholarships at Christian universities in the United States for Central American students so they could learn about capitalism and Christian business values.

The Wal-Mart Foundation (WMF) and the Walton Family Foundation (WFF) were formed in the 1980’s to support education. The family gave $5 million to establish Walton Arts Center at the University of Arkansas-Fayetteville. Another $3 million went to Knowledge is Power, a program to recruit teachers for public college-preparatory schools in underserved communities. In 2003-2004, WMF gave $274 million to 75,000 organizations in the United States and Puerto Rico. Ninety percent of that year’s contributions consisted of small grants to local causes through Wal-Mart stores, distribution centers, and Sam’s Clubs (the company’s public wholesale outlets, similar to Costco stores). In addition, WMF has contributed millions in money, supplies, and equipment for disaster relief in fire-ravaged and storm-stricken areas. Similarly, WFF has funded building programs to establish churches and schools in poor, underserved communities.

In March, 1992, Walton’s contributions to business and philanthropy were recognized by U.S. president George H. W. Bush, who awarded him the Presidential Medal of Freedom. When Walton died on April 5, 1992, he was the richest person in the world. In 1998, he was listed among Time magazine’s one hundred most influential people of the twentieth century.

Significance

Walton’s vision and the business principles he established have become the standard for discount retailing. In the first decade of the twenty-first century, Walton’s visionary creation Wal-Mart was the world’s largest corporate employer, with a global workforce of about two million “associates” and nearly 6,500 Wal-Mart stores and Sam’s Clubs in the United States, Mexico, Central America, Puerto Rico, Canada, Argentina, Brazil, China, South Korea, Japan, and the United Kingdom. Wal-Mart stores generated more than $300 billion in sales in 2006, making it the top revenue-producing company in the world. Walton’s far-reaching vision of discount stores as advocates for consumers has forever changed the retailing business.

Bibliography

Bergdahl, Michael. What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World. New York: John Wiley & Sons, 2004. A former Wal-Mart employee details Walton’s strategies for success, along with the principles, culture, and people of Wal-Mart that contributed to its unprecedented growth.

Dicker, John. The United States of Wal-Mart. New York: Jeremy P. Tarcher/Penguin, 2005. A critical yet balanced look at the business practices and the sociocultural repercussions of Walton’s creation. The author considers Wal-Mart a “global despot” formed by a visionary leader whose legacy is maintained through a “cult of Sam.”

Ortega, Bob. In Sam We Trust: The Untold Story of Sam Walton and Wal-Mart, the World’s Most Powerful Retailer. New York: Three Rivers Press, 2000. Analyzes Walton’s rise to dominance in retailing and how his methods have changed business practices, workplaces, and communities.

Trimble, Vance H. Sam Walton: The Inside Story of America’s Richest Man. New York: Dutton, 1990. A biography of Walton focused on his early life, relationships, and events that shaped his character and values.

Vance, Sandra S., and Roy V. Scott. Wal-Mart: A History of Sam Walton’s Retail Phenomenon. New York: Twayne, 1994. Authors present Wal-Mart as a case study of the evolution of marketing and retailing in America.

Walton, Sam, with John Huey. Sam Walton, Made in America: My Story. New York: Doubleday, 1992. Autobiography focused on Walton’s visionary concept of retailing, his philosophy, and his energetic pursuit of his goals.