Sam Walton: Made In America
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Read between January 2 - February 2, 2023
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If I had to single out one element in my life that has made a difference for me, it would be a passion to compete.
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Success has always had its price, I guess, and I learned that lesson the hard way in October of 1985 when Forbes magazine named me the so-called “richest man in America.”
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So they found out all these exciting things about me, like: I drove an old pickup truck with cages in the back for my bird dogs, or I wore a Wal-Mart ball cap, or I got my hair cut at the barbershop just off the town square—somebody with a telephoto lens even snuck up and took a picture of me in the barber chair, and it was in newspapers all over the country.
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It made me mad, anyway, that all they wanted to talk about was my family’s personal finances. They weren’t even interested in Wal-Mart, which was probably one of the best business stories going on anywhere in the world at the time, but it never even occurred to them to ask about the company.
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And he was the best negotiator I ever ran into. My dad had that unusual instinct to know how far he could go with someone—and did it in a way that he and the guy always parted friends—but he would embarrass me with some of the offers he would make, they were so low. That’s one reason I’m probably not the best negotiator in the world; I lack the ability to squeeze that last dollar. Fortunately, my brother Bud, who has been my partner from early on, inherited my dad’s ability to negotiate.
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I learned from a very early age that it was important for us kids to help provide for the home, to be contributors rather than just takers. In the process, of course, we learned how much hard work it took to get your hands on a dollar, and that when you did it was worth something. One thing my mother and dad shared completely was their approach to money: they just didn’t spend it.
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We still own 38 percent of the company’s stock today, which is an unusually large stake for anyone to hold in an outfit the size of Wal-Mart, and that’s the best protection there is against the takeover raiders. It’s something that any family who has faith in its strength as a unit and in the growth potential of its business can do. The transfer of ownership was made so long ago that we didn’t have to pay substantial gift or inheritance taxes on it. The principle behind this is simple: the best way to reduce paying estate taxes is to give your assets away before they appreciate.
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Some families sell their stock off a little at a time to live high, and then—boom—somebody takes them over, and it all goes down the drain. One of the real reasons I’m writing this book is so my grandchildren and great-grandchildren will read it years from now and know this: If you start any of that foolishness, I’ll come back and haunt you. So don’t even think about
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Here’s the thing: money never has meant that much to me, not even in the sense of keeping score. If we had enough groceries, and a nice place to live, plenty of room to keep and feed my bird dogs, a place to hunt, a place to play tennis, and the means to get the lads good educations—that’s rich. No question about
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A lot of what goes on these days with high-flying companies and these overpaid CEO’s, who’re really just looting from the top and aren’t watching out for anybody but themselves, really upsets me. It’s one of the main things wrong with American business today.
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One person seeking glory doesn’t accomplish much; at Wal-Mart, everything we’ve done has been the result of people pulling together to meet one common goal—teamwork—something I also picked up at an early age.
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Later on in life, I think Kmart, or whatever competition we were facing, just became Jeff City High School, the team we played for the state championship in 1935. It never occurred to me that I might lose; to me, it was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy.
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Closer at hand, I had decided I wanted to be president of the university student body. I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you. I did that in college.
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Also while I was at Missouri, I was elected president of the Burall Bible Class—a huge class made up of students from both Missouri and Stephens College. Growing up, I had always gone to church and Sunday school every Sunday; it was an important part of my life. I don’t know that I was that religious, per se, but I always felt like the church was important.
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Our last Army posting was in Salt Lake City, and I went to the library there and checked out every book on retailing. I also spent a lot of my off-duty time studying ZCMI, the Mormon Church’s department store out there, just figuring that when I got back to civilian life I would somehow go into the department store business.
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HELEN WALTON: “Sam, we’ve been married two years and we’ve moved sixteen times. Now, I’ll go with you any place you want so long as you don’t ask me to live in a big city. Ten thousand people is enough for me.” So any town with a population over 10,000 was off-limits to the Waltons. If you know anything at all about the initial small-town strategy that got Wal-Mart going almost two decades later, you can see that this pretty much set the course for what was to come. She also said no partnerships; they were too risky. Her family had seen some partnerships go sour, and she was dead-set in the ...more
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because it was from that experience that I learned a lesson which has stuck with me all through the years: you can learn from everybody. I didn’t just learn from reading every retail publication I could get my hands on, I probably learned the most from studying what John Dunham was doing across the street.
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That was the start of a lot of the practices and philosophies that still prevail at Wal-Mart today. I was always looking for offbeat suppliers or sources. I started driving over to Tennessee to some fellows I found who would give me special buys at prices way below what Ben Franklin was charging me. One I remember was Wright Merchandising Co. in Union City, which would sell to small businesses like mine at good wholesale prices. I’d work in the store all day, then take off around closing and drive that windy road over to the Mississippi River ferry at Cottonwood Point, Missouri, and then into ...more
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But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.
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northwest Arkansas appealed to us for several reasons. First, for Helen it was a whole lot closer to her folks in Claremore than Newport had been. And it was good for me because I wanted to get closer to good quail hunting, and with Oklahoma, Kansas, Arkansas, and Missouri all coming together right there it gave me easy access to four quail seasons in four states.
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We’ve got our first ad from the July 29, 1950, Benton County Democrat on display today down at our Wal-Mart Visitors Center. It’s for the Grand Remodeling Sale of Walton’s Five and Dime, promising a whole bunch of good stuff: free balloons for the kids, a dozen clothespins for nine cents, iced tea glasses for ten cents apiece. The folks turned out, and they kept coming. Although we called it Walton’s Five and Dime, it was a Ben Franklin franchise,
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By 1952 I had driven down to Fayetteville and found an old grocery store that Kroger was abandoning because it was falling apart. It was right on the square, only 18 feet wide and 150 feet deep. Our main competitor was a Woolworth’s on one side of the square, and a Scott Store on the other side of the square. So here we were challenging two popular stores with a little old 18-foot independent variety store. It wasn’t a Ben Franklin franchise; we just called it Walton’s Five and Dime like the store in Bentonville.
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It’s true that I was forty-four when we opened our first Wal-Mart in 1962, but the store was totally an outgrowth of everything we’d been doing since Newport—another case of me being unable to leave well enough alone, another experiment. And like most other overnight successes, it was about twenty years in the making.
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DAVID GLASS: “Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I’ve ever known. And once he sees he’s wrong, he just shakes it off and heads in another direction.”
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“We were flying to Fort Smith in the spring of 1962, and Sam was piloting the plane over the Boston Mountains. It was that Tri-Pacer by then, not the original plane that we had made a lot of trips in. Sam pulled this card out of his pocket, on which he had written down three or four names, and he handed it to me and asked me which one I liked best. They all had three or four words in the title, and I said, ‘Well, you know, Scotch as I am, I’d just keep the Walton name and make it a place to shop.’ I scribbled ‘W-A-L-M-A-R-T’ on the bottom of the card and said, ‘To begin with, there’s not as ...more
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until 1962, the year which turned out to be the big one for discounting. In that year, four companies that I know of started discount chains. S. S. Kresge, a big, 800-store variety chain, opened a discount store in Garden City, Michigan, and called it Kmart. F. W. Woolworth, the granddaddy of them all, started its Woolco chain. Dayton-Hudson out of Minneapolis opened its first Target store. And some independent down in Rogers, Arkansas, opened something called a Wal-Mart.
Michael Crouch
Now in 2023 only walmart is growing
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The idea was simple: when customers thought of Wal-Mart, they should think of low prices and satisfaction guaranteed. They could be pretty sure they wouldn’t find it cheaper anywhere else, and if they didn’t like it, they could bring it back.
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The biggest challenge was buying health and beauty aids at low cost and staying stocked up on them because those items were really at the heart of almost every early discounter’s strategy.
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None of these fellows like Don or Claude had any college, and they didn’t want me hiring any college men. They had the idea that college graduates wouldn’t get down and scrub floors and wash windows. The classic training in those days was to put a two-wheeler—you know, a cart that you carry merchandise on—into a guy’s hands within the first thirty minutes he came to work and get him pushing freight out of the back room. They all came out of these variety stores with the same background and the same kind of philosophy and education. And we looked for the action-oriented, do-it-now, go type of ...more
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A little later on, Phil ran what became one of the most famous item promotions in our history. We sent him down to open store number 52 in Hot Springs, Arkansas—the first store we ever opened in a town that already had a Kmart. Phil got there and decided Kmart had been getting away with some pretty high prices in the absence of any discounting competition. So he worked up a detergent promotion that turned into the world’s largest display ever of Tide, or maybe Cheer—some detergent. He worked out a deal to get about $1.00 off a case if he would buy some absolutely ridiculous amount of ...more
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The only other reason the thing held together back then is that from the very start we would get all our managers together once a week and critique ourselves—that was really our buying organization, a bunch of store managers getting together early Saturday morning, maybe in Bentonville, or maybe in some motel room somewhere.
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I guess that was the forerunner of our Saturday morning meetings. We wanted everybody to know what was going on and everybody to be aware of the mistakes we made. When somebody made a bad mistake—whether it was myself or anybody else—we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next days work.
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Another goal of ours was to create the kind of family togetherness Helen had grown up with. I’ve already told you how much the Robsons influenced Helen and me in the organization of our finances, but really I think their successful, happy, prosperous family was just an all-round inspiration for the kind of family I wanted as a young man, and, of course, it was the only kind of family Helen ever considered.
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The simple truth is that Mother and Dad were two of the most quarrelsome people who ever lived together. I loved them both dearly, and they were two wonderful individuals, but they were always at odds, and they really only stayed together because of Bud and me.
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but I swore early on that if I ever had a family, I would never expose it to that kind of squabbling.
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Through our combined efforts the kids received your everyday heartland upbringing, based on the same old bedrock values: a belief in the importance of hard work, honesty, neighborliness, and thrift.
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Helen and I made it a point to take the whole family out and spend time traveling or camping together. Sometimes the kids thought of these trips as forced marches, but I think that time we spent together has had a lot to do with our close relationship as a family today. We have a lot of good memories of traveling all over the country, especially in this one fine old DeSoto station wagon.
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Another one I learned a lot from was Sol Price, a great operator who had started Fed-Mart out in southern California in 1955. I made friends with Sol’s son-in-law, who was running a distribution center in Houston, and talking with him helped me sort out some of my thinking on distribution—which would eventually become another key to Wal-Mart’s success. I guess I’ve stolen—I actually prefer the word “borrowed”—as many ideas from Sol Price as from anybody else in the business. For example, it’s true that Bob Bogle came up with the name Wal-Mart in the airplane that day, but the reason I went for ...more
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If you want the people in the stores to take care of the customers, you have to make sure you’re taking care of the people in the stores. That’s the most important single ingredient of Wal-Mart’s success.
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If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he’ll make up for what he lacks. And that proved true nine times out of ten. It was one way we were able to grow so fast.”
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What has carried this company so far so fast is the relationship that we, the managers, have been able to enjoy with our associates. By “associates” we mean those employees out in the stores and in the distribution centers and on the trucks who generally earn an hourly wage for all their hard work. Our relationship with the associates is a partnership in the truest sense.
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And here it is: the more you share profits with your associates—whether it’s in salaries or incentives or bonuses or stock discounts—the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies,
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Our message became “Sure, we are a nonunion company, but we think we are stronger because of it. And because you are our partner, we have an open door, and we listen to you, and together we can work out our problems.”
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First of all, in my day, James Cash Penney had called his hourly employees “associates,” and I guess I always had that idea in the back of my head. But the idea to try it at Wal-Mart actually occurred to me on a trip to England. HELEN WALTON: “We were on a tennis vacation to England. We were there to see Wimbledon. One day, we were walking down a street in London, and Sam, of course, stopped to look at a store—he always stopped to look in stores wherever we went—anywhere in the world, it didn’t matter. On that same trip, we lost a lot of our things in Italy when thieves broke into the car ...more
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As you may know, shrinkage, or unaccounted-for inventory loss—theft, in other words—is one of the biggest enemies of profitability in the retail business. So in 1980, we decided the best way to control the problem was to share with the associates any profitability the company gained by reducing it. If a store holds shrinkage below the company’s goal, every associate in that store gets a bonus that could be as much as $200. This is sort of competitive information, but I can tell you that our shrinkage percentage is about half the industry average.
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These days, the real challenge for managers in a business like ours is to become what we call servant leaders. And when they do, the team—the manager and the associates—can accomplish anything.
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I learned this early on in the variety store business: you’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.
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And, in fact, I’ve been reading lately that what we’ve been doing all along is part of one of the latest big trends in business these days: sharing, rather than hoarding, information.
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Keeping so many people motivated to do the best job possible involves a lot of the different programs and approaches we’ve developed at Wal-Mart over the years, but none of them would work at all without one simple thing that puts it all together: appreciation. All of us like praise.
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There is one more aspect to a true partnership that’s worth mentioning: executives who hold themselves aloof from their associates, who won’t listen to their associates when they have a problem, can never be true partners with them.
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