Sam Walton: Made In America

by Sam Walton

When folks have asked me, “How did Wal-Mart do it?” I’ve usually been flip about answering them. “Friend, we just got after it and stayed after it,” I’d say. We have always pretty much kept to ourselves, and we’ve had good reasons for it; we’ve been very protective of our business dealings and our home lives, and we still like it that way.

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.

I realize that ours is a story about the kinds of traditional principles that made America great in the first place.

more than anything it proves there’s absolutely no limit to what plain, ordinary working people can accomplish if they’re given the opportunity and the encouragement and the incentive to do their best.

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.

most of that Wal-Mart stock is staying right where it is. We don’t need the money.

If you start any of that foolishness, I’ll come back and haunt you. So don’t even think about it.

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 it. And we have it.

I still can’t believe it was news that I get my hair cut at the barbershop. Where else would I get it cut?

So, I have always pursued everything I was interested in with a true passion—some would say obsession—to win.

This is hard to believe, but it’s true: in my whole life I never played in a losing football game.

It taught me to expect to win, to go into tough challenges always planning to come out victorious.

it was almost as if I had a right to win.

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 got into retailing because I was tired and I wanted a real job.

“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.”

I felt I had the talent to do it, that it could be done, and why not go for it? Set that as a goal and see if you can’t achieve it. If it doesn’t work, you’ve had fun trying.

It was a real blessing for me to be so green and ignorant, 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 was always looking for offbeat suppliers or sources.

I’d stuff that car and trailer with whatever I could get good deals on—usually on softlines: ladies’ panties and nylons, men’s shirts—and I’d bring them back, price them low, and just blow that stuff out the store.

If you’re interested in “how Wal-Mart did it,” this is one story you’ve got to sit up and pay close attention to. Harry was selling ladies’ panties—two-barred, tricot satin panties with an elastic waist—for $2.00 a dozen. We’d been buying similar panties from Ben Franklin for $2.50 a dozen and selling them at three pair for $1.00. Well, at Harry’s price of $2.00, we could put them out at four for $1.00 and make a great promotion for our store. Here’s the simple lesson we learned—which others were learning at the same time and which eventually changed the way retailers sell and customers buy all across America: say I bought an item for 80 cents. I found that by pricing it at $1.00 I could sell three times more of it than by pricing it at $1.20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater.

As good as business was, I never could leave well enough alone, and, in fact, I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart.

In our first year, the Ben Franklin did $105,000 in sales, compared to $72,000 under the old owner. Then the next year $140,000, and then $175,000.

We had to keep expenses to a minimum. That is where it started, years ago. Our money was made by controlling expenses. That, and Sam always being ingenious. He never stopped trying to do something different.

By now, my five years in Newport were about up, and I had met my goal. That little Ben Franklin store was doing $250,000 in sales a year, and turning $30,000 to $40,000 a year in profit.

Every crazy thing we tried hadn’t turned out as well as the ice cream machine, of course, but we hadn’t made any mistakes we couldn’t correct quickly, none so big that they threatened the business.

Still, I love competition, and it just struck me as the right place to prove I could do it all over again.

folks have gotten the impression that Wal-Mart was something I dreamed up out of the blue as a middle-aged man, and that it was just this great idea that turned into an overnight success. 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.

I did something I would do for the rest of my run in the retail business without any shame or embarrassment whatsoever: nose around other people’s stores searching for good talent.

most everything I’ve done I’ve copied from somebody else—

If I ever had any doubts about the potential of the business we were in, Ruskin Heights ended them. That thing took off like a house afire.

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.”

Whatever money we made in one store, we’d put it in another new one, and just keep on going. Also, from Willard Walker on, we would offer to bring the managers we hired in as limited partners. If you had, say, a $50,000 investment in a store, and the manager put in $1,000, he’d own 2 percent.

But in those days we were always borrowed to the hilt. We were about to go into the discount business for real now. And from the time those doggone Wal-Marts opened until almost today, it has been a little challenging.

I knew in my bones it was going to work.

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.

it would have been absolutely impossible to convince anybody back then that in thirty years most all of the early discounters would be gone, that three of these four new chains would be the biggest, best-run operators in the business, that the one to fold up would be Woolco, and that the biggest, most profitable one would be the one down in Arkansas. Sometimes even I have trouble believing it.

Many of our best opportunities were created out of necessity.

The things that we were forced to learn and do, because we started out underfinanced and undercapitalized in these remote, small communities, contributed mightily to the way we’ve grown as a company.

It turned out that the first big lesson we learned was that there was much, much more business out there in small-town America than anybody, including me, had ever dreamed of.

We didn’t have systems. We didn’t have ordering programs. We didn’t have a basic merchandise assortment. We certainly didn’t have any sort of computers.

Say the list price was $1.98, but we had only paid 50 cents. Initially, I would say, ‘Well, it’s originally $1.98, so why don’t we sell it for $1.25?’ And he’d say, ‘No. We paid 50 cents for it. Mark it up 30 percent, and that’s it. No matter what you pay for it, if we get a great deal, pass it on to the customer.’ And of course that’s what we did.”

back then we were using the ESP method, which really sped things along when it came time to close those books. It’s a pretty basic method: if you can’t make your books balance, you take however much they’re off by and enter it under the heading ESP, which stands for Error Some Place.

most of them owned a piece of their stores, so they were likely to be as concerned as I was.

Don had barely finished high school, if that, and he had terrible grammar. He threw people off sometimes because he only had one eye, and he looked at you sort of funny. But he was one of the finest people I have ever known in my life.

None of these fellows like Don or Claude had any college, and they didn’t want me hiring any college men.

And we looked for the action-oriented, do-it-now, go type of folks.

I found out that he had been able to save on his salary, and I usually felt that if a fellow could manage his own finances, he would be more successful managing one of our stores.

He was always open to suggestions, and that’s one reason he’s been such a success. He’s still that way.”

It’s almost embarrassing to admit this, but it’s true: there hasn’t been a day in my adult life when I haven’t spent some time thinking about merchandising.