Nobody expected a country boy from rural America to surpass the CEOs of the department stores that peppered the nation. And yet, one did. Despite early supervisors’ remarks that he was not suited for retail, Sam Walton ended up not only becoming Forbes’ 1985 Wealthiest Man in America, but he also transformed retail forever.
An Entrepreneurial Spirit
As a sales trainee at a J.C. Penney’s store in Des Moines, Iowa, young Walton loved working retail but found the emphasis on quotas and bookkeeping to be a distraction from his real passion: making sales.
After serving in the military, Walton returned to retail, this time as an investor-owner. With $5,000 of his savings and a $20,000 loan from his father-in-law, Walton bought a Ben Franklin variety store in Newport, Arkansas. Newport, Arkansas. At the time, variety stores had meager offerings for rural Americans, who had to travel to metropolitan areas to make big purchases or get discounted goods.
Walton had an idea: What if he not only charged less for his products but also expanded the stores’ offerings to include what the department stores offered? His approach worked: Walton tripled the performance of the Ben Franklin store, making it the leading store in six states by 1950.
Unfortunately, Walton’s customers weren’t the only ones to notice his success. His landlord asked to purchase Walton’s business, and when Walton refused, he refused to renew his lease.
The Move to Bentonville
Not to be defeated, Walton picked up and moved across the state to Bentonville, where he opened his own store, Walton’s 5&10. He made sure that this new enterprise was located in the town square — and had a 99-year lease. Walton immediately rose in pop- ularity because he charged significantly less than the other variety stories in town.
Throughout the 1950s, Walton took out loans and reinvested profits so that he could acquire new stores. At each location, he low- ered the products’ prices to entice customers. By 1960, ten years after relocating to Bentonville, he had 15 stores to his name. Still, Walton wasn’t seeing the profits he needed to pay back his loans. Something needed to change.
Walton had a brilliant idea: He could combine the five-and-dime approach, popular in big cities, with the variety store model. He needed bigger stores with more products — all at a discount. Going back to his roots, Walton approached the company that fran- chised Ben Franklin stores for help. They were unwilling to accept the initial cuts in profit margins that Walton admitted would be necessary to make the model work.
So, Walton took out a mortgage on his home to put his idea into action. In 1962, he opened the nation’s first big-box store: Wal- Mart, located in Rogers, Arkansas. He was 44 years old.
The Wave of Walmart
Neither the variety store franchisers nor the major department store chains foresaw what happened next. Wal-Mart exploded in pop- ularity, quickly expanding to 18 locations throughout Arkansas and Missouri in just seven years. Finally ready to pay back his debts, Walton made the company public in 1970, and the company instantly generated $5 million. Walton and his family owned 61 percent of the company, ensuring that Walton could continue to bring his retail vision to life.
Walton didn’t stop there. He had a revolutionary approach to his employees, which he called “associates,” and gave them a lot of in- put on how to grow the company. In time, Walton expanded his big-box model to include grocery, automotive, and gardening sec- tions (Wal-Mart SuperCenter) and then launched a wholesale club for his fellow businesses (Sam’s Club).
In 1985, when Forbes named Walton the richest man in America. He had an estimated worth of $2.8 billion. And yet Walton stayed humble, continually looking to improve the Wal-Mart brand and bring value to all Americans.
A Lasting Legacy
On March 17, 1992, President George Bush presented Walton with the Presidential Medal of Freedom, citing his entrepreneurial spirit and his devotion to his workers and customers. Just a few days later, Walton, who had been suffering from bone cancer, checked into the University of Arkansas Hospital. He passed away on April 5, 1992, at the age of 74.
In just 30 years, Walton had transformed the face of retail and created a brand with an enduring legacy. While big-box stores are now commonplace, they owe a lot to Walton’s vision.