The Kid Who Invented Walmart

a string of demanding jobs military service and tough business lessons taught Sam Walton resilience entrepreneurship and how to attract the most customers his single-mindedness supercharged a small shop in Arkansas growing into the biggest company in the world but it wasn't smooth sailing along the way allegations of predatory business practices bribing governments and labor disputes have threatened to put a stop to a retail Juggernaut this is the story of Walmart chapter 1 early life Sam Walton was born in the small town of king fisher County Oklahoma to a family of struggling Farmers after years of bouncing around tiny townships trying to find work the Walton settled in Colombia Missouri Sam was ingrained with a strong work ethic from an early age his parents put him to task working milking the cows and driving bottles to nearby customers as well as delivering newspapers to help the family stay afloat this was during the Great Depression when 12 million people lost their jobs in the country and Sam's parents made sure that he would always be able to survive on his own this work ethic translated to his studies too when he was admitted into the University of Missouri as a Reserve officer in the Army Walton studied economics where he excelled and was voted permanent president of his class here he mastered the fundamentals of business that would become so vital to him later in life outside of college 2 he worked hard in odd jobs to earn a living by the time he graduated the year was 1940 and after a brief stint at JC Penney a store that would become a major rival of his Sam joined the US Army intelligence Corps where he served for 3 years during World War II his intellect was put to use use and his job was to supervise security and aircraft plants rather than deploying on the front lines it was then that Sam formulated an outline of his master plan he would turn his attention back to retail where he had started with JC Penny but he believed that he had the management skills to turn a small shop front into a much larger operation first he would need some Capital to go out on his own and that's where his wife Helen Robson came in they had during the war in 1943 early in their partnership she would lay down some conditions over just a few years they had already moved 16 times Helen told Sam that she refused to live in a city or anywhere with more than 10,000 people Sam didn't know it yet but this focus on community in small town locations would be the key ingredient of Walmart's success chapter 2 a hard lesson at 26 years old and with an already impressive resume Sam approached his father-in-law Leland Stanford Robson with a business idea Robson was a successful banker and Ranch owner with considerable Sway in the business World Sam knew this was his best shot at real Investments he was able to convince Robson to fund him to take over a variety store in Newport Arkansas seeing the potential of Sam's business instincts Robson loaned him $20,000 and with $5,000 of Sam's own savings he bought a Ben Franklin franchise owned by the Butler Brothers though the property measured just 50 ft wide and 100 ft long Sam had big plans for it but apart from his own stint with JC Penney Sam was woefully inexperienced in the retail world so Butler Brothers sent him on a two-e training course at a different Ben Franklin store to prepare him Having learned the basics Sam Soon showed that he had no interest in following the conventions of other retail stores instead of keeping and maintaining High margins on products Sam chose instead to offer the lowest prices possible and he added Novelties like ice cream dispensers to make the shop more inviting and to make sure that customers would continue coming back Sam ensured that each product was stocked consistently this strategy paid off in the first 3 years of operation he more than doubled the sales from $80,000 to $225,000 he soon secured a lease on a shop front down the road to stop his main competitor from expanding Sam now had a department store which he called The Eagle store where he began selling jackets pants dresses and whatever else he could sell the Eagle store only turned a small profit but it kept control of the local market plus it gave Sam valuable experience in managing multiple locations meanwhile 5 years after opening the Ben Franklin store was generating $250,000 in sales a year and turning $50,000 in profit his skyrocketing success soon spelled the end of his first Venture though and delivered a tough lesson in business the landlord of the property rejected Walton's lease renewal he had watched Sam's success and now wanted to profit for himself with no other options the best Sam could do was sell the inventory of the store for $50,000 and without any other prospective shopf fronts in Newport he was effective kicked out of the Town it was the low point of Walton's business life but the next time he went into business he would be sure not to make the same mistakes chapter 3 building the wall with the $50,000 from inventory and the support of his father-in-law Sam was able to buy a location in Bentonville Arkansas more than 200 M away this time they made sure that the terms were different together with the title of the building the contract included Ed a 99-year lease on the shop next door in case they wanted to expand this would lock them into a virtually permanent deal with no room for the landlord to pull the rug from under them Walton named the store Five and Dime and he was still managing his original store in Newport when the lease ran out this was the Inception of what would become Walmart by this point Sam Walton had brought his brother James Bud Walton into the business James had also served in World War II but as a Navy pilot this became an instrumental part of their business expansion together they bought a secondhand airplane and used it to fly across the state scouting the terrain and searching for possible new locations they spotted their next property and in 1954 set up in rusen Heights Arkansas City over the next decade they acquire several other Ben Franklin stores in Arkansas Missouri and Kansas in less than a decade the Walton brothers were running a chain of 50 locations business is roaring but Sam Walton can see bigger opportunities he approaches Butler Brothers and with his successful track record tries to sell them on the idea of discount stores in smaller communities rather than the big Urban centers they were known for unconvinced by the strategy and not seeing enough money in rural low-income areas Sam Walton's idea is rejected this prompted Sam to go out on his own together with his brother but in 1962 they established their very first independent store in Rogers Arkansas and named it the Walmart discount City it was twice as big as their shop in Bentonville and Sam makes a policy of selling as many American-made products as possible once again Sam's formula is a winning one and Walmart generates almost 1 million in sales in their opening year Alone by placing huge stores in small towns Walmart can remain close to residential areas another Advantage is wording off competition who are hesitant to enter a market dominated by such a big discount store this becomes the signature of the company rocketing it to a rapid expansion to 24 stores in Arkansas over the first 5 years matched by $12.7 million in sales annually equal to $123 million today but success and Rapid expansion would bring with it new problems allegations of bribery and even a long-running war that continues to this day chapter 4 reaching a new level in 1970 Walmart becomes a publicly traded company and opens at $16.50 per share by 1972 Walmart is generating $78 million in sales and is listed on the New York Stock Exchange it's here here when Sam introduces a cheer for employees beginning their day after visiting a Korean tennis ball Factory he is convinced that it is an effective way to keep his employees motivated the chant is still sung at the start of each day in Walmarts all over the world Walmart moves to Louisiana Missouri Oklahoma Tennessee Kentucky and Mississippi and as of 1975 Walmart has 125 stores with 7,500 employees distribution centers allow for different branches to coordinate logistically and to keep products consistently stocked at all locations just as Sam Walton had begun the company Walmart's expansion was rapid from $72,000 in sales a quar century later Walmart was generating a staggering $15.9 billion across over 1,000 stores in the 1980s the incorporation of technological systems introducing inventory tracking barcode readers and instant communication between stores put Walmart as usual A Step Above the Rest in the year that founder Sam Walton resigned as CEO the first Walmart Super Center was opened which combined phone shops car services hair salons and fast food shops into a shopping Juggernaut and soon after Walmart launched Sam's Club which is a warehouse store selling items and books bulk off pallets for consumers seeking to buy in large quantities access to Sam's Club is available for a membership of between 50 to $110 a year Sam Walton was later awarded the presidential medal of freedom by President George HW Bush and when he died just Weeks Later his son Sam Robson Walton joined the corporate board of directors to serve as the chairman of Walmart replacing his father and stepping up from his position as Vice chairman Sam Walton's father's job had been to build the company from the ground up and now a behemoth of retailing Sam robson's task was to fight off competitors enter new markets and fight against Rising costs wherever they came from and his tenure started off with a legal decision that rippled through the entire company's strategy chapter 5 the war begins as the nation's biggest retailer Walmart was beginning to be blamed for destroying local businesses without large enough operations to slash prices or diversify Walmart towns were quickly becoming dominated by one store alone and other businesses were unable to keep up in 1993 an Arkansas court found Walmart guilty of predatory pricing meaning that it was selling products at an unsustainably low cost to force Rivals out of the market Walmart was ordered to pay out $300,000 in Damages to a number of drug stores in the Conway Community the issue was raised again in 1995 in a court case brought by the pharmacy retailer American drugs Incorporated which claimed Walmart was deliberately targeting them in order to build a monopoly again in 2000 the Wisconsin Department of Agriculture trade and consumer protection accused Walmart of selling essential items like milk and butter at drastically low prices to bankrupt local competitors Walmart has been Cutthroat offering prices that most small businesses can't keep up with with but Walmart argues that this is part of a price leading strategy where certain items are offered at a loss to get customers into the shop and encourage them to spend more on profitable items neither of these cases resulted in significant action against Walmart although overseas in Germany the company was ordered to increase their prices after the high court determined that their strategy significantly undermined competition this ultimately led to Walmart selling its 85 stores in Germany and leaving the country Walmart's expansion into Mexico was met with more serious controversy when an investigation found that Walmart paid $16 million to local politicians allegedly to sway them into speeding up bureaucratic requirements and put them ahead of competitors but Walmart's biggest threat has come from inside its own walls chapter 6 controlling labor from the founding of the company in 1962 Sam said that the company didn't want Outsiders running labor unions changing things Logistics made it difficult for organizers such as a spread out and disconnected variety of stores and workers one estimate estimated that it would cost a couple hundred million to create an effective organization that covered all workers but that hasn't stopped Walmart from aggressively intervening in any attempt of the workers to unionize early in the company's history Sam Walton hired an attorney named John Tate to Snuff out any signs of organized action or labor uprisings in 1972 when a union was gaining power at two Missouri Walmart locations the manager was instructed to immediately fire any employee seen with a union card elsewhere threats to remove profit sharing programs and even shut entire warehouses down have been made to discourage employees from starting a union Walmart created a union probability index made up of employee attitude data to determine which stores were most vulnerable to being unionized the company distributed manuals teaching managers how to shut down Union attempts and provided them with a special hotline to report suspicious activity Advocates claim that Walmart has flagrantly violated workers rights between 1998 and 2003 there were 288 charges of unfair labor practices filed against the company mainly for surveilling and Fire iring workers based on their Union affiliations the company's ability to control its operations from the factory floor to the shop front has been a key part of its success chapter 7 top of the mountain moving into the 21st century Walmart topped The Fortune 500 ranking to be crowned the biggest company in the United States it has also been on a mission to improve its image committing to disaster relief sustainable agriculture and renewable energy the company continues to roll out Walmart pay and free to-day shipping on selected items for the convenience of its customers Sam Walton's strategy to Target small communities with discount prices turned into a global retail Revolution through Rapid expansion countless lawsuits and internal uprisings Walmart has fought its way to the top of the world literally by Revenue it is the biggest company on the planet generating 570 bill ion doll a year which is over 2% of the United States economy and as the largest private employer on the planet employing 2.3 million people across 105,000 stores Walmart's power both inside and outside the retail world is virtually unmatched

Channel: Business Stories

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Keywords: Business Stories, walmart, walmart story, walmart history, story of walmart, success story of walmart, sam walton

Id: byVGManq_M0

Length: 16min 19sec (979 seconds)

Published: Fri Sep 22 2023