Here we are, in the throes of Christmas and a recession, and the only retailer who is sitting pretty is Walmart.  So I’m naturally curious about the man who started the nation’s only recession proof retailer.  So for today’s edition of the Self Made Man series is Sam Walton.

Sam Walton was born on March 29th, 1918 in Kingsfisher, Oklahoma.  Growing up he had many chores around the family farm, including milking the cow and bringing the milk to customers and a newspaper route.  He was voted “Most Versatile Boy” in his high school yearbook.

After high school he attended University of Missouri and majored in economics.   He worked his way through school by doing odd jobs and waiting tables for meals.  Three days after graduation he started working for J.C. Penny in management, making $75 a month.  In 1942, he quit this job in anticipation of serving in the military.  While waiting to be called to service he met his wife, Helen Robson.  They married on Valentines day 1943.  He served in the U.S. Army Intelligence Corps providing security for airplane plants and prisoners of war.  He reached the rank of captain.

In 1945, after leaving the military, he purchased a Ben Franklin variety store franchise in Newport Arkansas.  He used $5,000 he had saved from his military work and borrowed $20,000 from his father in law to purchase the store.  He pioneered the practice of discount merchandising by buying wholesale goods from the lowest priced supplier. This allowed him to pass on savings to his customers, which drove up his sales volume. Higher volumes allowed him to negotiate even lower purchase prices with the wholesaler on subsequent purchases. [1]  This made Walton’s store the most successful Ben Franklin variety store in a six state area.  The enormous success caused the landlord not to renew Walton’s lease, because the landlord wanted to give the store to his son.

Walton then opened Walton’s Five and Dime in Bentonville Arkansas and was wildly successful.  He then opened another store in Fayetteville but this store struggled.  Sam knew that he needed a great manager to turn this store around.  So, he said, ” 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” [2]  He hired Willard Walker, the manager of a local variety store, by enticing him with a percentage of the store’s profits.  This is now known as profit sharing.

Before Sam Walton came on the scene variety stores would have cash registers placed in each section.  If a customer wanted to buy five items from five different areas then the customer would have to check out five times.  Sam Walton moved all the checkouts to the front so the customers could pay for all their items at the same time.  He also provided baskets for customers to carry their selections in, and bags at the check out to carry their purchases home.

The first true Walmart opened in 1962 in Rogers Arkansas.  Kmart, Target, and Woolworth also opened that same year.   Sam Walton grew his sales and stores at an alarming rate.  He would scout out prospective store locations in a low flying plane.  To maximize potential customers he would look for locations that were between several towns.  When he would find the perfect spot he would land his plane, buy the property, and set up shop. [3]  He also used that plane to check on existing Walmarts.  He would fly overhead and make sure the parking lots were full.

Walton knew that he couldn’t maintain the expansive growth he wanted without computerizing his company.  So in 1966 he went to an IBM school with the goal to hire the smartest guy in the class.  Wal-Mart went on to become the icon of just-in-time inventory control and sophisticated logistics — the ultimate user of information as a competitive advantage. Today Wal-Mart’s computer database is second only to the Pentagon’s in capacity. [4]

It wasn’t until 1985 when Forbes magazine named Sam Walton the richest man in America that Sam Walton came into public consciousness.  Until then, most had never heard of him.  Soon after he began to receive blame for the disappearance of small town America.  Sam Walton thought those claims were absurd, as he had started as a small town merchant and he believed that small merchants could compete if they would make the changes they needed to do so.

Sam Walton died April 5th, 1992 from cancer.  He left his fortune to his wife and 4 children.  They went on to hold 5 spots of the top 10 richest people in America until 2005.

Other Self Made Men in the series:
Warren Buffett
Henry Ford
Ingvar Kamprad
Thomas Edison
Oprah Winfrey
Steve Jobs

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