Sam Walton and the Birth of Wal-Mart

Sam Walton Trading Card

The Beginning

In 1950, an enterprising young employee of J.C. Penney named Sam Walton resigned in anticipation of being drafted during World War II. When he returned from military service, he purchased a Ben Franklin variety store in Newport, Arkansas, with a loan from his father-in-law and with money he saved in the military. Walton made sure his store was stocked with a wide variety of different goods. Sales quickly ballooned, which drew the attention of his landlord - who refused to renew Sam’s lease. Instead, the landlord purchased all of Sam’s merchandise for $50,000. Walton’s business career, however, was merely getting started. Next, he secured a new location in Bentonville, Arkansas, where he opened Walton’s 5&10 variety store. Walton’s store proved successful and before long he had started 15 Ben Franklin stores in three different states as well as his variety store in Bentonville.

Wal-Mart

Sam Walton opened his first Wal-Mart on July, 2, 1962, in Rogers, Arkansas. Wal-Mart’s motto was “The lowest prices anytime, anywhere.”

The Philosophy

Walton’s business soared and he decided to expand. To avoid competing with retail giants such as Sears and K-Mart, he built his stores in rural areas. Walton believed that sales would soar if costs were low. He believed if he lowered the costs of individual items, the number of those items he would sell would increase. Not only was Walton proving to be a successful entrepreneur, but he also knew how to motivate his employees. Walton encouraged his employees to buy equity (ownership percentage) in the stores and thus, develop a personal stake in the success of the store.

Did it Work?

Wal-Mart grew at a record pace and was listed on the New York Stock Exchange in 1974. Throughout the 1970s, Wal-Mart stores were erected in the South, and the company began acquiring established stores such as the Hutchinson Shoe Company and Mohr-Value. It also expanded its in-store offerings to include jewelry, auto service, and pharmaceuticals. Wal-Mart continued to expand throughout the 1980s and 1990s and began building Sam’s Club stores, membership-only warehouses where customers could buy products in bulk for discounts. By the early 1990s, Wal-Mart expanded throughout the United States and internationally. By 2005, it was reported that Wal-Mart was serving nearly 138 million customers every week! Today, it is the largest employer in the world with over 2.3 million employees. It operates nearly 12,000 stores, more than half of which are outside of the United States. It additionally operates 655 Sam’s Club stores. With a 2016 total revenue of $482 billion, it is the world’s largest company and is still headquartered in Bentonville, Arkansas.

Discussion Questions

  1. How did Sam Walton start his business after the military?
  2. What made Wal-Mart’s first store different from other stores at the time?
  3. Why did Sam Walton build stores in small towns?
  4. How did Wal-Mart grow to become one of the largest companies in the world?

Glossary

  • Entrepreneur: A person who starts and runs a business.
  • Equity: Ownership or shares in a company.
  • Stock Market: A place where people buy and sell shares in companies.
  • Pharmaceuticals: Medicines and drugs sold in stores.
  • Bulk: Buying large amounts of products at once, usually for a discount.

The Beginning

In 1950, Sam Walton left his job at J.C. Penney to serve in the military. After returning home, he bought a small store in Newport, Arkansas, using savings and a loan from his father-in-law. His store sold many different items and was very successful. But his landlord didn’t renew his lease and bought the store’s goods instead. Sam didn’t give up. He opened a new store in Bentonville, Arkansas, called Walton’s 5&10. Soon, he was running 15 stores in three states.

Starting Wal-Mart

Sam Walton opened the first Wal-Mart store on July 2, 1962, in Rogers, Arkansas. The store’s motto was “The lowest prices anytime, anywhere.”

Business Philosophy

Walton chose to build his stores in small towns to avoid competing with bigger stores. He believed that keeping prices low would bring in more customers. He also gave employees a chance to own part of the company, so they would care about the store’s success.

Did It Work?

Wal-Mart grew very fast. In 1974, it became a public company on the stock market. It added new services like jewelry, car repair, and pharmacies. Later, Sam’s Club was started for people who wanted to buy in bulk at lower prices. By the 1990s, Wal-Mart was in the U.S. and other countries. By 2005, over 138 million people shopped at Wal-Mart every week! Today, it’s one of the biggest companies in the world, with more than 2.3 million employees and around 12,000 stores.
Sam Walton Activities