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ORIGINATED Sam Walton is the founder and first president of Wal-Mart Inc. In 1945, Sam Walton opened his first variety store called Ben Franklin in Newport, Arkansas. Ben Franklin was a small chain franchise which gradually died as supermarkets and discounters developed. Sam Walton discovered a tremendous market potential in the early 1960’s – discount retailing in rural areas. He had approached this idea with the Ben Franklin franchisers but this idea was met with rejection. Discount retailing had entered the US in the mid-1950s and grew at an annual compound rate of 25% between 1960 and 1970. After his idea was turned down, Sam Walton began opening his own discount stores in small, rural towns like Bentonville and Rogers, Arkansas. In 1962, in the small rural town of Roger’s, Arkansas a life long dream was fulfilled for a young flinty workaholic named Sam Walton. On July 2, 1962 the first Wal-Mart discount store opened. By placing his discount stores in rural areas, Wal-Mart did not face the same competition as its urban counterparts. Sam Walton was not flamboyant, but was frugal and determined to price below his competition. Walton had a mutual respect with his employees calling them associates and allowed them to participate in profit sharing. The most important factor to the company’s success according to Walton was that if you took care of associates, associates would take care of customers. Walton gave his associates responsibility and built loyalty among them as well as customers. Wal-Mart has a team concept, motivated employees, and excellent communication from headquarters to the stores, and good leadership. Integrity and character from Sam Walton’s legacy lives on. Sam Walton was a leader; he had immense integrity and people believed what he said. He was honest and frugal. For a man worth billions, he drove an old pickup truck. Employees felt as though Sam was one of them. Sam Walton was also a visionary; he had persistence to make the concept work. If he failed, he would try again. The first Wal-Mart stores consist of racks of clothing hung from metal pipes, and most of the goods, such as automotive supplies, toys, and sporting goods, were stacked on tables. There were three checkout stands. The staff consisted of twenty-five associates, who were paid 50 to 60 cents per hour. Wal-Mart’s image significantly changed in the mid 1970s, creating a three-tone combination of light beige, soft blue, and burnt orange. Carpeting was added and new racks were installed to display the entire garment. Walton used state of the art technology to follow consumer purchasing trends real-time, installed UPC product scanning, which improved efficiency and optimized inventories. Wal-Mart also employed an effective distribution network which supplied 80% of each stores product. Walton was selective with vendors, dealing only with those who met certain employment conditions. Wal-Mart began using electronic commerce with its major vendors providing increased savings to the company. Wal-Mart flourished under the leadership of Sam Walton. He had laid the foundation for the substantial growth that followed after he stepped down as CEO in 1988. From 1983 to 1988, sales increased from $4.6 billion to $20.6 billion. David Glass became CEO in 1988 and sales climbed to just under $105 billion by 1997. Under Glass’ watch, earnings increased from $837 million to nearly $3.1 billion. Glass and COO (Don Soderquist) now had the challenge of keeping up the phenomenal pace of growth Wal-mart had witnessed for so many years. Wal-mart obtained a reputation for forcing mom & pop stores to shutdown as these stores couldn’t compete on price. Wal-Mart was taken to court for selling below cost and claims arose how advertising did not meet with store prices. Despite these setbacks, Glass and Soderquist had to grow the company and increase the value of the Wal-Mart share price. Glass and Soderquist had focused internationally since 1991, with target markets in Canada, Brazil, Argentina, Mexico, China and Indonesia. However, these economic ties proved much more difficult than the domestic home front.
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