“I’ve always been driven to buck the system, to innovate, to take things beyond where they’ve been,” Sam Walton once told a reporter. That drive to buck the system would lead Walton — who died on April 5, 1992, 25 years ago — to build the world’s largest company by revenue (just shy of $500 billion annually) and by number of employees (over 2.3 million worldwide).
Like so many of America’s great entrepreneurs, the man who created so much wealth wasn’t born to it. Walton was born in 1918 in Kingfisher, Oklahoma, and knew hard times. He watched his father struggle as a farmer. The family moved a lot, and Walton ended up spending his childhood in Columbia, a Midwestern town in the middle of Missouri, a two-hour drive east to St. Louis, and a two-hour drive west to Kansas City.
Walton grew up as America’s economic prospects were looking down. It was the Great Depression, and a young Walton would take a variety of jobs in order to contribute to his family’s income: He milked the family cow, bottled the surplus, and drove it to customers. He also found time to deliver the local newspaper, but he wasn’t merely a paper boy. He sold subscriptions as well.
At an early age, he’d caught the sales bug — and it would never leave him. The work ethic stuck, too.
“This is a man who was at work at 4:30 in the morning, had warmth and charm throughout the day, an interest in his customers, and who treated his associates well as persons, not just as clerks and salespeople,” said Walter F. Loeb, a retailing consultant who met Walton in 1976.
The young Walton had a knack for leadership and an appetite for competition. In what would be a harbinger of things to come, Sam became the youngest Eagle Scout in state history. He was in the 8th grade when he earned the honor.
Sam Walton was a decent student in high school and a very good athlete, ultimately leading his high school football team as its quarterback. His classmates at Hickman High named him “most versatile boy.” After graduation, he enrolled at the University of Missouri in Columbia. While there, he added more routes to his paper delivery job, hired helpers, and started to make some real money. He needed it — he was paying his own way. He did whatever it took to make ends meet, waiting tables in exchange for meals and even lifeguarding on the side.
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Besides learning the value of hard work from a young age, Walton learned people skills. In college, he wanted to be the student-body president, so he deployed a sales tactic that would serve him well throughout his life.
“I learned early on that one of the secrets to campus leadership was the simplest thing of all: Speak to people coming down the sidewalk before they speak to you,” Walton once explained to a business writer. Not something they teach at Harvard Business School, but perhaps they should.
Walton continued: “I did that in college … I would always look ahead and speak to the person coming toward me. If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend.”
Walton took a job at JC Penney just days after graduating from college with an economics degree. He wasn’t exactly a great success while working there. He didn’t have organizational skills, and he messed up details such as sales slips and cash-register transactions.
“Walton, I’d fire you if you weren’t such a good salesman. Maybe you’re just not cut out for retail,” the man at JC Penney who supervised him famously said to the aspiring merchant. He was right about the former assessment, because Walton was one of the great salesman of the 20th century. But he was wrong about the latter: Walton would become the greatest retailer of all time.
Walton would become the greatest retailer of all time.
Walton was a product of the Great Depression, but he was also part of the Greatest Generation. He quit his job at the store to join the Army in 1942, supervising security at aircraft plants and prisoner of war camps. Walton would eventually reach the rank of captain.
After leaving the military, the 26-year-old Walton took a risk and purchased a Ben Franklin variety store in Newport, Arkansas, with the money he’d saved while in the Army and a loan from his father-in-law. By the early 1960s, Walton and his brother, Bud, owned 15 franchises.
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Then came the best worst luck of Sam Walton’s life. He and his brother hatched a plan to open bigger stores in rural areas with discounted prices to attract more customers. He thought the operating costs were too high at Ben Franklin, and he had a plan to bring those costs down. The Ben Franklin executives didn’t like Walton’s plan — and turned him down. That rejection would fuel the rise of the biggest retail empire in the world.
“They didn’t want to give on their end to the degree that it took for the prices to be as low as I felt they should be,” Walton told Financial World magazine of the disagreement. Operating costs were as much as 25 percent of sales, Walton would tell the magazine; he thought they could be lower. “Aren’t I glad they didn’t accept the idea, because I was forced to build our own team and program,” Walton added. The rest was history.
But what actually made Sam Walton the truly unique success he was? “Sam Walton understood people the way Thomas Edison understood innovation and Henry Ford, production,” Jack Welch, the former CEO of General electric, once explained. “He brought out the very best in his employees, gave his very best to his customers, and taught something of value to everyone he touched.”
Home Depot co-founder Bernie Marcus, himself one of the great retailers of the 20th century, credited conversations he had with Sam Walton for making the Home Depot story possible. “We feel a great affinity for Sam and Walmart because of the way they treat their people,” Marcus explained. “We look at his operation, and you walk in there, and they’re all smiles. He proved that people can be motivated. The mountain is there, but somebody else has already climbed it.”
The story of how Walton became the best merchant in American history can teach us all a lot about achieving our own success, no matter what our line of work. Though Walton was never gifted academically, his desire to learn may be the quality that separated him from his peers and competitors. He had a desire to bring new ideas to life, whether they were his or someone else’s.
Indeed, Walton created Walmart with the idea, once mocked by retailers, that large discount stores could thrive in small towns and rural areas. Seeing rural America as the great unserved population, Walton opened his stores in small towns in which he faced minimum competition, and he worked tirelessly to deliver savings to the people there. He was serving Trump voters when President Donald Trump was still in high school.
He was serving Trump voters when President Trump was still in high school.
Walton knew what it was like to live paycheck to paycheck, and his desire to drive down costs for people in small towns and rural areas ran deep. Customers there had less money than their big-city counterparts, but they paid higher prices because it cost more to get goods and services to those smaller, and more distant, populations. Driving out the wholesalers and middlemen, and going straight to the manufacturers, kept prices down. So, too, did Walton’s inventory-management skills, his attention to detail, and his deeply hardened philosophy of keeping operation costs low. There were no fancy offices, cars, and perks for Walmart managers and executives.
This was the heart of the Walmart value and values proposition: Keep costs low, attract more customers, and make money through volume. It succeeded beyond even Walton’s wildest imagination.
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He opened the first Walmart Discount City in 1962 in Rogers, Arkansas, a small city in the Ozarks. By 1991, the chain passed Sears, Roebuck & Company to become the nation’s largest retailer. A Global Insight study in 2005 revealed that over 100 million Americans shopped at Walmart each week, and that the average family saved over $2,500 a year shopping there.
That barely covers the annual sushi budget for city dwellers — $2,500 — but it’s a whole lot of money for the average Walmart customer, especially when those savings are added up year after year over a lifetime.
How important was keeping costs down to Sam Walton? Former Walmart CEO Lee Scott was on “Charlie Rose” once when the host asked him what it was like working for him. Scott told a terrific story about his boss.
SCOTT: When you didn’t perform, Sam would have a direct conversation with you.
ROSE: (laughing) What’s a direct conversation?
SCOTT: Well, you go around the room on a Friday morning meeting and there’s 20 people in the room in the spring of 1980, the year after I joined, and I’m sitting in that meeting with all of the officers in the company — at the time 20 — and Sam would have a P&L, a profit and loss statement, that wasn’t particularly good, and he got to me. Now when he was mad at me, he’d point his finger at me, and he said, “Scott, your driver-uniform costs were up 30 percent this month. What’s going on?” And you better know what it was. The interesting thing was that the whole cost of drivers’ uniforms was $1,500.
ROSE: But that amount of money meant something to Sam.
SCOTT: (laughing) You’re darn right it did. And it taught me that it meant a lot.
Savings on the micro level, Scottt learned, would lead to savings on the macro level. That discipline and ethos drove much of Walmart’s success.
Walton wasn’t just a teacher: He was also a relentless learner. He spent much of his life visiting his own stores, even learning to fly his own plane so he could visit more stores, asking questions and sharing best practices. He spent endless hours in his competitors’ stores, too.
“I probably have traveled and walked into more variety stores than anybody in America,” Walton told people. “I am just trying to get ideas, any kind of ideas that will help our company. Most of us don’t invent ideas. We take the best ideas from someone else.”
Walton didn’t just parrot those words or emblazon them on a corporate mission statement. He lived them.
“I remember him saying over and over again: ‘Go in and check our competition. Check everyone who is our competition,'” said Walmart associate Charlie Cate. “‘And don’t look for the bad. Look for the good. Everyone is doing something right.'”
Walton especially liked checking out Kmarts. The company was far ahead of Walmart in the early years. He even visited the headquarters of his competitors. Walton also sought out discounters who weren’t in competition to come to his stores and critique them. As outsiders, they might offer some unique insights and perspectives, went Walton’s thinking.
“These guys just ripped our stores apart, telling us how poorly we did everything,” Walton recalled.
“These guys just ripped our stores apart, telling us how poorly we did everything,” Walton recalled.
It shocked everyone and exposed top Walmart people to criticism. But Walton considered it “a turning point in our business.” It prepared the company to compete with their biggest and toughest competitors.
Walton also understood that the very best ideas would come from his people on the ground. “He especially loved to talk to the truck drivers,” explained Scott. “For a long, long time Sam would show up regularly in the drivers’ break room at 4 a.m. with a bunch of doughnuts and just sit there for a couple of hours talking to them.”
Scott remembers Walton telling him how many great ideas the drivers had for fine-tuning the company’s delivery systems.
How many CEOs in those days really listened to their employees? That was in its own way an innovation, visiting stores and poking around, asking questions, and — most important — listening to the answers.
But listening alone wasn’t enough. Applying that listening to real-world circumstances is what Walton did better than anyone. He wasn’t afraid to experiment, tinker, and make things better. “I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Walmart,” Walton once told a business writer.
Always, Walton was bucking the system, even his own.
Of all of the Walton innovations, the biggest was the least sexy. In the early years, Walton tried to build stores no more than a day’s drive from his distribution centers, to keep one step ahead of his competition. He knew it was an advantage to be close to the beating heart of his enterprise: his supply and distribution chain.
But as the company grew, its logistics capabilities had to grow with it. “One of Walmart’s biggest strengths was the streamlined, sophisticated logistics it created for replenishing products as its universe of stores expanded,” said a management adviser at the Boston Consulting Group.
The company would eventually have distribution centers the size of shopping malls, each with an average of six miles of rack space. Add to that more than 2,000 trucks, a satellite system for executives, store managers, buyers, and associates to track sales trends in real time, and a fleet of aircrafts to carry store managers to stores across the globe — and you get an idea of how committed Walton was to the free flow of information that would keep him close to his customers.
To share a perspective on the advantage Walmart had baked into its enterprise, here’s one statistic to ponder: Eighty-five percent of the merchandise Walmart sells is shipped from its own distribution centers. Compare that with 50 percent at its biggest competitor in discounting, Kmart, which relies on suppliers to ship the rest of its merchandise, and you can understand why Kmart has fallen from 2,171 stores at its peak in 2000 to a mere 735 today.
Three officers at Boston Consulting Group wrote about the revolutionary nature of this approach in The Harvard Business Review. Walton turned the conventional retailing approach on its head: Instead of having senior executives make purchasing and stocking decisions, Walmart let the customers decide.
“Instead of the retailer pushing products into the system, customers ‘pull’ products when and where they need them,” they wrote. “The job of senior management at Walmart, then, is not to tell individual store managers what to do but to create an environment where they can learn from the market — and from each other.”
But there was even more to the Walton managerial arsenal: He also happened to be one heck of a team builder and leader. He got the very best out his people not just by listening to them, but by trusting them and empowering them to make their own decisions.
Former Walmart CEO David Glass believed this was what distinguished Walton from so many peers.
He shared total financial information with everyone in every store, in every community. Sam felt we were all partners, and he wanted to share everything. And he was absolutely right. He believed that everyone should be an entrepreneur. If you ran the toy department in a store in Harrison, Arkansas, you’d have all your financial information. So you’re just like the toy entrepreneur of Harrison: You know what your sales are, what your margins are, what your inventory is. And then we had … grassroots meetings in every store. And there was an absolute belief that the best ideas ever at Walmart came from the bottom up. Ideas would come up from those meetings and be implemented company-wide. The door greeter, for example, was the idea of an hourly associate in Louisiana.
And then there was Sam Walton the performer. Anyone who ever had the chance to see Walton in action at the annual shareholders’ meetings got to see a man who was part carnival barker, part Baptist preacher, and part Dallas Cowboys cheerleader.
One such occasion was Walton’s last performance. It was June 7, 1991, and more than 10,000 people filled the basketball arena at the University of Arkansas, 30 miles south of Bentonville, Walmart’s home base.
“It was like a Bruce Springsteen concert,” one admirer said. “Walton took the stage at 7:00 a.m. and kept on going into the early afternoon.”
“A lot of believers are here today,” Walton exclaimed, as the crowd roared. The arena was filled with a mixture of shareholders, suppliers, and 2,000-plus employees who’d traveled to Arkansas at company expense to be at the rally, which at times felt like a revival.
Later that day, Sam and his wife invited employees to a barbecue on the lawn of the home they’d lived in since 1959. That’s right. The world’s richest man lived in the same house — with some improvements — for his entire adult life.
The world’s richest man lived in the same house for his entire adult life.
There was a method to his madness. The annual meeting reflected his deep belief that relationships among suppliers, employees, executives and shareholders determined outcomes. And created the winning culture that was Walmart.
What he did worked. Walmart averaged $103,000 in sales per employee, while his chief rival Kmart averaged $82,000. The story is even more remarkable for anyone who invested in Walmart, especially anyone who invested when the company went public in 1970.
But even if you began investing in 1980, and bought $10,000 worth of Walmart stock, you’d own close to 75,000 shares worth nearly $4 million today. And your annual dividend check would be over $100,000. Walmart would help build the wealth of many retired teachers, firemen, and American workers who’d invested in the company.
He would make many of his employees wealthy as well. He installed profit-sharing plans that enabled workers with low wages to retire with good, and even outsized, retirement pensions. A cashier, Shirley Cox, worked at Walmart for 24 years and was making $7.10 an hour when she retired in 1989. Her pension was an astounding $262,000, according to Vance Trimble, who wrote a book about Walton.
In 1985, Forbes magazine declared Walton the wealthiest person in America, a distinction he didn’t much care about. “All that hullabaloo about somebody’s net worth is just stupid, and it’s made my life a lot more complex and difficult,” he told Fortune magazine.
Walton had little interest in the lifestyles of the rich and famous: He was too busy working. He would visit up to six Walmart stores in a day, he often rented subcompact cars, and he spent nights at budget motels, or in the homes of store managers. To the end, you wouldn’t catch Walton dead in a Mercedes or a fancy import, let alone a new car or truck. He drove a red 1979 Ford F150 pickup truck, which now sits in the Walmart visitors center. “Why do I drive a pickup truck?” Sam Walton once asked rhetorically. “What am I supposed to haul my dogs around in, a Rolls Royce?”
Of all those who knew Walton and Walmart, perhaps David Glass, one of the company’s most highly regarded ex-CEOs, best put things in perspective. “He had this desire to improve that I’ve not seen. I can count on one hand the people I’ve known who got up every morning and really tried to improve something — either in their business or in their lives. Sam worked at it seven days a week.”
“Sam Walton was to the faith of consumerism what the Mahatma Gandhi was to nonviolence,” a Walton biographer wrote. But he was more. He ended up being listed by Time magazine as one of the 100 most influential people of the 20th century. He also won the nation’s highest civilian honor, the Presidential Medal of Freedom. His wealth continues to support important charitable causes.
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Indeed, on April 10, 2015, Fortune magazine reported that Walton enterprises, the holding company owned by the Walton family, planned to gradually distribute 6 percent of Walmart’s outstanding 193 million shares, worth $15.6 billion, to a newly formed entity, the Walton Family Holdings Trust.
Cancer cut Sam Walton’s life short at age 74. But his most enduring legacy, a life of thrift, risk taking, hard work and fun, is impacting people long after his life. And the retail empire he built continues to deliver savings to the nearly one in three Americans who visit his stores each week. That’s a legacy this small-town American rebel, quail hunter, churchgoer, and one-time Bible teacher would surely love.
Lee Habeeb is VP of content for Salem Radio Network and host of “Our American Stories.” He lives in Oxford, Mississippi, with his wife, Valerie, and his daughter, Reagan.