The Rise of Walmart: From Farm Boy to Retail Giant

Sam Walton, the founder of Walmart, was born into poverty on a farm during the Great Depression. Despite facing early hardships, he demonstrated a strong work ethic and entrepreneurial spirit from a young age. This drive ultimately led to the creation of Walmart, which has become the world's largest company by revenue. This is the story of Sam Walton and the rise of Walmart, which, although an incredible success story, has also been marked by controversy.

Early Life and Influences

Born in 1918 in Kingfisher, Oklahoma, Walton's family struggled financially. As a child, he sold magazine subscriptions, delivered milk, and raised animals to contribute to the family income. The Great Depression had a profound impact on the family, as their farm was lost. Walton's father was forced to repossess other farms, which made a big impression on Sam, instilling in him a determination to make money and to never waste it. At the University of Missouri, Walton's resourcefulness continued, saving money by committing to military service after graduation and working as a waiter for free meals. He even ran a newspaper delivery business in high school, which expanded to multiple routes by the end of college and made over $4,000 per year.

Early Career and First Store

After graduating, Walton joined J.C. Penney's management training program. Despite his resourcefulness, he was considered a poor employee, disliking paperwork. His boss even told him he wasn't cut out for retail work. Walton's career at J.C. Penney was cut short when he was called to serve in the military during World War II. While stationed stateside, he met and married Helen Robson, whose wealthy father provided a crucial loan of $220,000 (along with $5,000 of Walton's savings) that enabled Walton to purchase his first retail store in Newport, Arkansas, in 1945. It was a Ben Franklin franchise that was struggling. Walton was only 27 at this time and had never actually run a store before.

Innovation and Expansion

Walton made some drastic changes to turn the store around. He implemented a strategy of low prices and high volume sales. He also sought out cheaper merchandise outside of the Ben Franklin franchise system, driving to obscure wholesalers to acquire products. This led to conflict with Ben Franklin, but his sales increased 45% in his first year and reached $250,000 in revenue by the fifth year, making it the number one Ben Franklin store in the region. However, the store's lease was not renewed, which forced Walton to sell the store.

Determined to move forward, Walton opened a new store in Bentonville, Arkansas, in 1950, named "Walton's 5 and 10"” He secured a 99-year lease this time. To promote his new store, he purchased the local newspaper, using it to advertise his store at minimal cost. Inspired by a self-service model he saw in Minnesota, Walton implemented a similar system, which reduced labor costs and allowed him to further reduce prices. He kept pushing to reduce prices, which customers loved. He then began expanding his business, opening 15 stores by the end of the decade.

The Birth of Walmart

Walton's vision extended to creating a large chain of discount stores in rural towns. He faced challenges securing partnerships with established businesses and had to take personal financial risks to open the first Walmart store in Rogers, Arkansas, in 1962. He was willing to borrow money from friends and any bank, and he mortgaged his home. The decision to focus on rural areas proved successful, as customers appreciated not having to travel to larger cities for discounted items. He also sought out information from his competitors, openly taking notes on their strategies. By 1971, Walmart had six stores and 78 private partners, but was also millions of dollars in debt. Walton saw debt as a necessity for doing business. However, as his debts grew, he needed a solution to avoid the risk of his partners pulling out. He decided to take the company public on the stock market.

Growth, Competition, and Controversy

Going public in 1972 was a turning point for Walmart. After relieving himself of the debt burden, Walton focused on beating the competition. He kept stores open longer and found more ways to cut costs. Walmart also adopted a very aggressive strategy to drive out competitors. They would open in smaller, rural towns, undercutting prices to put local stores out of business, a strategy that many considered predatory pricing. Walton admitted that he used this strategy, seeing it as a natural part of competition. He gave lower prices to customers, which caused them to flock to Walmart. Walmart also had huge parking lots, free for customers to use. By 1980, Walmart had 276 stores, and they were opening about 100 new stores per year. They focused on small towns with populations less than 5,000. This allowed them to save money on advertising as everyone knew about the store. It also forced Walmart to develop its own warehousing and communication system, eliminating bottlenecks to growth. By 1990, there were over 1,000 stores and 150,000 employees.

However, this rapid growth was not without its challenges. Walmart struggled to keep up with its own expansion and was often behind on distribution. Walmart also faced criticism for putting local shops out of business and for its low wages. The company was accused of union-busting tactics, forcing employees to attend anti-union meetings, and using intimidation to prevent unionization. While Walmart's low prices were appreciated by consumers, their business practices were highly controversial.

Later Years and Legacy

By the time of Sam Walton's death in 1992, Walmart's annual revenue exceeded $104 billion. By 1999, it was the largest private employer in the world. However, criticism continued to mount regarding Walmart's treatment of workers, including allegations of unpaid overtime, wage theft, and mistreatment of employees. There were also allegations of poor working conditions in Walmart supplier factories, including factories in China where employees were earning 3 cents an hour. In 2005, a bribery scandal in Mexico was exposed, revealing that Walmart had paid bribes to government officials to gain market dominance. Despite these controversies, Walmart has become the largest company in the world by revenue and the largest retailer in the United States.

Sam Walton's story is one of incredible business success achieved through resourcefulness, innovation, and determination, and his legacy is complex and controversial.