Sam Walton of Wal-Mart Dies; Top U.S. Retailer
Sam Walton, a self-made multibillionaire who parlayed an Arkansas five-and-dime into the mega-merchandising empire of discount stores he called Wal-Mart, died Sunday. He was 74.
Walton had been treated in the early 1980s for leukemia and was found to have bone cancer in 1990. A Wal-Mart spokesman said Walton died at the University of Arkansas Medical Sciences Hospital in Little Rock, where he had been for more than a week.
Perennially at the top of Forbes magazine’s annual list of America’s richest people, last October Walton was No. 3, followed by his four children, each with a net worth of $4.4 billion. Last year, ringing up $43.89 billion in sales, Wal-Mart unseated Sears, Roebuck & Co. as the country’s largest retailer.
Walton was a paradox who shunned publicity, yet once honored a promise to employees to dance the hula on Wall Street when they turned a higher profit than he had predicted.
Tapping an eager small-town market for discount merchandise, Walton kept his empire centered in tiny Bentonville, Ark., where he drove an old pickup truck and regularly stopped by the local coffee shop for breakfast with townsfolk.
“Y’all are real good. We couldn’t have done it without your support and without your buying a little merchandise from that old five-and-dime,” he told the Ozark citizenry on Oct. 8, 1983, when Bentonville staged a “Sam and Helen Walton Appreciation Day.”
“I had no vision of the scope of what I would start,” Walton once said of his Southern and Midwestern chain that numbers 1,735 stores. “But I always had confidence that as long as we did our work well and were good to our customers, there would be no limit to us.”
“Mr. Sam,” as his neighbors called him, was criticized by some labor groups for buying foreign products after announcing a “buy-America” policy, for failing to promote women into management ranks, and for putting some of Main Street’s smaller shops out of business.
But Walton, whose autobiography is due for publication in June, was generally revered by his neighbors and employees, whom he always referred to as “associates.”
When Walton received the Medal of Freedom last month, President Bush called him “an American original” who “embodies the entrepreneurial spirit and epitomizes the American dream.”
Gov. Bill Clinton’s office in Little Rock issued a statement: “Hillary and I treasured Sam Walton’s friendship and we will miss him very much. He was a remarkable human being, a wonderful family man and one of the greatest citizens in the history of the state of Arkansas.”
Walton maintained a generous profit-sharing plan for his employees and spent two or three days each week talking to them in their stores, eager to hear their problems and suggestions. He knew the names of his hundreds of store managers, and the names of 90% of their wives.
“We like to let folks know we’re interested in them and that they’re vital to us. ‘Cause they are,” he said. “Those department heads are the ones who really know what’s going on out there in the field, and we’ve got to get them to tell us.”
On a typical store walkabout, Walton praised a woman’s suggestion about displaying fabric in flat folded pieces rather than in bolts, and said he would pass the idea along to her counterparts in other stores.
Unable to sleep one night, he climbed into his pickup, stopped for doughnuts, and went to one of his distribution centers to chat with dockworkers. They said they needed a couple more shower stalls, and Walton had them added.
Walton the inveterate cheerleader often led his troops in a peppy, “Give me a W . . . Give me an A. . . . “
Mr. Sam relished the work ethic in himself and his employees. A favorite motto in his eager, energetic Wal-Mart world was “TGIM” for “Thank God It’s Monday.”
On store visits, Walton would count the cars in the parking lot as a barometer of business, and once got so engrossed in the task that he crashed his car into the back of a Wal-Mart truck. One of the 10 floats in the parade on Walton Appreciation Day was a wrecked car welded to the back of a Wal-Mart truck.
Walton encouraged comments by his employees, and used their ideas when appropriate. But his lieutenants knew the debate was over when Mr. Sam thundered: “By golly, I still own most of the stock in this company, and this is the way we’re going to do it!”
Sam Moore Walton was born in Kingfisher, Okla., March 29, 1918, the elder of two sons of farm mortgage broker Thomas Walton. During the Depression, the family moved to Columbia, Mo., where Sam worked his way through the University of Missouri with a paper route.
His down-home folksiness masked a clear talent for business administration and economics, his major. That skill and insight led him to develop Wal-Mart into one of the most state-of-the-art computerized companies in the world.
After his graduation in 1940, Walton spent more than two years as a J. C. Penney trainee in Des Moines, Iowa. He was drafted into the Army in 1942, and spent the remainder of World War II in the United States with the military police.
On Valentine’s Day, 1943, Walton married his equally unassuming wife, Helen, the mother of his three sons, S. Robson, Jim C. and John T., and daughter, Alice L.
Using all his savings and a small loan, Walton bought his first store--a franchise Ben Franklin five-and-dime in Newport, Ark.--when he was 27.
He moved his growing family to Bentonville in 1950 after losing the Newport franchise, and opened Walton’s five-and-dime. With his brother, James L. (Bud) Walton, he built that store into a franchised chain of 17 Ben Franklin variety stores.
But Walton saw the friendly small town as more than a pleasant place to live and sell small quantities of mundane goods, He viewed it insightfully as an untapped market for discounted name-brand merchandise.
“I thought that larger stores could be put in smaller towns than anyone had tried before,” he said. “There was a lot more business in those towns than people ever thought.”
In 1962, unable to persuade owners of the Ben Franklin chain to join him, he founded Wal-Mart with his brother and became chairman. Their first store was Wal-Mart Discount City in Rogers, Ark.
Walton was not the first into discounting, but he set out doggedly to become the best.
“Anyone willing to work hard, study the business and apply the best principles can do well,” Walton said in 1984. “I worked at it. I walked into competitors’ stores. And I wandered into more stores than anyone else. I was fortunate in getting some smart people to work for me and we avoided mistakes that the others made. We learned from everyone else’s book and added a few pages of our own.”
Walton’s strategy included aggressive expansion, a computerized merchandise information system, tightly controlled expenses, a strong distribution network and his hands-on employee relations operation.
By 1970 he had 30 stores. He took the company public and built it over the next couple of decades to more than 1,700 stores ranging in size from 30,000 to 60,000 square feet.
Many of his Bentonville neighbors bought stock when it cost $2, learning to appreciate the new method of large-scale merchandising when that stock split six times in its first dozen years. The stock closed Friday at $51.62 per share on the New York Stock Exchange.
A small company plane that took Walton to his stores throughout the South and Midwest--he got a pilot’s license in 1952--was his only nod to the wealth he began to accumulate and share equally with his children.
His favorite hobby continued to be quail hunting, and he enjoyed daily sets of tennis. Another sign of his commonality was that he insisted on standing in line like any other customer when he bought something at a Wal-Mart.
Walton continued to live in his large but unassuming ranch-style house in Bentonville, and a big Friday night out might be ribs and cheesecake at Fred’s Hickory Inn. The modest brick Wal-Mart headquarters in town was often described as “bus station modern.”
Just as he had followed K mart and others into the discount market, Walton followed San Diegan Joe Price’s Price Clubs into the warehouse shopping market. In 1983, he founded Sam’s Wholesale Clubs, a chain of warehouses that sold huge lots of goods to consumers who paid a $25 membership fee for admittance.
Unlike Wal-Mart stores, the Wholesale Club ventured into larger cities, beginning with Oklahoma City, Kansas City, Mo., and Dallas.
While the discount Wal-Mart stores had a 28% markup with an operating cost of 19.5% and annual inventory turnover of four times, the Wholesale Clubs had only a 10% markup, 6% operating cost and inventory turnover of 10 to 14 times a year.
Walton tried to step down as chairman in 1974, but resumed the role two years later after realizing that he “wasn’t able to assume a passive role.” He relinquished one title, chief executive officer, in 1988, when he was 70, but remained chairman.
While chief executive officer, Walton won Financial World magazine’s gold CEO of the Year Award in 1986.
By 1991, Forbes said Walton would have been the richest man in the world had he not divided about $18 billion equally among his four children. And he continued to build stores, further reducing his capital.
It seemed indeed that, as he had once predicted, “there would be no end to us.”
* WAL-MART AFTER WALTON: Billionaire laid plans for retail chain to continue thriving. D1