|
Made in America: My Story
(1992) Sam Walton In 1985, Forbes magazine named Sam Walton 'richest man in America'. Thirty years later, the same magazine ranks several members of his family among the richest people in the world, and their company, Wal-Mart, turns over more than any other on the planet. The media was always going to be interested in a family of such vast wealth. As Walton puts it, "The media usually portrayed me as a really cheap, eccentric recluse, sort of a hillbilly who more or less slept with his dogs in spite of having billions of dollars stashed away in a cave." Made in America, written in the couple of years before Walton died, is his attempt to explain the philosophies and strategies behind Wal-Mart's rise from nothing to be the largest retailer in the world in one generation. Beginnings Sam Walton had grown up in the Depression, going with his father, a loan appraiser, to witness the repossession of family farms. His boyhood ambition was always to be a salesman, but after college and military service began his retail career with the retailer JC Penney. After wedding Helen Walton, whose father put up some money, the young couple opened a Ben Franklin variety store franchise in Newport, Arkansas. The store turned out to have very high rent and strong competition, but Walton still managed to multiply sales and profits. When the day came for the renewal of the lease, the owner refused to do so; he wanted his son to take over the store. Walton was devastated. They started over again in Bentonville, an even smaller town in northwest Arkansas. Walton's Five and Dime adopted the brand new idea of self-service with checkouts at the front and fluorescent lighting, and the store did well. Walton had discovered that there huge untapped demand in small towns and their hinterlands if the prices were right. People were willing to travel tens of miles for a bargain. Expansion Post-war America was changing rapidly. People were moving to suburbs and commuting into cities and the car was king. Fast food joints and motels sprouted to service the freeway traffic, which usually bypassed the towns. In these towns retailing stayed much the same - small specialty stores (butchers, drapers etc) and 'variety' stores. The Waltons began to challenge this cozy arrangement by offering much lower prices, greater variety, satisfaction guaranteed and long opening hours - all now taken for granted. Walton tried always to buy direct from manufacturers, cutting out the middleman. If you buy goods at a high price, he believed, "you've just bought someone else's inefficiency." The Wal-Mart strategy - not obvious at the time - was that you'd have higher profits from selling more things at a lower price, compared to selling fewer at a higher price. By 1960, Sam and Bud Walton had built an 'empire' of nine variety stores. When asked how much further they would expand, Sam Walton's answer was 'probably very little' - any more and they would not be able to personally supervise them all. The purchase of a small light plane, however, enabling the brothers to visit stores quickly and scout new locations, left this prediction in the dust. Outsider becomes giant The first store actually called 'Wal-Mart' was not opened until 1962, by which time Walton was 44. SS Krege's Kmart opened for business the same year. Walton makes much of his company's outsider status. For much of its history, it was viewed as a hick upstart from Arkansas and not taken very seriously. By the early 70s, Kmart had 500 stores and the Waltons less than 70. By 1976, Kmart had doubled to 1000, with Wal-Mart still only 150. The first Wal-Mart's were quite ugly and chaotic, but prices were generally 20% less and this alone flocked the customers in. With improved distribution, they had found a way to grow at 30 to 70 per cent a year, and competition with Kmart began to heat up. The figures say it all. By 1980 there were 276 Wal-Marts, and by 1990 the company hit $1 billion in profits with 1,528 stores. In the year Sam Walton wrote Made in America, Wal-Mart sold 27 million pairs of jeans and 280 million pairs of socks, enough for every man, woman and child in the USA. Wal-Mart today Wal-Mart is now often criticized for being closed to unions, and for having a third of workers only part-time. Another accusation is the company's comparatively small charitable giving. Walton's defense was that his overriding aim is to save customers money, and through these savings to raise the standard of living wherever its stores are located. Neither higher wages nor an expansive charity program would serve this purpose. Wal-Mart's policy of using American suppliers where possible, Walton believed, created hundreds of thousands of jobs and made US manufacturing more competitive. He had also made sure that the Wal-Mart organizational structure allowed ideas to filter up from grass roots, and that the company had only got so big by 'thinking small'. On these points it is clear that Wal-Mart could not be more different from the Enron's of this world, whose operating style Walton refers to (years before the problems in some of America's largest corporations was revealed) as 'looting from the top'. The Sam Walton way in business and life
Final word Made in America is a classic because it is not an ego trip; Walton takes pains to point out that Wal-Mart is a collective success story, and even if you have zero interest in retailing you may be fascinated by the tale of what a single family can achieve. Helen Walton, who had a degree in finance, was clearly a major factor in her husband's success beyond the stable home life she provided. He had originally wanted to go into partnership with a friend and open a store in St Louis, but she overruled: no partnerships, no living in a town with more than 10,000 people. The seed of Wal-Mart's success - a family-based company with a small town focus - was thus sown by Mrs Walton. Get the book to read Sam's '10 rules for building a business', equally appreciated as 10 personal success rules, and for the many anecdotes from Wal-Mart family members, managers and associates. If you are considering starting a company, you should read Made in America to rethink what might be possible. |
"It is a story about entrepreneurship, and risk, and hard work, and knowing where you want to go and being willing to do what it takes to get there...But I think more than anything it proves there's absolutely no limit to what plain, ordinary people can accomplish if they're given the opportunity and the encouragement and the incentive to do their best." Sam Walton Walton was born in Kingfisher, Oklahoma in 1918, and at age five his parents moved to Missouri, finally settling in Columbia. He sold magazine subscriptions and ran paper routes through school and into college, where he was making $4000 a year while doing a business degree at the University of Missouri. He made efforts to be well liked and became president of the student body. After graduating, Walton became a graduate trainee at JC Penney, before joining the US Army Intelligence Corps in World War Two, attaining the rank of Captain. In 1945 Walton opened his first store, a Ben Franklin franchise, using his own savings and a loan from his father-in-law, Walton died in Little Rock, Arkansas, in 1992. |
Source: 50 Success Classics: Your Shortcut to the Most Important Ideas on Motivation, Achievement, and Prosperity (published by Nicholas Brealey/Hachette, London & Boston).
Click for reader reviews