The Editors of New Word City - Sam Walton

Saturday, August 14, 1964, was a broiling hot day in Harrison, Arkansas but the heat was the last thing on Samuel Moore Waltons mind. After all, it was the grand opening of his second Wal-Mart hed opened the first in 1962. For the forty-six-year-old Walton who still had the lean athletic body hed honed as quarterback of his championship high-school football team this was a big day, and he was going to make damn sure it was a big success.

With the compulsive attention to detail that was already his trademark, he had planned everything. He took one last walk through the aisles and led his employees in an adrenaline-charged cheer. Out in the parking lot, hed had two truckloads of watermelons delivered and hired a donkey to provide rides for the kids. He headed outside to greet his first customers.

What he saw would be enough to shake even the coolest entrepreneur: The watermelons had burst in the heat, and donkey dung littered the lot. Instead of a festive welcome, customers were facing a barnyard gone bad. Waltons reaction was emblematic of his ability to rise above any challenge, big or small, by focusing on his customers. He simply ignored the mess, walked up to the crowd, stuck out his hand to the first person he came to, and said, Welcome to Wal-Mart.

That focus is one of the lessons every businessperson can learn from Sam Waltons remarkable life. But there are many others, beginning with his obsession with low prices, itself just the first step in a mission to deliver unbeatable value to his customers.

Sam Walton was born the son of Thomas Gibson and Nancy Lee Walton on March 29, 1918, in the small town of Kingfisher, Oklahoma. His father owned a farm at the time of Waltons birth, then, five years later, went back to his previous profession as a farm loan appraiser. For the remainder of Waltons childhood, the family moved from place to place in Missouri, struggling financially amidst the hardships imposed by the Great Depression. Waltons job was to milk their cow, bottle any milk that wasnt consumed by the family, deliver it to the neighbors, and collect the proceeds. He also had a newspaper route. In eighth grade, Walton made Missouri history by becoming the states youngest Eagle Scout. At Hickman High School in Columbia, he was a star athlete, honor student, and president of the student council. His graduating classmates voted him most versatile boy.

Walton took on a variety of jobs to help pay his way through the University of Missouri. He waited tables, served as a lifeguard at the local swimming pool, took on a paper route, and worked as a clerk in a dime store. An economics major, he also attended U.S. Army ROTC (Reserve Officer Training Corps) classes, where he was promoted to an officer. He joined a fraternity, served as president of his senior class, and again excelled at his studies, earning membership in the National Honor Society. In 1940, when he graduated, his classmates voted to name him Permanent President of the class.

After college, Walton briefly took a job as a management trainee with J.C. Penney in Des Moines, Iowa, where he was paid $75 a month. It was there that he discovered his passion for retailing. In 1942, on Valentines Day, he married Helen Robson, who held a business degree from the University of Oklahoma at Norman. She would prove to be a strong and influential life partner. In fact, it was her refusal to live in a town with a population of more than 10,000 that subsequently led Walton to focus Wal-Marts strategy on underserved rural communities.

With the outbreak of World War II, Walton resigned from J.C. Penney and joined the U.S. Army Intelligence Corps. He was eventually promoted to captain.

After leaving the Army in 1945, Walton borrowed $20,000 from his father-in-law, Leland Stanford Robson, an Oklahoma banker, and, with the addition of $5,000 he saved from his military pay, bought a Ben Franklin variety store in Newport, Arkansas. His success was hardly assured. For all my confidence, he later wrote, I hadnt a days experience in running a variety store... That inexperience cost him.

First, he paid too high a price for the store. Only after we closed the deal, he said, did I learn that the store was a real dog. In addition to the $25,000 purchase tag, he agreed to pay rent of 5 percent of gross sales. Later, Walton learned that this was the highest rent anybodyd ever heard of in the variety store business. No one paid 5 percent of sales for rent.

Still, Walton persisted. Despite the hefty monthly expense, he was determined to offer his customers low prices. It was this unshakeable, obsessive, core credo that drove all of Waltons strategies and decisions. And his commitment to delivering value to his customers went beyond price, extending to a large and varied selection of products, top quality, long hours, and unstinting service with a sincere smile.

To make all this possible, Walton began investing and implementing the buying practices that are another of his legacies. He was an extremely tough negotiator, and, because his volume was high, he had a lot of leverage. In addition, he began to cut out the manufacturers representatives and wholesalers, dealing directly with the companies that produced the goods he was selling.

As Harvard Business School professor Richard S. Tedlow once observed, Sam Walton did not become a billionaire because he was a genius (although he was without question smart, shrewd, and astute). The real explanation was that he had the courage of his convictions.

In time, Waltons store became a big success. In his first year in business, he boosted sales by 45 percent to $105,000. In his second year, sales rose 33 percent to $140,000. In his third year, revenues climbed 25 percent to $175,000. By year five, sales reached $250,000.

During this time, Walton repaid the $20,000 he borrowed from his father-in-law, and he and Helen began their family. John Thomas Walton was born in 1946, James Carr Walton in 1948, and Alice Walton in 1949. In 1950, Walton bought a second store, this one in Bentonville, Arkansas. Although it was part of the Ben Franklin chain, he named it Waltons 5 & 10.

Then, in January 1951, Waltons world crashed around him. When the term of the lease on his original store expired, he found that it didnt include any provision for renewal. The landlord, P. K. Holmes, evicted Walton and turned the location over to his son. Walton learned a crucial lesson: Read the fine print, and own the real estate.

It was the low point of my life, he later noted. I felt sick to my stomach. I couldnt believe this was happening to me. It was really like a nightmare. I had built the best variety store in the whole region and worked hard in the community done everything right and now I was being kicked out of town. It didnt seem fair. I blamed myself for getting suckered into such an awful lease, and I was furious at the landlord. Helen, just settling in with a brand-new family, was heartsick at the prospect of leaving Newport. But thats what we were going to do.

Holmes agreed to pay Walton $50,000 for the stores inventory and fixtures. And so Sam and Helen Walton moved on, relocating to Bentonville, where he still had the 5 & 10. Ive never been one to dwell on reverses, and I didnt do so then, he said later.

As it turned out, Walton never lived in Newport again, but he did return to open his eighteenth Wal-Mart. In his memoir, he wrote, By then, I was long over what had happened to us down there, and I didnt have revenge in mind... As it happened, we did extraordinarily well with our Newport Wal-Mart, and it wasnt too long before the old Ben Franklin store I had run on Front Street had to close its doors. You cant say we ran that guy the landlords son out of business. His customers were the ones who shut him down. They voted with their feet.