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When Sam Walton opened the first Wal-Mart store in 1962, it was the beginning of an American success story that no one could have predicted. A small-town merchant who had operated variety stores in Arkansas and Missouri, Walton was convinced that consumers would flock to a discount store with a wide array of merchandise and friendly service. Hence, Wal-Mart's mission is to deliver big-city discounting to small-town America. Sam's Roots From humble, hard-working roots, Sam Walton built Wal-Mart Stores, Inc.
into the largest, fastest-growing, and most profitable retailer in the world. A child of the Depression, Sam always worked hard. He would milk the cows, and by the age of eight, he started selling magazine subscriptions. When he turned 12, Sam took on a paper route that he continued well into his college days to support himself. Walton began his retail career at J. C.
Penney in Des Moines, Iowa in 1940 making just $ 75 per month. In 1945, Sam borrowed $ 5, 000 from his wife and $ 20, 000 from his wife's family to open a Ben Franklin five and dime franchise in Newport, Arkansas. In 1950, he relocated to Bentonville, Arkansas and opened a Walton 5 & 10. Over the next 12 years they built up and grew to 15 Ben Franklin Stores under the name of Walton 5 & 10. Sam had plenty of new ideas.
He liked to deal with the suppliers directly so he could pass the savings on to the customers. He later brought a new idea to Ben Franklin management that they should open discount stores in small towns. They rejected his idea. The First of 3054 Sam and his brother James (Bud) opened their first Wal-Mart Discount City store in Rogers, Arkansas in 1962. Walton and his wife Helen had to put up everything they had, including their house and property to finance the first 18, 000 square-foot store. With gradual growth over the next eight years, they went public in 1970 with only 18 stores and sales of $ 44 million.
While other large chains lagged behind, Wal-Mart soon grew rapidly in the 1970 's, due to their highly automated distribution centers and computerization. By 1980, they were up to 276 stores with revenues of over $ 1. 2 billion. Sam Walton's guiding philosophy for his stores from the beginning was to offer consumers a wide selection of goods at a discounted price. The company saved money by keeping advertising costs low and located stores in small towns where residents had few options for retail shopping. On one level, Sam Walton was just folks, the guy with the red dented pickup with the bird dogs in back. On another, he was the flinty entrepreneur, there to peer as deep into the salesmen's souls as into their sample kits and persuade them to give a deeper discount for Wal-Mart's bulk and massive purchases.
Wal-Mart's success in small towns led to criticism that the stores took business away from small, hometown merchants. Nevertheless, the company managed to successfully market the stores as friendly, local businesses. In the Wal-Mart spirit, employees often greet shoppers at the store's entrances. Since their early days, Wal-Mart stores have paid careful attention to specific community needs and wants, often selling local merchandise along with items sold throughout the chain. In addition, the company honors selected graduating high school seniors with college scholarships, and the stores hold charity fund-raisers and sponsor various community events. Wal-Mart's corporate community spirit began to exert an influence on public policy in the 1990 s.
After the record industry established a parental advisory system of sticking music albums containing potentially offensive material, Wal-Mart decided to ban the stickers albums altogether from their stores. The company subsequently has succeeded in influencing many record companies to release clean versions of stickers albums. Wal-Mart has considerable impact in the music industry, largely because about one-tenth of all compact disks sold in the United States are sold at Wal-Marts. Today, Wal-Mart has over 728, 000 Associates worldwide with 3, 054 stores, sales of over $ 104 billion, is in operation in all 50 states and it's still growing. In an average week, approximately 60, 000, 000 customers will shop at Wal-Mart throughout the world. In the United States, on average, every man, woman and child spends 5360 annually there as well.
In his autobiography "Sam Walton, Made in America: My Story, " Sam shares with us, "If you believe in your dreams, there's no limit to what you can do. " In 1992, American legend, Sam Walton left us with these words, "I would like to be remembered as a good friend to most everyone whose life I've touched; as someone who has maybe meant something to them and helped them some way. " The Story Behind the Story While Walton's techniques over the years were hardly the stuff of an MBA program, it represents the kind of grassroots common sense that many entrepreneurs readily acknowledge-but too seldom heed. (People have a knack for making business more complicated than it needs to be. ) What Walton showed the world, but especially the retailing world, was that success was rooted in a mindfulness of a few basic principles. These principles consisted of constantly being mindful of; customer service and satisfaction, always take advantage of the competitions ideas, diversify, employee satisfaction, and give back to the community. Couple this with a relentless drive to put these principles into practice. Customer Service and satisfaction Sam Walton understood better, it seems, than anyone else that no business can exist without customers. He lived by the creed of, make the customer the centerpiece of all your efforts. In addition, in the process of serving Wal-Mart's customers he served Wal-Mart associates, shareholders, and communities.
He accomplished this almost without parallel in American business. Walton knew what the customer wanted. The customer wanted everything: a large assortment of quality merchandise; low prices; satisfaction guaranteed; friendly service; convenient hours; free parking; a pleasant shopping experience. His motto was, always exceed the customers expectations.
In the 1950 's and 1960 's the great migration from the inner cities and from the rural areas to the suburbs had begun. The big retail giants stayed put, around the large populated suburban and urban areas. Small town and rural America either had to travel to the big city to buy cheaper or buy from the local merchant at higher prices. These merchants seemed to think that since they had a captive audience they could stick with their 35 to 45 percent mark-ups. There seemed to be an ever widening or let me say, vacuum occurring. Walton has been accused of single handedly driving the small town merchants out of business.
Reality shows though that the small town merchants brought about their own demise, by being greedy and only trying to monopolize their small piece of the market. They also viewed that their loss of revenue, declining because of people moving out and people driving to the urban areas to shop, could only be solved by raising the mark-up on their goods. Sam saw just the reverse of this. Buy in tremendous volume, mark the goods up less (30 %) and carry a large variety of goods. Every day low prices is a hall mark of Wal-Mart and Sam credits a manufacturer's agent from New York, Harry Weiner, with his first real lesson about pricing: "Harry was selling ladies' panties for $ 2 a dozen. We'd been buying similar panties from Ben Franklin for $ 2. 50 a dozen and selling them at three pair for $ 1.
Well, at Harry's price of $ 2, we could put them out at four for $ 1 and make a great promotion for our store. "Here's the simple lesson we learned... say I bought an item for 80 cents. I found that by pricing it at $ 1. 00, I could sell three times more of it than by pricing it at $ 1. 20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough, but this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail.
Sam's adherence to this pricing philosophy was unshakable, as one of Wal-Mart's first store managers recalls: "Sam wouldn't let us hedge on a price at all. Say the list price was $ 1. 98, but we had paid only 50 cents. Initially, I would say, 'Well, it's originally $ 1. 98, so why don't we sell it for $ 1. 25?' He'd say, No. We paid 50 cents for it so mark it up 30 percent, and that's it. No matter what you pay for it, if we get a great deal, pass it on to the customer. ' And of course that's what we did. " Moreover, that's what we continue to do - work diligently to find great deals to pass on to our customers.
Some will argue that Walton's plan was, and Wal-Mart's plan even today, is to drive all competition out and raise prices for even larger profits. In essence, become a monopoly similar to the previous small-town merchants. The album...
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Research essay sample on Essentials Of Business Management Wal Mart Case Study
