The Educational Path and Business Career of Sam Walton

Samuel Moore Walton, widely known as Sam Walton, was an American businessman who revolutionized the retail industry. He built Walmart from a small store in Arkansas into the world’s largest retailer, a multibillion-dollar business with thousands of stores and millions of employees worldwide. His journey, marked by innovation and dedication to customer satisfaction, provides valuable insights into entrepreneurship and business management.

Early Life and Education

Born on March 29, 1918, in Kingfisher, Oklahoma, Sam Walton was the son of Thomas Gibson Walton and Nancy Lee. His early life was characterized by the values of hard work and self-reliance. In 1923, the Walton family moved to Missouri, where his father transitioned from farming to mortgage brokering.

Growing up during the Great Depression, Walton learned the importance of contributing to the family's financial well-being. As an eighth-grader in Shelbina, Missouri, Walton achieved the distinction of becoming the youngest Eagle Scout in the state’s history. He excelled in both basketball and football at Columbia, Missouri’s Hickman High School, leading the football team to a state championship in 1935 as the starting quarterback. He was also elected president of the student body in his senior year, demonstrating his leadership qualities. Throughout the Depression of the 1930s, he delivered newspapers and took on odd jobs to support his family.

In 1936, Walton enrolled at the University of Missouri-Columbia, where he majored in business. To finance his education, he delivered newspapers, worked as a lifeguard, and waited tables. He joined the professional business fraternity and was voted permanent president of his graduating class. From 1936 to 1940, he was a Reserve Officers’ Training Corp cadet and was made captain during his senior year. His experiences during these formative years instilled in him a strong work ethic and a keen understanding of business principles.

Early Career at J.C. Penney

After graduating from college, Walton joined J.C. Penney as a management trainee in Des Moines, Iowa, in 1940. His starting salary was $85 per month. At J.C. Penney, Walton was impressed with the company’s seven-point business philosophy, which later influenced his own Ten Rules for Success for Walmart employees.

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Walton spent approximately 18 months with J. C. Penney. He was enthusiastic about his job, but he was never one of the JC Penney company’s most thorough employees. He hated to make customers wait while he fussed with paperwork, so his books were a mess. His boss even threatened to fire him, saying he was not cut out for retail work. In 1942, anticipating military service, Walton left Penney’s for a job at a DuPont munitions plant near Claremore, Oklahoma. There, he met Helen Robson, daughter of L. S. Robson, a prominent banker and rancher. Sam and Helen were married on February 14, 1943. They had four children Samuel Robson (Rob), John Thomas, James C. (Jim), and Alice. This early experience provided him with valuable insights into the retail industry and customer service.

Military Service

In 1942, Walton was drafted into the United States Army. During World War II, Walton served with the Army Intelligence Corps, supervising security at aircraft factories and prisoner-of-war camps. He served stateside as a communications officer in the Army Intelligence Corps for the duration of World War II. After he was discharged on August 16, 1945, he and his wife and baby Rob moved from Salt Lake City, Utah, to the small town of Newport, Arkansas, where Walton would restart his chosen career in retailing. His time in the military honed his leadership skills and strategic thinking, qualities that would later prove essential in his business ventures.

The Ben Franklin Franchise

After his military service, Walton decided to return to the retail business. He contacted Butler Brothers, a large retail company with two franchise operations, one of which was Ben Franklin variety stores. Butler Brothers offered Sam a Ben Franklin franchise in Newport, Arkansas, for $25,000. He readily accepted, and with financial support from his father-in-law, L.S. Robson, Sam bought the franchise. He was twenty-seven years old. In 1945, Walton invested $25,000 to acquire a Ben Franklin variety store franchise in Newport, Arkansas. He financed this purchase with $5,000 of his own money and $20,000 borrowed from his father-in-law. As a Ben Franklin franchisee, Walton was given the right to distribute Ben Franklin merchandise in exchange for a certain percentage of monthly sales. As a franchisee, however, he had to buy merchandise from Butler Brothers to sell in his store. Walton was not allowed to sell merchandise unless it was approved by the company, nor could he set the price.

Walton quickly turned the struggling store into a success by focusing on providing quality merchandise at affordable prices. With Ben Franklin, Walton gained considerable management experience and studied the operations of competitors. His goal was to serve consumers by providing quality merchandise at affordable prices. He bought merchandise from low-price suppliers and sold it at discount prices, making his profit on greater volume of sales rather than on margin. He bought merchandise from low-price suppliers and sold it at discount prices, making his profit on greater volume of sales rather than on margin. He implemented innovative strategies, such as purchasing merchandise directly from manufacturers to reduce costs and offering discounted prices to attract customers.

In just five years, Walton transformed the Newport store from a struggling operation with just $72,000 in annual revenue to a successful small business with $250,000 in revenue and $30,000 to $40,000 per year in profits. His store was the number one Ben Franklin location in terms of sales and profits in his six state region. However, Walton’s initial naiveté came back to haunt him. The landlord ended up buying the Newport store and Walton had to start over again in Bentonville, Arkansas. His success drew the attention of the landlord, who refused to renew the lease. Walton realized that he had been duped into a lease with no renewal option and an exorbitant annual rent of 5 percent of sales. Walton had made the store so profitable that Holmes wanted it for his son, so Walton sold the store’s inventory and fixtures to Holmes for $50,000 and left Newport to seek another small town and another store. This experience taught him a valuable lesson about the importance of securing favorable lease agreements.

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Walton’s Five and Dime

On May 1, 1950, Walton arrived in Bentonville, Arkansas, where he opened Walton’s Five and Dime. Bentonville would become the Walton family’s hometown and the headquarters of the multibillion-dollar Wal-Mart enterprise. After the setback in Newport, Walton moved to Bentonville, Arkansas, in 1950 and opened Walton’s Five and Dime. Although still a Ben Franklin franchisee, Sam Walton chose to call his new store in Bentonville “Walton’s Five and Dime”. For a small town, Walton’s four thousand square foot location was very large and his implementation of a self-service concept with a central checkout register at the front of the store was a unique innovation.

He continued to innovate, implementing self-service and discount merchandising strategies. As an incentive to maximize profits and improve managerial skills, he offered store managers the opportunity to invest a maximum of $1,000 in new outlets as they opened. By purchasing merchandise directly from manufacturers, marking up the price, and selling it in large quantities, he was able to increase his profits. He soon opened a second store in nearby Fayetteville. Expansion continued throughout the 1950s as Walton reinvested profits from one store into a new one and repeated the process several times. During this period, Walton purchased his first plane and began to fly over small towns in Arkansas and Kansas looking for potential opportunities and store locations from the air. This is a habit that he would maintain for the rest of his life.

Throughout the 1950s, using borrowed money and the profits from stores he already owned, Walton acquired one variety store after another. By 1960, he was the proud owner of 15 stores. But he wasn’t seeing the profits he’d expected and thought he ought to be making more money for the kind of effort he was putting in. By 1962, Walton and his brother James L. (Bud) Walton were operating Wal-Mart stores in sixteen small towns in Arkansas, Missouri, and Kansas.

The Birth of Walmart

In 1962, Walton decided to implement his vision of a retail world in which discounting was “king.” He opened the first Wal-Mart Discount City in Rogers, Arkansas the same year that two competitors, Kmart and Target, entered the industry. On July 2, 1962, Walton opened the first Walmart store in Rogers, Arkansas. Called the Wal-Mart Discount City store, it was located at 719 West Walnut Street, and launched a determined effort to market American-made products. He aimed to create a retail world where discounting was the primary strategy. Walton wasn’t alone in his venture into discounting. That same year, S.S. Kresge launched Kmart and Woolworth’s started Woolco, both of which could have easily crushed Walmart.

Walton’s concept was to offer a wide variety of merchandise at discount prices in a no-frills setting. Large American discount store chains typically situated their stores in or near large cities, but Walton was convinced that even small towns could generate enough business to make such stores profitable. Contrary to the prevailing practice of American discount store chains, stores were located in smaller towns, not larger cities. To be near consumers, the only option at the time was to open outlets in small towns. This allowed Wal-Mart to operate under the radar for many years.

This strategy set Walmart apart from its competitors, who typically focused on larger urban areas. To operate in out-of-the-way locations, he situated a regional cluster of stores no farther than one day’s drive from a giant Wal-Mart warehouse that made large-volume purchases and distributed the goods to the stores using its own trucking services. Volume buying and a low-cost delivery system enabled Wal-Mart Stores to offer name-brand goods at discount prices in locations where there was little competition from other retail chains. This approach allowed Walmart to thrive in underserved markets.

Expansion and Growth

The early success of Walmart provided funding for further expansion, and by 1969, there were 18 Walmarts throughout Arkansas and Missouri. In 1969, the eighteenth Wal-Mart opened in Newport, Arkansas, the same town where Walton had lost his Ben Franklin store. Until that time, Walton had funded expansion from profits and borrowing, but in 1970, he decided to take the company public.

In 1970, Walmart became a publicly traded company, which provided the capital needed for rapid expansion. By 1970, when Wal-Mart stock was first offered to the public, the retailer had thirty-two stores. As new stores were opened, Walton established regional distribution centers so that stores could restock merchandise almost immediately. In the first year after going public, Walmart added six stores, followed by 13 stores in each of the next two years, then 14, then 26. By the end of 1980, Walton had 276 stores and would soon be opening stores at the rate of about 100 per year.

Walton focused on logistics and efficiency, locating stores within a day's drive of Walmart's regional warehouses and distributing through its own trucking service. This strategy allowed Walmart to maintain low costs and offer competitive prices.

In the early 1980’s, Walton turned to technology to increase efficiency. Wal-Mart was one of the first retailers to use bar codes to automate its inventory process, but, more important, it was the first to use the system efficiently. In 1983, Walton launched the first Sams Club, which were aimed at small-business owners and others who wished to buy merchandise in bulk. Once again, Walton had struck gold. In 1987, the company developed the Wal-Mart Satellite Network, the largest private satellite communications system in the United States, to speed credit card transactions, track delivery trucks, transmit audio and video signals, and report sales data.

Leadership and Management Style

Walton’s management style was characterized by his hands-on approach and his commitment to his employees, whom he called “associates.” Walton's management style inspired loyalty and hard work among his employees, whom he called “associates.” He insisted that every Wal-Mart store support its local community and reflect its values. He personally interviewed managers and selected those he thought best suited for the communities they would serve. All Wal-Mart stores were expected to maintain local outreach programs, contribute to local charities, and offer scholarships to local high school graduates.

He fostered a culture of customer service, challenging employees to always be friendly and helpful. At one point, he issued a challenge to employees to never get within ten feet of a customer without smiling and asking if they needed any help. He instilled a sense of community in his stores, encouraging local outreach programs and charitable contributions. He insisted that every Wal-Mart store support its local community and reflect its values. He personally interviewed managers and selected those he thought best suited for the communities they would serve. All Wal-Mart stores were expected to maintain local outreach programs, contribute to local charities, and offer scholarships to local high school graduates.

Walton also believed in sharing profits with his employees, offering them comfortable pensions and stock options. He stepped down as chief executive officer in 1988 but remained company chairman. He kept prices and salaries low but nevertheless inspired company loyalty in employees, who retired with comfortable pensions as a result of his profit-sharing plan.

Philanthropy and Legacy

Walton and his wife, Helen, established the Walton Family Foundation in 1987, a philanthropic organization that supports education and community development. In 1987 Sam and his wife, Helen, established the Walton Family Foundation, a philanthropic organization. Beyond the local, Walton wanted to counter the trend toward communism in Central America. The Wal-Mart Foundation (WMF) and the Walton Family Foundation (WFF) were formed in the 1980’s to support education. The family gave $5 million to establish Walton Arts Center at the University of Arkansas-Fayetteville. Another $3 million went to Knowledge is Power, a program to recruit teachers for public college-preparatory schools in underserved communities. In 2003-2004, WMF gave $274 million to 75,000 organizations in the United States and Puerto Rico. Ninety percent of that year’s contributions consisted of small grants to local causes through Wal-Mart stores, distribution centers, and Sam’s Clubs (the company’s public wholesale outlets, similar to Costco stores). In addition, WMF has contributed millions in money, supplies, and equipment for disaster relief in fire-ravaged and storm-stricken areas.

Walton supported various charitable causes. He and Helen were active in 1st Presbyterian Church in Bentonville;[27] Sam served as an Elder and a Sunday School teacher, teaching high school age students.[28] The family made substantial contributions to the congregation.

His contributions to business and commerce were recognized in 1992 when President George H. W. Bush awarded him the Presidential Medal of Freedom. In 1992 President George H. W. Bush presented Sam Walton with the Presidential Medal of Freedom, the nation’s highest civilian award, for his contributions to business and commerce.

Sam Walton died of bone cancer in Little Rock, Arkansas, on April 5, 1992, at the age of seventy-four. He is buried in the Bentonville City Cemetery in Bentonville, Arkansas. At the time of his death in 1992, Walton was the richest person in the world, famous for his business success and his numerous philanthropic endeavors. He left his ownership in Walmart to his wife and their children: Rob Walton succeeded his father as the Chairman of Walmart, and John Walton was a director until his death in a 2005 plane crash. The others are not directly involved in the company (except through their voting power as shareholders), however his son Jim Walton is chairman of Arvest Bank. The Walton family held five spots in the top ten richest people in the United States until 2005. Sam Walton revolutionized retail merchandising due to his competitive nature, his willingness to try new ideas, his focus on keeping operational costs low, and his openness to using new technologies.

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