Monday, July 14, 2008

What Sam Walton Knew

For many years following World War II, the most famous individual in American retail was arguably James Cash Penney. Founder of the famous chain that bore his name, Mr. Penney was active in the company into his nineties, passing away at age 95 in 1971. In 1950, he published a best-selling autobiography, Fifty Years with the Golden Rule, which shed light on his life, Christian faith, and principles for running a business. Since the mid-1980’s, in a point that’s certainly beyond argument, the “most famous” distinction most assuredly belongs to Sam Moore Walton, founder of Wal-Mart. Ironically, the two men met early in Walton’s career.

Sam Walton, Born in Kingfisher, Oklahoma in 1918, decided on a career in retail early on. After graduating from the University of Missouri in 1940, he took a job as a trainee at a J.C. Penney store in Des Moines, Iowa. Robert Slater, in his book The Wal-Mart Decade (later renamed The Wal-Mart Triumph) relates a story in which Mr. Penney, on a tour of his Midwest area stores, stopped by the Des Moines store. During his visit, J.C. taught Sam how to wrap a package using the least amount of materials that would still allow the package to look attractive. Whatever else they discussed is lost to history, but I think it’s safe to say at a minimum that the young Walton walked away with some inspiration as a result of Penney's common touch, a reinforcement of his already strong sense of thrift, and most importantly an awareness of the importance of visiting the stores, something that would later become his trademark .

After a stint in the U.S. Army Intelligence Office during World War II, with borrowed money from his in-laws, Walton opened his first retail operation, buying out a poor-performing Ben Franklin store in Newport, Arkansas in September, 1945. Ben Franklin was a franchise operation based in Chicago and owned by Butler Brothers, a wholesale operation that was founded in 1877. Butler opened the first Ben Franklin variety store in 1927.

Butler exercised a great amount of control over its Ben Franklin franchisees, dictating merchandise to be stocked, merchandise sources and prices to be charged from on high. Walton, who within a few short years transformed the Newport store into the top performer in the state, chafed under Butler’s restrictive approach. Possessed of an unusual level of street smarts and a great deal of curiosity, traits that led him to examine competitors’ operations very closely, Walton soon began to develop his own retail approach - one that over time grew increasingly at odds with the Ben Franklin hierarchy.

Forced to part with the Newport store when his lease expired, Walton and his family settled in the tiny Northwest Arkansas town of Bentonville, where he opened a Ben Franklin franchise under his own name, Walton’s 5 and 10-cent store, in early 1951. Joined by his younger brother, James L. (Bud) Walton, the pair would open 16 more Ben Franklin stores over the next eleven years. The Walton 5 and 10 cent stores gave way to self-service “Walton Family Centers”, larger stores that carried a wider selection of merchandise. The stores were located primarily in Arkansas and Missouri, with a couple of units in Kansas. Walton proved to be a natural at merchandising, and by this point he was eager to introduce a new concept to his basically rural market.

Sam Walton knew that a huge opportunity existed in underserved small town markets such as the one in which his company was located, an opportunity to do business on a much larger scale than the antiquated variety store format would allow. He had read about the discounting trend that was taking root in other parts of the country, especially in the Northeast – Zayre, Two Guys , Arlan’s, Ann and Hope and Mammoth Mart, among others. In California, Sol Price had started up Fed-Mart. And of course, there was action in the Midwest, as plans for S.S. Kresge’s Kmart program began to leak out.

Walton approached Butler Brothers with his plans to build a discount store in hopes that they would be willing to partner with him on the new venture. Since his firm had a long standing relationship with Butler, he was their largest Ben Franklin franchisee, and he really didn’t want to have to set up his own merchandising and supply chain infrastructure, Walton made a pitch to Butler brass in Chicago, in an attempt to convince them a partnership would be in both of their companies’ best interests. They turned him down flat. Even two years later, after the first Wal-Marts had been launched, Sam offered his concept to Butler to franchise to their other small-market operators, and again he was spurned. Looking back, it’s staggering to fathom what those two decisions cost the Butler/Ben Franklin organization over the course of the following decades. No more offers from Sam Walton would be forthcoming.

On July 2, 1962, in the the same year that S.S. Kresge launched Kmart, who would rule the retail roost for a very long time to come, F.W. Woolworth launched the (now long gone) Woolco in an effort to stay relevant and The Dayton Company launched Target, a tiny seed of a discount operation that wouldn’t reach full flower until much, much later, Sam and Bud Walton opened the first Wal-Mart Discount City in Rogers, Arkansas.

Both Slater’s book and Sam Walton’s autobiography, Made in America (required reading, to my mind, along with Lee Iacocca’s autobiography for late 20th century business buffs) recount an interesting story that took place on the new store’s opening day. A contingent of Ben Franklin executives from Chicago showed up, asking to see Mr. Walton. They proceeded to the office at the back of the store, saying nothing along the way. Meeting in Walton’s office, they issued an ultimatum: “Don’t build any more of these Wal-Mart stores”, then left, without another word, in a huff. Wisely, he completely blew off their ultimatum.

Over the next four years, four more Wal-Mart Discount Cities were opened – in Siloam Springs, Springdale, Harrison (1 hour south of future tourist magnet Branson, Missouri) and Conway, Arkansas. Wal-Mart was on its way.

The photos above, with the exception of the sign photo, which is a bit newer, are circa 1971 and show views of various store departments. From the seventh photo, one can assume that stripes were definitely in that year. The last photo shows “Mr. Sam”, as he was affectionately called, doing what he loved to do – grabbing a store’s P.A. microphone and thanking customers for shopping at Wal-Mart.


  1. Imagine if stores today were even remotely that colorful, or if the bargains were so good that people actually wanted to dig through a "scramble table"....really takes you back.

  2. In 1989, I met my future husband in Grand Rapids, MI. He had just left Rogers, AR (long story) and told me two things that I still can't believe have really come true: 1. Some guy named Bill Clinton would become president of the United States, and 2. Walmart would conquer discount retail as we knew it. Disbelieving Chicagoan that I am, I told him he was crazy on both counts - he has never let me forget those predictions! Seriously, in 1989, I had never set foot in nor really even heard of Walmart. Shortly thereafter, we took a trip to Rogers and I got to see Store #1 for myself. Also went to the Walmart museum in Bentonville, of course, which is quite interesting if you dig retail history like those of us who frequent this site. Still, I'd rather shop at Target! Well, I'd rather shop at Turnstyle...or Jupiter...or Korvettes...sigh:-)

  3. Steven - Colorful is an understatement. It's amazing what they could do with polyester! And I've never heard the term "scramble table" before, but it's perfectly descriptive.

    Adrienne - GR is a great town, I worked for many years for a company that was based there.

    Sounds like your husband was right on the money - who would have ever thought that Arkansas would loom so large in America's future?!

    I've been to the W-M museum myself (don't really live that far away), and found it fascinating. Rogers was a sleepy country town of 4,000 when Wal-Mart started, and now has a very affluent suburban feel. Most of W-M's key suppliers, the Procter and Gambles, Krafts and Coca-Colas of this world have set up major contingents of execs and support people in NW Arkansas to service their biggest customer. Rogers has been an extremely popular residential area with those folks.

    And I'm totally with you about wishing we could shop at those fallen classic stores!

  4. Those early Walmart pics make me nostalgic for the days when Walmart existed in certain areas, but just hadn't grown to Starbucks-like proportions and the point where it would be about the only discounter left in the nation except Target. There is certainly nothing wrong with Walmart establishing itself in underserved small towns and bedroom communities (I've been there before, believe me), but if they'd left the major cities alone, we might still have at least a handful of chains that departed over the past ten years or so.

  5. Walmart saw an opportunity and filledit when it entered the larger cities, as Kmart failed to move to fill the voids left by Zayre, Ames, Hill's, Richway/GoldCircle, Venture, and many others from the late 80's into the mid-90's. Most new build Kmarts of that era were a reaction to Walmart rather than taking an opportunity. Some posters may wonder why I included Richway/Gold Circle when they were primarily sold to Target, but a few factors were Target didn't reopen several of the former RW/GC locations, many were closed for 6 months to a year before reopening as Target, and Target carried less hardlines than RW/GC.

    Walmart built its base and strength in overlooked and underetailed rural areas and tapped a goldmine that many marketing gurus said was too small to be profitible. When new rural markets became fewer and fewer, the fallout in the discount chains of the larger cities opened a new opportunity.

    Even the hypermarket was considered a failure in the American market-Meijer, Fred Meyer and Smitty's were the exception. Walmart's Hypermart USA was less than successful, but was a proving ground for Walmart as they learned they needed their own infrastructure to enter the grocery business and they once again turned to their roots and began replacing the older Wal-Mart Discount Cities of rural America with Wal-Mart SuperCenters and in the last few years the SuperCenter has arrived in larger cities, though like traditional Walmarts, a true inner city urban store is a rarity.

  6. Horizontal stripes are NOT slimming.....

    Good stuff, Dave. I love historical randomness like this, and I must admit to a certain fascination with the Walmart juggernaut.

    But I'd still rather shop at Target and my local supermarkets.

  7. Most of the pictures on this blog were before my time. One of the things that I've noticed, is that unlike the stores I've been to in my lifetime all of these department stores are always packed with people in almost every picture. Were they always busy like this, possibly due to the fact there weren't as many stores around? Or is that just a promotional thing done by the company for the picture?

  8. This was a great post! Being from the North East, I never had the opportunity to even visit a Wal-Mart until, believe it or not, this past year! There are no Wal-Marts nearby where I live. The closest one is in Lynn, Massachusetts, I believe. So this was a really sweet opportunity to not only see Wal-Mart as it was back in the day, but to learn about it's history as well. Looking at these pics actually had me remembering some of the long gone North East retailers, like Zayre, Caldor and Bradlees. Damn, I miss those stores!

    Another great article on this great blog! Great work! Keep it up!

  9. Black Squirrel - Ken, in the next comment, puts it very well about the void Wal-Mart was able to fill after the closure of many of the other leading discount chains.

    Many of those chains, including some profiled here in this site, were in big trouble long before Wal-Mart became a factor in their market areas, so the void in many places was huge.

    Ken - It really is astounding how Kmart missed the boat in taking advantage of the demise of some of those chains. The "reactionary" Kmarts , meaning most built after 1985 or so, were not very effective competitors (to put it nicely) to Wal-Mart. Even as early as the mid-70's, when Kmart began to build stores in such Wal-Mart strongholds as Springfield, Missouri, Wal-Mart pretty much ate their lunch. It was a sign of things to come nationally.

    The Hypermarkets weren't successful in themselves, but they were invaluable in helping to perfect the supercenter concept.

    Captain - Definitely stylish threads, no?

    I agree that the Wal-Mart story is fascinating, whether one likes them or not.

    Mr. Burns - A lot of the photos are old store publicity shots, and were taken at peak busy times, such as during a grand opening.

    Panda Cookie - Thanks again! I would say that Wal-Mart probably has the smallest concentration of store in the New England states.

    You guys definitely had some of the great chains back in the day. I grew up in the Chicago area, but spent a month with my grandparents in Rhode Island every summer from 1970 to 1980, so I remember quite a few of them. The Caldor at the Auburn Mall (which was previously a Denholms and a Forbes and Wallace) is the one I remember most. Another one I really liked was Mammoth Mart. My grandma bought me the first Osmonds album there around '71. Not exactly a classic album, but a great memory.

  10. I actually grew up in Newport, Arkansas, and my next door neighbor ran the Ben Franklin after his family took over the lease from Walton. Sam ran both the Five & Dime stores in town out of business when he opened up Store #18 in Newport. The downtown basically died. He claimed it wasn't intentional.

  11. Anonymous - Thanks very much for the comment. It's great to hear from someone who had a front row seat for this piece of retail history. Sam actually addressed this issue in his 1992 autobiography, quoting at length:

    "That store opened in 1969, and it marked our return to Newport, Arkansas, nineteen years after we had basically been run out of town. By then,I was long over what had happened to us down there, and I didn't have revenge in mind. It was a logical town for us to expand into, and I admit that it did feel mighty good to be back in business down there. I knew it was a town where we would do well. As it happened, we did extraordinarily well with our Newport Wal-Mart, and it wasn't too long before the old Ben Franklin store I had run on Front Street had to close its doors. You can't say we ran that guy -the landlord's son- out of business. His customers were the ones who shut him down. They voted with their feet."

  12. I think that maybe Sam Walton should have took the advice of those Ben Franklin executives. Just kiddding! Although think of the atmosphere we would have today if he actually had. Would their results have been the same? Would some other company be king with few survivors? I think the Chicago connection in all this is interesting to say the least.

    I like the term "Discount City." Stores like this should have kept it, it seems a lot more jovial than the term "Supercenter".

  13. "Western style" anything was huge with adults of the 1950s/60s. Those born before 1946. TV shows, movies, John Wayne, woody sided station wagons, wood paneling, ranch houses...

  14. Didi - I really doubt it would have been the same had the Ben Franklin folks been more receptive. In my opinion, they were probably way too stuck in their old ways, and Sam did far more with the concept on his own than they ever would have.

    Tomcat - You're right. The biggest indicator of that was the prime-time TV schedules of the era, which were absolutely top-heavy with Westerns at the time.

  15. Dave-- I've been to the site of that original Ben Franklin store in Newport (thinking that Newport was actually the first town to have a Wal-Mart; you set me straight). The Merchants & Planters that's there now has a little shrine on the corner showing what it looked like back in the day. It made me miss America's downtown even more (and I never got to experience it).

    By the way, do you live in Arkansas? I'm a resident of Searcy, which I understand is home to the first Wal-Mart Supercenter.