Tuesday, August 5, 2008

It's a Wal-Mart World Out There

Two of the many notable developments of the 1980’s were first, the ascent of Wal-Mart to the top of the American retailing world (the peak itself would be reached in 1991) and secondly, the establishment of Sam Walton as a modern-day American folk hero.

As mentioned, the company closed out the seventies with $1 billion in sales and 278 stores. Ten years later, in 1989, their profits were $1.6 billion (surpassing Kmart’s profits for the first time) on a sales total of nearly $26 billion, with a store count of 1,402 Wal-Mart Stores and 123 Sam’s Wholesale Clubs. Their market area, far too big to fit in a circle, magic or otherwise, comprised 29 states.

In many ways the catalyst for Wal-Mart’s explosive growth was their acquisition of the Big K stores. Overnight, the company’s store base grew by 20 percent, adding Georgia and South Carolina as new states, more than doubling their presence in Tennessee and Kentucky, and picking up some nice new locations in Mississippi and Alabama. Within a year, sixty percent of the Big K stores had been converted to the Wal-Mart format, not a simple process. Most importantly, the episode built the confidence of the Wal-Mart management team, convincing them that the company’s growth rate could be stepped up big time with relatively few problems.

Year by year, more states were added – Nebraska and Florida in 1983, North Carolina, Indiana and Florida in ’84, Virginia in ’85, Wisconsin in ’86, Minnesota in ’87, Colorado in ’88, Ohio and Arizona in ’89, and Michigan and Wyoming in 1990. The following year, Wal-Mart, that good old “southern chain”, became a coast-to-coast operation with stores in California, Nevada and Utah. Of course, Wal-Mart has been a 50-state (and international, for that matter) operation for many years now. Here is an amazing animated graphic illustrating Wal-Mart’s growth from 1962 up to now. Watch as the slow progression gives way to a frenetic pace. Kinda gives you pause, eh?

In 1987, Wal-Mart launched a new concept that quickly came to be regarded as a failed experiment - Hypermart USA. The peripatetic Sam Walton’s travels had by this time led him around the world – to South America, Australia, South Africa and all over Europe in search of retailing ideas. Walton was most impressed with the French-owned Carrefours (pronounced car-four) Hypermarket stores in Brazil, and got the itch to try out the concept in the United States. Carrefours’ Hypermarkets were huge 200,000-plus square foot stores offering general merchandise and a huge selection of food under one roof. While other American companies had tried or at least dallied with the hypermarket idea, Chicago’s Jewel Food Stores among them, no one had been able to make it fly.

Garland (suburban Dallas), Texas was the site of the first Hypermart USA opening in 1987. A second Dallas-Fort Worth store would follow, along with Hypermarts in Topeka and Kansas City. The stores – gaudy monstrosities with excessively high ceilings and massive entrance archways overwhelmed both the company and their customers. Although traffic was good, profits, due to the huge scale and overhead of the Hypermarts were not. Only four of them were ever opened. Author Robert Slater quotes Rob Walton as saying the Hypermart program failed “because of a lack of commitment and focus” – unusual attributes indeed for a Wal-Mart initiative.

Failure or not, the Hypermart experience paved a reliable highway for what would become Wal-Mart’s bread-and-butter, the Wal-Mart Supercenters. Scaled down and toned down, the Supercenters nonetheless were good-sized (150,000 plus square feet) and featured a similar merchandising mix to the Hypermarts. The first Supercenter opened on March 8, 1988 in Washington, Missouri. Wal-Mart was a bit more cautious at the outset, with only 100 Supercenters in operation over the first six years, but would step up the pace from there – 250 Supercenters were in existence by 1996 and an astounding 1,060 Supercenters by 2002. A by-product of the Supercenters’ success was Wal-Mart’s eventual dominance of the grocery industry. In 2001, Wal-Mart became America’s number one grocer, surpassing longtime industry leaders Kroger and Safeway, companies whose history goes much further back. Since we live smack in the middle of the Supercenter era (and goodness knows I try to stay away from the present on this site), I guess not a lot more needs to be said about them.

Sam Walton was not averse to publicity for Wal-Mart’s sake. In 1984, he splashed onto America’s front pages when he did his famous “Hula on Wall Street”, fulfilling a promise he made to Wal-Mart employees if the company met a certain earnings-per-share goal. Standing there on a summer day, with a crowd gathered around, a large contingent of TV cameras present, and outfitted in a suit, tie and grass skirt, the 66-year old Walton danced what he termed “a fair hula” to the music. A star was born.

What Walton was totally unprepared for was the media feeding frenzy that came his way a year later, when Forbes magazine featured him on its cover with the tagline “The Richest Man in America”. Shocked and a bit resentful of the publicity and encroachment on his privacy that ensued, Sam made a point of being seen driving his truck, wearing a casual denim shirt and jeans (Walton customarily wore suits to the office and on store visits) and hauling his hunting dogs around everywhere he went, in hopes that the media would be bored silly by his modest lifestyle and leave in short order. If anything, the opposite proved to be true, and it only fed the mystique. Eventually, he learned to live with the newfound attention, all the while trying to shift the focus to Wal-Mart’s amazing growth instead of his own story. It was never to happen during his lifetime. The story of Sam Walton - a true rags-to-riches, All-American saga was far too hard to resist.

In April 1992, after a long illness, Sam Walton passed away, followed three years later by his brother Bud. Control of Wal-Mart remained in the family hands of Sam’s wife, Helen, and their four children. Eldest son Rob Walton became chairman. The management of the company remained in the hands of trusted veterans David Glass and Don Soderquist, among others, who had highly developed skills in merchandising and distribution and were well-suited to take the company to new heights. Wisely, none of these men even attempted the impossible task of filling Sam’s shoes as the “Face of Wal-Mart”.

Here in the 21st century, Wal-Mart is the largest company in the world, a spot that was for many years the domain of General Motors. Reviled by many, defended by many - but ignored by few.

The first photo above shows the 1980's standard triple-soffitted Wal-Mart facade in a 1984 photo. The second photo, from 1982, shows the somewhat more economical alternate facade that appeared on a good many stores, including most of the renovated Big K units. Photos 3 through 10 are from 1981 to 1984 and show the checkout area, the service desk (with ironclad guarantee on the wall in back), the mens' and girls' clothing departments, the record department featuring a poster of Billy Joel from his "Glass Houses" era along with signs for Blue Oyster Cult, Cheap Trick (I saw them in concert back then!) and the late great Dan Fogelberg. Not a compact disc in sight. Next is the TV department with an Atari display and some outdoor antennas looming above (now there's a tribute to outdated technology), and Sam and Bud Walton cheering on the troops. The last photo, from 1988, shows the 80's glitz monster (by Wal-Mart standards, at least) that was Hypermart USA.


  1. Dave this site is awesome man. I still haven't seen it all yet. But I am working on it. Thanks for all the cool stuff, it brings back a lot of great memories. Richard

  2. It's like...a disease! On the other hand, it's fascinating to find when the local Wal-Mart opened (1988).

  3. The irony is that the inclusion of food and other low margin merchandise has forced them to look beyond their core business to build profits. Check cashing fees and wire transfers have been lifting the bottom line not the volume builders like books and food. The current recession will help Wal-Mart in the short run, but their business model is now entering a state of exhaustion. No more cheap markets to enter. Much more opposition and protracted entry into new communities or to build replacement stores. No new lines of profitable merchandise.

  4. Now you're posting the Wal-Mart with which I'm familiar, the post-Kuhn's Big K era. One note, Wal-Mart was quick to replace the Big K's which were small and outdated with the store designs similar to the two in this post. Even in 1981, $7 million for over 100 stores would have been a bargain, and a typical Sam's or Walmart Supercenter alone today costs more to build. The Kuhn's Big K definitely put Wal-Mart on the map.

    And speaking of map, the imagery seemed almost "wargames" like, a each dot could represent a detonation of an A-bomb. It felt like a NORAD image of the US getting nuked. And there are plenty who would say we did, only the major population centers were the final target and not the initial.

    As the interior pictures show, the Wal-Mart design was much more modern than its Kmart counterpart of the same era and definitely a cut above anything that Ames, Zayre, Hill's and most other discountersother than Target, Caldor, and Venture were offering.
    I don't why, the Kmart prototype introduced in the mid-80's seemed too imitative of Walmart, but far more boring and disappointing. And while a favor, the Hypermart USA was a harbinger of the future for Walmart and the US, many newere Supercenters are exceeding the overwhelming size of the original Hypermart USA. I never had the opportunity to enter a Hypermart USA, though about 3 of them survived becoming a Walmart Supercenter. I did visit Kmart's version, American Fair, and like Hypermart USA, the store was busy but overwhelming, a true mall without walls. The differences between American Fair and Super Kmart are very much the same as the differences among a Walmart Supercenter and a Hypermart USA. I think only one AmFair made the transition to a SuperKmart and a couple were scaled down to Kmart and I'm sure they all closed during the first round of bankruptcy closings.

  5. I've seen the map of walmart's growth across the country and needless to say I was AMAZED!!! Started with a few stores and it spreaded like a virus!!! WOW!!! I live in Benton Harbor and my closest walmart at the time was in South Haven. We didn't get ours until like 93/94 or something!! Now it's a Supercenter!! Such a LONG way from an "unknown" chain!!

  6. Now THIS is the Walmart of the more recent eras gone by that I remember...on the threshold of bigger things to come from 19909 onwards. Of note, their first few stores here in Wisconsin (Wisconsin Rapids, Beaver Dam, and one or two others that escape my memory now) all had the brown exteriors, blue/orange striped interior motif going on. The two aformentioned were former WoolCo locations that both became Copps (department stores) for a short time.

    By the 1990s though, they started adding more stores, eventually eating into Prange Way's pie (that chain located in many small cities here) and was among many other factors for causing them to go under. They took many regional chains like those guys out.

    That animated map is quite freaky to look at. How a chain starts off very slowly and within a concentrated area up until the early 1980s. Then BOOM! It's like a swarm of bees. It's amazing, and scary at the same time.

  7. A correction and a few more additional comments I forgot.

    Typo: I meant "on the threshold of bigger things to come starting from 1990 onwards". My bad.

    Despite my dislikings towards Walmart, I did find this series of bloggings on its history interesting. It really is a good example of a 'rags to riches' story, as you have put forth.

    Sears was at the top up to the 1960s, K-mart was king in the 1960s- 1980s, and Walmart from the 1980s to present. With retail being such a cyclinic thing, and with Walmart being pinned further into a corner with shrinking land avaliability, more resistance against them building their mammoth 'Supercenters', and the more-limited availability of goods that can be put out on the cheap.....as the previous 'anonymous' commenter put forth....who knows? Whoever rises up and takes Walmart's throne in the future will kick off the next wave in retail trends.

  8. In some ways, Target already has eclipsed Wal-Mart by doing all the things that Wal-Mart should have done--been flexible about locations and layouts, get into food gradually via items that have decent markups, test new merchandise lines, create value-added (or at least its appearence) for their own goods.

    Wal-Mart's basic model of hyper-standardization is neither new nor novel, nor particularly adaptive in the long run. They only underprice the competition on a small number of items and their overall advantage exists only in places with few stores. Their real innovations have been in the supply chain, with just in time delivery of a lot of fashion items and better inventory control methods. Much of that technology has been acquired by competitors that already are more nimble with their offerings, like JC Penney. The rise of the discounters put Sears on the ropes, but Sears survives. My guess is that Wal-Mart will have a similar fate. Their business model is perfect for being a store for people who have limited options and will continue to thrive in smaller cities. Sears was countered by many competitors, not just K-Mart. Wal-Mart faces the same problems--dollar stores taking away a lot of commodity purchases, Target and various cheap chic chains eating away at apparel (the most pfofitable part of their retail business), and volume areas like CDs being undermined by new technology.

  9. I hate to say this but all the interiors of Walmart don't look as nice as the interiors of Two guys and Korvettes which you featured elegantly before. But it is cool to see the outdated tv technology.

  10. These are the Wal-Marts I'm more familiar with, though my exposure of them was at the tail end of this era. The Martinsville, Va. store at Liberty Fair Mall from 1989 looked just like the triple-soffit model pictured.

    They didn't seem that menacing back then. They were a little hokey, I thought. I guess that was their appeal to the masses. It was accessible, cheap and nice (but not "expensive" nice). They ran counter to what everyone was doing back then. In the late '80s, everybody was going upmarket, but Wal-Mart steadfastly "kept it country."

    But the key to their success was not only the the "regular folk" charm but the sophisticated distribution network they employed. Even today, it's the best retail logistics department in the business. I can respect that about them, even if other stuff doesn't resonate as well.

  11. Richard - Thanks so much, and take your time! I'm a huge fan of the Viewliner as well!

    Jonah - It is almost viral, isn't it? And the green color doesn't help!

    Anonymous - It is interesting to ponder Wal-Mart's next steps. They've given up for the time being on one key urban market - Chicago -but continue to ring the suburban areas with Supercenters. I think they might devote more resources to foreign markets, but who knows?

    Ken - Its sure does conjure up images of "Wargames" or another (much older) favorite movie of mine, "Fail-Safe". And the nuke analogy can be carried a long way.

    You're right, 80's Wal-Mart design may have been modest, but 1980's Kmart's were downright boring, in my opinion.

    The interesting thing is that even though there were ultimately only four Hypermarts built, Kmart felt the need to respond with their "American Fare" store concept. By that time they were much more sensitized to what Wal-Mart was doing.

    Terry Jr. - Startling, isn't it?

    Matt - The blue/orange/brown stripes were memorable, even if not necessarily liked. PrangeWay was just one of many regional chains that was having serious problems already before W-M came to town and their fate was sealed. Interesting about the Woolco tie-in!

    Anonymous - At this point, Wal-Mart still has two monumental advantages - overwhelming, unequalled buying power and the best supply chain structure in the retail business. Those alone could carry them for quite some time.

    They have made some mistakes, such as the ill-fated attempt to stock more upscale apparel. I don't see them trying to compete on style with Target again in that manner.

    They certainly have some outside challenges and public image problems, that's for sure. And I did recently read where Apple/iTunes has surpassed W-M as the number one music seller.

    The current economic situation bodes well for them at least temporarily, I think. I use my own buying patterns as an example - for major shopping trips for the basics, we shop at Wal-Mart. I love Target, but our buying there is much more, well, targeted. 5 to 10 percent price differences are significant in the current economy. They need to become just a bit more price promotional (for the time being, at least) to maintain their standing against Wal-Mart, in my opinion.

    Didi- No question about it, not even close!

    Steven - These are the Wal-Marts I first shopped in as well, and the scale was much more in line with traditional department stores. I don't know if a mix of sizes is in the offing for W-M's future. Maybe it would help them penetrate some of the more elusive markets. You're right about their logistics. More than anything else, it made them.

  12. No area Wal-Marts ever made a big play on posting their no hassle return policy like in the photo, but they did build a great deal of loyalty for keeping such a policy when most mainstream retailers were abandoning such policies.
    Kmart, as in previous post, prominently displayed its policy in the 1960's and early 70's. Given Sam's keen observance of all things Kmart, he must have felt some pride that Wal-Mart ultimately usurped Kmart's lead by updating the little things that shopper's appreciate. It was actually a policy that many departments stores once employed-Sears, Macy's, Rich's, Burdine's, et al utilized on the basis it was a small price to pay for customer goodwill and loyalty. That was until corporate bean counters and risk managers felt the policies were open to abuse, of course they were, and a cost that could be controled or reduced.

    The cash register is one I've never seen in Wal-Mart, it looks similar to the pre-Fujitsu National Semiconductors once common in old Ingle's and Food Lion supermarkets of the early to mid 80's. A non scanning version of the ubiquetous 80 register, the NCR 1255 was employed by area Wal-Marts from the time that the first Big K's were replaced, which had the old mechanical registers, and eventually upgraded to scanning,well into the 90's when IBM 4690 was adopted.

    An old Kuhn's Big K even survived as a Wal-Mart until the late 90's in Shelbyville, TN, land of the Tennessee Walking Horse, below Kuhn's Nashville base until a Wal-Mart Supercenter took its place on Murphysboro Hwy(US 231).

    And I agree with the nuke analogy, but unlike the outcome that would occur, the final map looks more like the satellite imagery of the USA at night once it reaches the current store count. Even without a major inner urban presence, the company now has enough presence in major markets to light up the map in a blur.

  13. Ken - I think there was some real value in setting the policy out clearly as they used to do it. I've seen the "guarantee" scraped off quite a number of old Sears store entrances where the gold-colored store name remains. Sends a message.

    I think I've seen the Shelbyville store (really great area), but I definitely remember the Manchester, TN store a little further south on I-24 from my hundreds of business trips between Nashville and Atlanta in the 80's and 90's. I'm pretty sure that one was a former Big K as well.

    I like the night imagery idea a lot better the the "nuke" one!

  14. Dave,I had seen interior shots of Hypermart USA before, but never the exterior. I have to say it's gaudier than the Wal-Mart look of the era and looks "cheap" in a negative way. It's hard to overcome first impressions and most of the Metroplex Hypermart USA's were in affluent suburbs, which couldn't bode well. The arrangement wasn't too good for Cullum, operator of upscale Tom Thumb and Simon David supermarkets in the DFW metroplex, and was a contributor to Cullum being absorbed by Houston based Randall's, to eventually become the return of Safeway to Texas.

    Again, returning the concept to Wal-Mart's rural roots and tweaking it proved to be a winner.
    By using the Wal-Mart name and a larger scale Wal-Mart exterior, the new Wal-Mart SuperCenters would beacon shoppers who were now accustomed to Wal-Mart.

  15. This design was exactly what the Walmart's looked like when they first moved into my town in 1983. The blue and orange decor, wow, brings back memories of when I was 15 and first got my driver's license and was able to go to the store by myself. One of those stores of course being the local Walmart. It just seems to scream 1985!..LOL.. Especially the all vinyl music department. And those blue smocks and vest of the employees, more of the 80s. Thanks for the pics.

  16. Ken - I agree that the standard, simple W-M Supercenter is preferable the Hypermart look. It's hard to fathom how bad those massive red overhangs would have looked with the passage of time and fading from the sun. The scaled down approach made more operational sense as well.

    Interesting comments on the Dallas grocery market of the era. Tom Thumb has been part of Kroger for some time now, hasn't it?

    Jamie- It's "80's" through and through, I agree. Glad to help you relive those times!

  17. Wow. An old Data Terminal Systems cash register at the service desk. That looks like a Series 2550.

  18. I found an aerial photo of Hypermart*USA-turned-WAL*Mart Supercenter in Kansas City:


    And a picture of it:


  19. J.P. - Thanks for that bit of info. I'm always amazed at the level of interest there is in the vintage cash registers and their electronic descendants!

    Anonymous - Thanks for those excellent photo links. Interesting that they kept the elaborate entranceways - they don't seem to fit the superstore image! The store looks absolutely huge in the aerial view!

  20. OMG!!!! ALL the registers are OPEN!!!!!
    I remember when Wal-Mart looked like these old pictures, and we just couldn't wait until Shady Brook Mall (1981) in Columbia, TN opened- so that we could go to Wal-Mart!!! Hindsight is 20/20.... they eventually moved out of the mall into an outparcel, then built a SuperCenter behind the mall, effectively closing the K-Mart across the street.