"The Beat Goes On" at Dillard's

Here’s a set of vintage snapshot photos I purchased several months back. Taken in Austin, Texas in April 1967, they depict famed pop stars Sonny and Cher on a bandstand in front of a Dillard’s department store. The photos are a bit overlit and fuzzy (not unusual for outdoor shots from an inexpensive Kodak 126 Instamatic – like millions of others in those days, most of my childhood photos were taken on this exact type of camera), but you can tell that Sonny and Cher seem to be having a good time and the crowd is excited.  

When I first saw these photos I was intrigued, and two questions came to mind: What brought these entertainers, L.A. denizens to the core, to Texas? And what prompted a personal appearance at Dillard’s, then among the smallest specks on America’s department store landscape? (We’ll get to that in a minute.) Through a bit of research I found a satisfactory answer to first question and reached a fairly obvious conclusion about the second.

It turns out that Sonny and Cher were in town for a movie premiere. On April 11, 1967, the world premiere for the movie “Good Times”, the first picture to feature the couple in starring roles, was held in Austin. The premiere was part of a weeklong promotional Texas trek that, according to an April 29 Billboard magazine article, included stops in Dallas, Fort Worth, Houston, Abilene and El Paso. (“A cowboy’s work is never done”, they say.) My guess is a fashion show at Dillard’s was added at some point to the duo’s itinerary.

The “rock and roll movie” was a fixture of American culture by 1967, and if an artist had a few hits under their belt (Sonny and Cher had scored a number one smash with “I Got You Babe” in 1965, one of five Top 20 hits for the pair in just a little over a year), some personality and a unique presence (Cher’s dusky voice and exotic looks, Sonny’s fur vests and bowl haircut), a movie offer was usually a solid bet. These movies varied wildly in quality, and more often than not were “star vehicles” with minimal, hackneyed plots. “Good Times” featured the rock and roll singers in a movie about…well, rock and roll singers becoming movie stars. (Viewing it today, it’s a fun, much better than average sixties romp. And the styles were incredible, topped off by George Barris-designed his-and-her Mustangs specially built for the film. Long clips can be found on YouTube, but you didn’t read that here!)

History shows that 1967 was the start of a long dry spell for Sonny and Cher. “Good Times” bombed at the box office, and “The Beat Goes On”, a number 6 pop hit, would provide the Bonos’ last Billboard chart action for a very long time. So they headed for Las Vegas. Only made it out to Needles. There, they found steady work as a casino act, and over the next few years they carefully honed their stage personas (personae?) – Sonny, the naïve, somewhat air-headed dreamer, and Cher, his quick-witted, sharp-tongued wife, always ready to burst his bubble with the perfectly timed wisecrack.

Audiences loved it, and in 1971 CBS came forward with an offer for an hour-long summer replacement series. “The Sonny and Cher Comedy Hour” quickly became a national sensation, a Top 10 show for several seasons in a row, and a weekly fixture of millions of TV viewers’ homes, mine included.

When the couple announced their divorce in 1974, it was a palpable shock. Their lives took very different courses over the ensuing decades, with Sonny eventually entering Republican politics, winning the office of Mayor of Palm Springs, California then a seat as a U.S. congressman. In 1998, he died in a tragic skiing accident. Cher, no last name necessary, remains an entertainment icon, with at least number one hit in each decade since her first emergence on the scene. I still think of her 1999 hit “Believe” as “the inescapable song”, because unless you stayed in your house all year with a supply of food, windows and doors duct-taped shut and the lights turned off, you couldn’t escape it. We took a family vacation to California that year and heard it at least once every 15 minutes, including while standing in line for the mine train at Calico. Somehow it made perfect sense.

All right. Lest you think this site has turned into “Retro Entertainment Tonight”, I figure it’s about time I said something about that stately structure behind our Hollywood heroes. That, my friends, is the first “real” Dillard’s store, which opened in February 1964 in Austin’s Hancock Shopping Center.

It was a far cry from the first store opened by William T. Dillard in Nashville, Arkansas, a rural town southwest of Hot Springs, in the late 1930’s. Born in 1914, Dillard grew up in the tiny town of Mineral Springs, Arkansas, where his father owned a dry goods store. His early years were typified by hard work at the family store and a desire to learn the retailing business inside and out, the quintessential American story of a young man diligently following in his father’s footsteps.

By his mid-twenties, however, Dillard had earned a distinction that set him apart from most American young men of the day, certainly those from rural Arkansas. In 1938, he earned a masters’ degree in business from New York’s prestigious Columbia University, where he attended on a scholarship.  Valuable as a Columbia education was, however, Dillard’s exposure to the Big Apple’s legendary department stores – Macy’s, Gimbels and John Wanamaker (Dillard worked at their Manhattan branch while in school there) – arguably did as much to shape his future career.  

Leaving New York, Dillard pursued management trainee jobs with Sears, Roebuck and Co. and J.C. Penney, and received offers from both. Penney offered Dillard positions in Walla Walla, Washington, of all places, and the much closer to home Topeka, Kansas. Dillard took Sears’ offer, which was closer still –a Tulsa, Oklahoma store. He stayed there only seven months before leaving to open his own store, in Nashville, Arkansas, as mentioned.

The store did well, but over time Dillard grew restless. Most of all, he was eager to avoid his father’s mistake of “wast(ing) many of his abilities because he was confined to a small town”, according to author Leon Joseph Rosenfeld in his brief but excellent 1988 book “Dillard’s: The First Fifty Years”. In 1948, Dillard purchased a 40 percent in Wooten’s department store in Texarkana, -- miles to the southwest on the Texas border, a much larger market with a population of 55,000. The following year, he bought the remaining interest in the Texarkana store (by then called “Wooten & Dillard”) and sold off the Nashville business.  Within five years it became the leading store in Texarkana, and Dillard, who had relocated his family there, was one the area’s prominent citizens.

Interestingly, Dillard reversed course in a sense when he bought back into a small market with the March 1955 purchase of a department  store in Magnolia, Arkansas from a friend. It was back to bigger things the following year, however, when the opportunity arose to acquire a well-respected East Texas  department store. For years, Dillard had admired Mayer & Schmidt, the leading store in Tyler, Texas, a town with a population similar to that of Texarkana.

Mayer & Schmidt, founded in 1899, was a well run store with a fine reputation, drawing customers from a radius well beyond the city of Tyler. In 1956, however, they were in trouble. The previous year, Mayer & Schmidt opened a second store in town “to capitalize on its prosperity”, but the new location turned out to be a flop, and “within a year it was closed and deeply in debt”, according to Rosenberg. Based on his success in Texarkana, Dillard was able to line up financing, and in April 1956, acquired a majority stake in the Mayer & Schmidt store. Dillard immediately embarked on a complete remodeling and expansion of the store, adding furniture, appliance, jewelry, records and hi-fi departments along with leased shoe, book and fur operations. The revamped Mayer & Schmidt debuted on September 17, 1956, and would prove to be a great success under Dillard’s ownership.

In 1959, a banker friend of Dillard’s informed him of another well-regarded department store recently befallen by rocky times. Brown-Dunkin Company was Tulsa, Oklahoma’s largest department store (more than twice as large an enterprise as Mayer & Schmidt), founded in 1924 by brothers-in-law John H. Dunkin and John A. Brown, and “occup(ied) the first nine floors of the fifteen-story Hunt building at Fourth and Main streets, the city’s busiest corner”, Rosenberg states, and “had become a household word in northeast Oklahoma”.    

Brown-Dunkin’s problem was one of succession. Dunkin had passed away in 1958 and Brown some years before that, and the store went into decline under the management left in place by the founders’ widows. Intrigued by the challenge of running a well-known store and the chance “to prove his abilities before a national audience” as Rosenberg put it, Dillard set off on an arduous seven-month process of negotiations with the Brown and Dunkin widows and numerous banks. Ultimately, he was required to put up the Mayer & Schmidt store as security for the transaction. Knowing he could fall back on the Texarkana and Magnolia stores should things go awry, Dillard pressed forward confidently. On the last day of February 1960, Dillard took control of the Brown-Dunkin store.

Initially there were headaches – after the ownership change was publicized, picketers from the local Building Services Union showed up on the sidewalks outside the Brown-Dunkin store. Unbeknownst to Dillard, the previous ownership had recently dismissed the store’s cleaning ladies and elevator operators, contracting out those functions to outside firms. Dillard refused to reopen the issue and eventually the picketing stopped. Then there was the matter of $150,000 worth of unpaid invoices discovered in a drawer, which forced Dillard to obtain an additional line of credit.

On top of these hassles was one more that ended up turning into a considerable plus. In sharp contrast to today, mid-20th century America was dotted with department store companies that ranged in size from single-store outfits to 20-plus-unit multi-regional chains, with most falling somewhere in between. To increase their negotiating power with clothing manufacturers and other suppliers, many department store firms signed up with (usually New York-based) buying cooperative agencies. These agencies strove to represent one department store chain in each major city, while doing their best to avoid any competitive overlap between clients. When Brown-Dunkin’s buying agency, Mutual, caught wind of the buyout, they figured Dillard wasn’t capable of pulling the potatoes out of the proverbial fire and dumped Brown-Dunkin in favor of Vandever’s, another Tulsa department store.

Not long afterward, Dillard joined up with the Frederick Atkins Company, “one of the more prestigious buying houses in the country”, as Rosenberg put it. The Atkins firm represented a host of marquee names including John Wanamaker (Philadelphia), B. Altman (New York), Hochschild-Kohn (Baltimore), Miller & Rhoads (Richmond), Ivey’s (the Carolinas and Florida), Pizitz (awesomely-named, Birmingham), Chas. A. Stevens (Chicago – did you really think I’d leave that out?) and The Broadway (of latent “Mad Men” fame, Los Angeles), among many others. When he signed on with Atkins in 1962, Dillard was their smallest client. By the early 1980’s, he was their largest.

Two years on and these problems behind him, Dillard was eager to expand.  Dillard had “recognized the shift of the population to the suburbs and the need to provide stores close to them” as far back as his brief tenure with Sears, Rosenberg noted, and he “had wanted to open a unit in a mall for some time to see if it would work”.  For this exciting new venture he partnered with Homart, a recently created mall development subsidiary of Sears, then ferociously active in the Southwest.  Dillard initially considered Homart’s first mall project, the just opened Seminary South Shopping Center in Fort Worth, Texas. (Many years later, in 1987, Dillard finally put in a store there.) Also in the running was Homart’s still-in-development Coronado Center in Albuquerque.

Instead, he chose a third Homart project, the Hancock Shopping Center, to be located in Austin and co-anchored, of course, by Sears (second photo here). Dillard’s methodology behind this choice was novel, to put it mildly. From Rosenberg’s book: “Dillard had been visiting in the city (Austin) and was waiting for his flight to Albuquerque when he happened to thumb through a telephone book. He noticed there were more Lutheran churches in Austin than any other denomination and associated the churches with Germans, who had always impressed him with their work ethic and honesty. On that basis, he decided that Austin would be an excellent place for his store.”  (And here I always thought the Methodists were the benchmark for retail site selection. Shows you what I know.)

Obviously the Lutherans and a great many others liked Dillard’s store. It was an unqualified success, resetting the template for all of the company’s future growth. From that point forward, Dillard “took every opportunity in subsequent years to co-anchor new malls with Sears or Penney’s”, Rosenberg wrote, “…he was not in direct competition with either store, and they both made good mall partners for him”.

Importantly, the store was the first to carry Dillard’s own name, not counting his early dry goods stores in southwest Arkansas. (As a side note, Dillard sold the Texarkana and Magnolia stores in 1962 to Aldens, a Chicago-based catalog retailer then seeking a piece of the brick-and-mortar side of the business. Aldens had recently bought out Shoppers World, and would itself be absorbed by Gamble-Skogmo in 1964.) Although he would continue to put his own name on stores in markets that were new to the company (Austin, for example), for years he maintained the names of acquired companies in their respective markets, such as Mayer & Schmidt and Brown-Dunkin, even when adding new mall-based stores in their areas.

As mentioned, the Austin, Texas Dillard’s store opened in February 1964. Later that year saw the return of Dillard and his family (from Tulsa) to Arkansas, this time to Little Rock, the state capital, where he had recently assembled a considerable retail enterprise. Over the previous year, Dillard bought out the Gus Blass Company and Pfiefer’s, two of the three largest department stores in the area, the other being M.M. Cohn. The buyouts were carried out with the help of funds from the Mayer & Schmidt stockholders and $1.5 million kicked in from Sperry & Hutchinson, who invested on the condition that Dillard hand out their S&H Green Stamps in his stores. Both Blass and Pfeifer’s were large downtown stores with one branch apiece – Blass in Pine Bluff and Pfeifer’s in Hot Springs. In 1965 a mall-based Blass store was opened at Park Plaza in Little Rock, and two years after that, another at the then new (and just recently torn down, except for Sears) Indian Mall in Jonesboro. Starting in 1967, Dillard’s Little Rock-based operations were combined under the name of Pfeifer-Blass, although I don’t know for sure whether this change was extended to store signage.    

The late 60’s and early 70’s were a furious period of growth for Dillard’s companies, and virtually all of it took place at the malls. 1965 saw a Brown-Dunkin store at Southland Shopping Mall in Tulsa, followed by another at the Northland Shopping center the following year. In Oklahoma City, he opened a “Dillard’s Brown-Dunkin” store at the Sheppard Mall, “a first step in phasing in his own name for all his stores”, according to Rosenberg’s book. In 1968, two Dillard’s stores were opened in San Antonio, at Central Park Mall and what is now known as South Park Mall. And the growth continued from there – the first Missouri location, at Springfield’s Battlefield Mall was added in 1970, as was the first Louisiana location at Shreveport’s Shreve City Center.

In 1974, the various Dillard-controlled stores all took on the “Dillard’s” name, reflecting the incorporation of Dillard’s enterprises under one financial umbrella. More importantly, it provided a consistent brand image for marketing purposes. While many (including me) lament the passing of so many great department store nameplates in recent decades, it has proven to be an unstoppable, irreversible trend.  It’s interesting to note, however, that even Macy’s, the proverbial poster child” for department store rebranding, owned Davison’s (Atlanta) for 61 years before converting them to Macy’s in 1986 and Bamberger’s (“New Jersey’s greatest store, and one of America’s finest”) for 57 years before finally hanging the red star on its front door that same year. 

When William T. Dillard passed away at age 87 in 2002, his namesake company that began so humbly was America’s third largest department store chain, according to his New York Times obituary. Today, among “luxury” department stores (i.e.: not including Sears, Kohl’s and J.C. Penney), they remain number three, behind Macy’s and Nordstrom and ahead of Neiman Marcus and Belk, per Stores Magazine’s latest rankings. Today, Dillard’s boasts over 300 stores in a coast-to-coast empire. And the beat goes on.

Below, a 1972 newspaper ad hailing the new Dillard’s store at the Northwest Arkansas Plaza, as reproduced in the Rosenberg book - an enjoyable hodgepodge of names and architectural styles if there ever was one.

July 2, 1962 - The First Walmart Opens

Ben Franklin could’ve had it made. I’m not referring to the “founding father”, of course – the one Americans will honor tomorrow, he of the long hair and granny glasses, kites, keys and lightning bolts, Almanacks and The Saturday Evening Post. I mean the famous variety store chain that borrowed its name from ol’ Ben, the “Ben Franklin 5 and 10 cent stores” that dotted communities nationwide for a big chunk of the 20th century.   

Samuel Moore Walton of Bentonville, Arkansas was far and away one of Ben Franklin’s most successful franchisees. Starting with a lone store in Newport, Arkansas in 1945, by 1962 he had 16 profitable stores in Arkansas, Missouri and Oklahoma.

In addition to being an unusually savvy retailer, Sam Walton was a researcher - a true “retail scientist.” An idea sponge. His laboratories, in this case, were the pioneering discount stores of the Northeast – Korvette, Ann and Hope, Mammoth Mart and others who by the late fifties were sowing the seeds of a full-scale retail revolution that would bloom within a few short years.  Walton saw the enthusiastic response to these exciting stores and saw no reason why their concept couldn’t be duplicated in the rural towns of the South, areas that were primarily served by small chain stores and mom-and-pop shops. In many places, even those were few and far between.

Having formulated his ideas and drawn up his plans, Sam did the loyal thing – he flew up to Chicago to meet with the execs of his franchisor, Butler Brothers, the parent company of Ben Franklin. There, he mapped out his discount store concept in great detail, covering all of the key aspects – the larger stores, the plethora of departments, the everyday low prices, the streamlined distribution model whereby Butler would do most of it themselves, eliminating the costly middlemen wholesalers. Then he offered it to them - lock, stock and barrel - if only Butler would be willing to carry the plans out. They told him to stuff it, so to speak.  

Rejected, he returned home to Bentonville, and on July 2, 1962, fifty years ago yesterday, he opened the store pictured above – the first Walmart store, in nearby Rogers, Arkansas. (The photo itself is circa 1970. The “Discount City” sign was added shortly after opening, a tagline they used for over three decades.) Not long after the first store opened, the Butler brass traveled to Rogers and saw firsthand the favorable customer reactions. They pulled Walton aside and told him “Don’t open any more of these Walmarts”, lest he jeopardize his relationship with their company. His exact response isn’t recorded, but through his actions Walton essentially told them to stuff it. So to speak.

Within four years, there were five Walmarts, and by 1980 there were nearly 300. Today, the company has over 9,000 stores internationally and they are the undisputed King of Retail. Best I can tell, no one is even vying for the crown.   

Here is the grand opening ad for that landmark store, boasting 22 departments! (And some way-cool specs!)

For those interested in learning more about the Walmart story, let me commend to you the fine book pictured below. “Mr. Sam: How Sam Walton Built Wal-Mart and Became America’s Richest Man”, written by former Wall Street Journal reporter and editor Karen Blumenthal  and published last fall. I was able to help Karen source some photos for the book, and she very kindly sent me a copy. Written for the “young readers” market, it’s an intelligent, entertaining, well-illustrated biography that will definitely appeal to adults with an interest in retail history and/or modern-day commercial culture.  

Walmart books (with the exception of Walton’s autobiography “Made in America”, an essential read) tend to fall into one of two categories – the “fawning over Walmart” group or the “Walmart as scourge of humankind” group.  Blumenthal takes a very balanced approach, and “young readers” notwithstanding, gives a great amount of historical detail and insight into the events and personalities that shaped the company. Importantly, the book doesn’t shy away from the controversies of recent years. It’s a very satisfying look at an important historical figure.    

A Family Affair at Kroger

As previously mentioned here, one of the most notable grocery industry trends of the 1960’s was the emergence of the supermarket/discount store combination. Usually the supermarket and discount store were separated by a wall and had their own checkstands, adjoining each other only via a common lobby area at the front. In some cases, the layout was open and both grocery and non-foods shared a common checkout area, much the way Wal-Mart Supercenters (on a comparatively gigantic scale) are configured today.

Many of the major chains (with the exception of A&P, a resolute holdout) tried their hand at this – Grand Union (the pioneer – they doubled the size of their Keansburg, NJ supermarket in 1956 to add a non-foods department and soon named the concept Grand-Way), Jewel (with their 1961 acquisition of Boston-based Turn-Style), Food Fair (they bought out J.M Fields in 1961), Stop and Shop (acquired Bradlees in 1961),Safeway (launched Super-S in 1962), Fazio’s (opened their first combination store in Akron in 1967) Red Owl (a Minnesota-based chain who opened their first combo in 1965), Lucky Stores (opened their first “Lucky Discount Center” way back in 1959) and others I’ve undoubtedly missed. Jewel/Turn-Style and Fazio’s were among those who decided to dub their combination units “Family Centers”.

In 1965, Kroger decided to try the idea as well, and the first Kroger Family Centers were opened in 1966. By the end of the following year, the company had seven Family Centers, located in Texas, Louisiana, Arkansas and Kansas. The company also opened a few Thriftown stores, a general merchandise-only concept (with footprints a bit larger than the Family Centers) that to my knowledge never grew past five stores.

In addition to food, the Family Centers carried the normal discount store mix. There was clothing, jewelry, housewares, sporting goods, auto accessories, toys, and that welcome oasis in the bargain-hunting Sahara, a snack bar.

The stores featured common checkout areas and ranged in size from 50,000 to 70,000 square feet, much larger than the standard Kroger footprint of the time. In fact, in the early and mid-60’s Kroger tended to adopt a contrarian attitude regarding store size, actually shrinking their standard supermarket footprints for a time in the interest of efficiency. Over time, competition and the sheer increase in the number of new grocery products available forced them to upsize the stores. Of course, Kroger would later jump in with both feet with the much larger Superstores of the early seventies.

One of the more interesting aspects of the Family Centers, to me, was their construction. The typical Kroger supermarkets of the era were standard brick and glass affairs, often distinguished by an interestingly shaped pylon. The Family Centers were of concrete-wall construction, with aggregate facing on the concrete panels, a long concrete canopy over the entrances, supported by tapered columns, and far less window surface than most stores of the era. The Family Centers had a sturdy, handsome appearance, short on frills.

By 1969, there were 24 Family Centers, with 18 announced for the following year and a goal of 100 units by 1975, which unfortunately was never reached. Most of these were in the Mid-South (Arkansas, Mississippi and Louisiana) and in Texas. Units in the Houston area went under the name of Henke’s Family Center (short for Henke and Pillot). The store openings, particularly in the 60’s, were a big production, complete with an appearance by a replica of Barney Kroger’s 1883 horse-driven delivery wagon. Since many of the Family Centers went into cities that didn’t previously have Kroger stores, they were enthusiastically received.

For their groceries, that is. By 1972 it had become obvious that carrying such a broad range of general merchandise was not Kroger’s forte, and the decision was made to close the Family Centers, writing off the operation to the tune of $5 million. The "Family Center" name was retained on some Texas and Louisiana stores, although most of their general merchandise was broomed.

Far more exciting things were now happening at Kroger – the Superstore program was underway. “The family” would have new, compelling reasons to shop there.

The exterior photo above is from 1968, the three interior views below from the following year.

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.

The Original Big K

Well, Big K, we hardly knew ye, and now you’re leaving us again. That’s right, the many Kmart stores which for some not well-explained reason took on the “Big K Mart” identity in the mid-90’s are being restored (thankfully) back to just “Kmart”, with a logo closer to their original 1960’s look, albeit with a single color, red. And a familiar sight to many Kroger shoppers is their age-old “Big K” private label brand, probably best recognized in recent decades on their soft drinks, but we’ll talk about that later.

Aside from these, however, was a Mid-South based chain by the name of Big K, which enjoyed a good deal of success as a regional discount store operation in the late 60’s and early 70’s. Big K was a division of Nashville-based Kuhn Brothers Company, Inc., which was founded as a variety store chain in the teens. The information I’ve been able to find about the Kuhn stores, which unfortunately is minimal, indicates that that they were very much cast in the standard Woolworth/Kresge variety store mold. As such they faced similar problems as those firms did in the fifties –footprints too small to accommodate a growing range of popular consumer goods, rising operating costs of counter service as opposed to self service, and most importantly the decline of downtown business districts with the advent of shopping centers with their vast availability of free parking.

In 1962, that historic year for the discount industry, Kuhn’s launched the first of their Big K discount department stores. Kuhn’s employed a strategy similar to Wal-Mart, opening the Big K stores in small-to-medium sized towns within a four-state market area – in their case Alabama, Kentucky, Tennessee and Georgia. Like Wal-Mart, they avoided the larger markets which were likely to be heavily populated with Kmart stores, as Atlanta most certainly was. Kuhn’s-Big K , as the company was renamed, would eventually adjoin the Wal-Mart market area, but there was very little overlap. The Kuhn family and Sam Walton, who were acquaintances, had chosen (for a time at least) to honor an old unwritten code between regional retailers to stay of each others’ territories. Of course another unwritten code, every bit as popular as the first, was to scrap the previous code and build right in your fellow retailer’s backyard. When Wal-Mart opened a store in Jackson, Tennessee, the heart of Big K-land, The Kuhns retaliated by opening stores in West Helena and Blytheville, Arkansas.

By the end of 1973, the company operated 57 Big K’s and 27 Kuhn’s Variety Stores, and had pushed into eastern Arkansas and Missouri, Wal-Mart’s operating area. The Big K stores carried the standard discount store mix of apparel, sporting goods, hardware, toys, etc., and averaged 45,000 square feet. There were three larger stores (65,000-75,000 square feet) ringing the Nashville area, the company’s home turf. In 1977, Kuhn’s-Big K moved into the South Carolina region with its acquisition of Edwards, Inc., a Charleston-based chain of 33 stores in South Carolina.

Soon after the Edwards purchase, the Kuhn’s - Big K operation spun into decline, losing money and experiencing management turmoil. In 1981, Chain Store Age characterized the company as “a broken chain”, citing increasingly intense competition, the strain from the Edwards acquisition and cost overruns on the company’s fancy new Nashville headquarters complex. The magazine was also critical of the Kuhn family’s management approach. Predictions of Big K’s demise were aflight.

Discussions regarding a possible acquisition by Wal-Mart had begun some months before the Chain Store Age article appeared. Wal-Mart, traditionally committed to internal growth, had only one major acquisition under its belt at the time, having purchased the 21-store Mohr Value chain, an Illinois operation, in 1977. When it became evident that Big K would be forced to sell out, the ideal store sizes (directly in line with Wal-Mart’s at the time), respectable customer base, and most of all the chain’s prime locations in new, adjoining territory made the proposition too powerful to resist. Even so, Wal-Mart’s board of directors was split down the middle over the idea. Sam cast the deciding vote in favor of the buyout, and the deal was done. Incidentally, Wal-Mart’s indecision over the buyout paid another dividend – as they hemmed and hawed over the prospect, the value of Big K’s stock continued to fall. The initial purchase price, according to the Wall Street Journal was $17 million in December 1980. By the following June it was $12.9 million, and by the time of the actual buyout in December 1981, it was $7 million - $2 million less than Kuhn’s -Big K had paid for the Edwards chain four years earlier. Sort of gives a new, unwanted meaning to the word “discount”.

The first photo, location unknown, is from 1973. The second and third photos are from the Dickson, Tennessee store and were taken the following year.

Wal-Mart Expands the "Magic Circle"

If Sam Walton harbored dreams of empire during Wal-Mart’s early years, he did a good job of keeping it to himself. That’s not to say he wasn’t interested in growth – he most certainly was, as is clearly evidenced throughout his autobiography. In Wal-Mart’s first decade and beyond though, the company flew under the radar, expanding slowly within the area that Walton called the “magic circle” – northern Arkansas, southern Missouri, southeastern Kansas and eastern Oklahoma. A typical retailer with a home base in northwest Arkansas could have reasonably been expected to try to plant their flag in Kansas City or St. Louis soon after their first flush of success, but Walton did not and wouldn’t for many years. In 1967, five years after the company’s founding, there were 18 Wal-Marts. By comparison Kmart, another retailer celebrating the five-year mark that year, had 250 stores.

Walton was much more interested in “growing internally”, saturating existing markets to create dominance. New markets were added incrementally, and only in areas that adjoined existing ones, to maximize efficiency. An early sign that this strategy was paying off came in the mid-70’s, as Kmart began to open stores within Wal-Mart’s market area. Until around 1974, Kmart rarely entered cities with a population below 50,000. At that point, they introduced a smaller store format and began to roll it out in various parts of the country. When Kmart entered such Wal-Mart strongholds as Springfield, Missouri and Hot Springs, Arkansas, Wal-Mart creamed them. It was a sign of things to come, on a much larger scale, in the coming decades.

Most importantly, Walton sought to improve the stores. As mentioned in the previous post, he relentlessly pursued competitive intelligence, trying to learn from the good and bad things chains across the country were doing. Conversely, he spent a great deal of time in the Wal-Mart stores, quizzing employees in his friendly but pointed manner, digging deeper if he sensed there was a problem. Walton practiced “management by walking around” long before Tom Peters and Robert Waterman made the phrase famous in the bestselling book “In Search of Excellence”.
At the close of 1970, Wal-Mart had 38 stores and $44 million in sales. Up to this point, a great deal of the financing had come from Sam Walton’s own family, leaving him $2 million in debt by that time. Reluctant to take on the scrutiny and hassles of going public, but weighed down by the heavy debt load and the realization that a stock offering was the only feasible way to keep expanding the company, Walton took the company public in October, 1970. In the space of one day, Sam was out of debt and would never have to personally contribute another dime to Wal-Mart’s expansion. The stock sold out immediately, and of course a major expansion ramp-up was to come. By 1974, Louisiana, Tennessee, Kentucky and Mississippi had received their first Wal-Mart stores.

Then Sam, age 56 at the time, did something that is not well-remembered today and in retrospect seems more than a little surprising. In November 1974, he resigned as Chairman and Chief Executive Officer of Wal-Mart and turned the reins of the company over to a younger man.

The new Wal-Mart chief was 40-year old Ron Mayer, a former Duckwall-ALCO executive who more recently was a Wal-Mart vice president, instrumental in setting up the first version of Wal-Mart’s vaunted computer infrastructure. Walton moved over into a new position, chairman of the executive committee, an oversight position in most companies. He even gave up his office to Mr. Mayer, moving down the hall and out of the way. Had things remained as they were, Sam would have had plenty of time to perfect his tennis game and bird hunting skills, and Wal-Mart would have probably become a decent-size regional player, and probably an eventual acquisition candidate for the likes of Kmart or Target, no offense to Mayer intended.

The vigorous Walton, try as he might, learned quickly that standing on the sidelines was not something he could do. In June 1976, Mayer stepped aside and Walton reassumed leadership of the company. Sam was frank when interviewed about it by the Wall Street Journal –Mayer had left “because I wasn’t able to assume a passive role… I wasn’t about to force myself to stay out” of the company’s decision process. Walton offered Mayer a vice chairmanship, but he declined and chose to leave the company instead. The founder was now back in charge. By the end of 1979, Wal-Mart had 278 stores, over a billion dollars in sales, and operated in 11 states. The magic circle was growing.

The photos above are from 1976, 1978 and 1979 respectively. These pictures remind me of the very first Wal-Mart store I ever laid eyes upon, around 1976, years before I (and much of America) learned of the company’s famous founder. In the early 70’s, my stepfather bought a small farm in rural west Tennessee. It was a rustic place, with a creaky old farmhouse without air conditioning. We’d spend about three weeks there every summer, and many years we would drive down the day after Christmas and spend the rest of our Christmas break there, trying to keep the pipes from freezing. The summers were definitely a shock to the system of this 12-year old Chicagoan, used to spending my vacations lying around the house, watching reruns of Petticoat Junction and Green Acres. Now I was digging postholes and sweating like I never had in my life. (Fresh Air! Bah. Of course now I look back at it as great experience, naturally.) The Wal-Mart location was in Martin, Tennessee, a college town, and was Wal-Mart’s third or fourth store in the state. I clearly remember thinking that it had to be the single store of a family-owned business. Regrettably, we never set foot in the place, and it would be years before I would experience the wonder of Wal-Mart.