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.    

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.

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.