Walmart Empire

Whenonehears thenameofthefamousretailstore“Wal-Mart”,onecouldonlythink about the endless possibilities of what that store contains! For purchasing groceries, technology, basic care items and even getting a pedicure, Wal-Mart is the place to go! With a busy lifestyle of trying to live and attain the American dream, Wal-Mart is the perfect place to go because it contains all you need and more!

Not only does it satisfy the wallet of a daily shopper, it also satisfies the shopper’s appetite. Yes, Wal-Mart also contains a fast-food restaurant and/or pre-made food to satisfy one’s growling stomach full of hydrochloric acid churning in one’s empty stomach after a busy day of work and errands. But how did Wal-Mart come about? Why is it one of the most booming companies in the United States? To start off, Samuel Walton is the man with the plan! He was an American business man and entrepreneur who was born in Oklahoma.

What’s makes his store so great is that he was able to create a business in which the merchandise would be offered in a lower price with still the expectation of great service. It can’t get any better than that! Having everything in one store and at a lower price compared to other retail stores as well as accompanying it with great service, no wonder why Wal-Mart continues to boom with success. Not only did Walton make it easier for daily shopping purposes but he also changed the face of business as we knew it.

THE WAL-MART EMPIRE: HOW WALMART BECAME THE BIGGEST RETAILER

Family Roots

Wal-Mart did not become the first retailer in America in overnight or by chance, to understand the accession of Wal-Mart we need to go to the roots of the Walton family.

Starting with Sam Walton’s grandfather, Samuel Walton Sr. who was a ward worker who as well established strict family rules that the Walton family passed on to the future generations (Teutsch, 1992. Pag 4). Thomas Walton, Sam Walton’s father was a real business man. He made his money by making multiple deals on farms lands, he didn’t expect to profit from one or two deals but he understood the little bit he got on many deals will multiply (Teutsch, 1992. Pg 12, 13). This is the equation that Walton family invented and passed through their generations.

Get little back on many. At that, he was seen as someone who was taking land from people, but the deals were legal and in a capitalist economy this the way to get rich, you have exploit people. Thomas Walton was not the only one who exploited others to get profit, if you look at the other rich families in the United States you will soon discover that many achieved their fortune roots from slavery with the cotton plantations.

In the 1940’s Thomas Walton was one of the most successful businessmen in Missouri. At a smaller level my grandfather was in the same kind of business, he would lend people money to grow coffee and oranges if they felt to pay their dues he would have part of their land or depending of the amount of money the whole land. He had the acquisition of many acres of land; this is why so many plantations were named after him “The Menard Plantations”. He made a lot of profit out of his business. The plantations are not as profitable today but they provide enough money to enable us to live.

THE WAL-MART EMPIRE: HOW WALMART BECAME THE BIGGEST RETAILER

Sam Walton, the founder of the Wal-Mart Empire bought his first store by borrowing $20000 from his father in law, which was a Ben Franklin variety store in Newport, Arkansas (Copeland, N., & Labuski, C. 2013 pg 18).

Low price and Rural Cities Policies

According to Copeland, N., & Labuski, right after Sam Walton bought his first store he quickly understood the importance of low price products at that time. He targeted the poor in the rural community after the great depression, who had little to spend (Copeland, N., & Labuski, C. 2013 pg 19). That was a smart move. It was a new market share that was not yet exploited by other competitors.

He made a huge success of it. In 1962, he opened the first Wal-Mart in Rogers, Arkansas. He left the Ben Franklin franchise for good because no one supported his low price policy. He was very passionate about cutting prices of products because he believed that a low price retailer would be more profitable.

He studied meticulously of the subject to find the best way to offer low price to his customers and also continued to expend his business in the rural cities. That was his number one mission. He had to find the formula to beat his competitors because at that time he was not the only one who was trying to sell goods at low price. Among his competitors were Kmart, Target, Shopko and five year later big lot that was challenging him.

Sam Walton encountered many obstacles to his dream for example his franchise contract required that the store sold at least 80 percent of merchandise, which made it difficult to offer low prices . Second there was also the Robinson-patman Act that obligated retailers to sell their product at the manufacturers’ suggested price. (Copeland, N., & Labuski, C. 2013 pg 19). The new store was organized differently from other stores of that time; instead of having a register in each department he would have some registers at the entrance of the store. He was an adept of

THE WAL-MART EMPIRE: HOW WALMART BECAME THE BIGGEST RETAILER

the self-serve model; and paid his employees at a low wage (Copeland, N., & Labuski, C. 2013 pg 19). This set up and these policies helped him save a lot of money that allowed him to maintain his products at a low prices. Surprisingly to his former associates, the Ben Franklin, the store made $ 975,000 in sales for his first year (Slater, R. 2003 page. 28). In a few years he opened many stores in the rural cities that allowed him to sell more at low price and have a quick return on his investment. Sam Walton was very careful about his money.

In his autobiography he admitted that when he first started the business he was cheap: “In the beginning, I was so chintzy I really didn’t pay my employees well. It wasn’t that I was intentionally heartless, I was of obsessed with turning in a profit margin of 6 percent or higher that I ignored some of the basic need of our people, and I feel bad about it” (Copeland, N., & Labuski, C. 2013 pg 19). This is reason that some people were against the opening of Wal-Mart stores in their neighborhood because they said it encourages poverty with 6 dollars per hour and minimum of 15 to 25 hoursper week.

New technology and Inventory System Furthermore in 1970 Walton discovered another tool that helped him consolidate his ascending empire, technology. He invested in an expensive computer program UPC and POS invention that allowed him to have an exact control of the merchandise inventory. He also modernized the use of credit card transactions by purchasing a satellite. This would help them to trace transactions and know what they had in stock and what they need to order.

That is why they partnered up with Protect & Gamble, the biggest packaged supplier a partnership that they call “automatic” or “ just in time” that help them have strict control of their inventory (Copeland, N., & Labuski, C. 2013 pg 24). If you know a little bit about accounting you can understand how THE WAL-MART EMPIRE: HOW WALMART BECAME THE BIGGEST RETAILER the controlling and managing inventory is vital for a company, having too much inventory you are paying for merchandise that you don’t sell inflating your cost of goods sold and if you have too small you losing sales and the customers can get frustrated go the competitor and never come back.

Overseas suppliers

In North America, to have your products manufactured locally cost a lot. One has to worry about minimum wage, benefits, insurance and so on are added on the cost of production. As a smart business man Walton overturned these obstacles by using the foreign labor market.

In Anita Chan’s book, Wal-Mart in China, she explained how Wal-Mart and china made the association of a low rate cost that 70 percent of Wal-Mart products are made in china. Ironically, “Wal-Mart and "Made in China" are practically synonymous.” Together they have found the perfect formula to pay almost nothing to their employees and make a gigantic profit of their products while keeping the face of offering low price products to their customers. No surprisethat in the 2014 fiscal year report they have been reported an amount of net sales of more than $279 billion and Sam’s Club net sales were more than $57 billion.

http://news.walmart.com/walmart-facts/corporate-financial-fact-sheet. To conclude, Sam Walton was an extraordinary businessman. Establishing the world’s most renowned retail store that continues to soar with success is phenomenal.

To accomplish all that he accomplished took a lot of risks, exploitations and sleepless nights. So the next time you step foot in Wal-Mart, remember your low price items and great value items are all thanks to Mr. Sam!

THE WAL-MART EMPIRE: HOW WALMART BECAME THE BIGGEST RETAILER

References

Chan, A. (2011). Walmart in China. Ithaca: ILR Press.

Copeland, N., & Labuski, C. (2013). The world of Wal-Mart. New York: Routledge.

……………http://news.walmart.com/walmart-facts/corporate-financial-fact-sheet

Ferris, K., & Stein, J. (2010). The real world: An introduction to sociology. New York: W.W.

Norton & Co. p.46 History Teacher, 42(4), 403-423.

Scott, N. (2014) the Two- Way. Oxfarm-worlds-richest-1- percent-control-half-of-global-wealth. ……….264241052 Retrieved from http://www.npr.org Slater, R. (2003). The Wal-Mart decade: How a generation of leaders turned Sam Walton's legacy into the world's number one company. New York: Portfolio. Teutsch, A. (1992). The Sam Walton story: An inside look at the man and his empire. New York: Berkley Books.

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