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In this episode of the podcast, RJ Shara discusses the inspiring life of Sam Walton, a great American Entrepreneur who despite many hurdles was able to found the successful empire of Walmart. RJ Shara highlights his life and the principles by which he lived which are inspiring.
The podcast starts by RJ Shara quoting a line known to all entrepreneurs,
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Sam Walton, Founder of Walmart
The hampered but continuous growth of Walmart
Everyone knows about Walmart but like many other success stories, it wasn’t an overnight entrepreneurial success.
The past decade hasn’t been very good for Brick and Mortar Retail because of eCommerce gaining rapid popularity with the American population. This trend of eCommerce can be seen impacting retail stores in other countries too.
However, Walmart has been in existence for many decades and has survived multiple recessions. This business giant has even survived Amazon. RJ Shara discusses the founding principles laid down by Sam Walton which allowed Walmart to thrive through these decades and constantly maintain its position as one of the Top 5 Retailers out there.
The early days of Sam Walton
Born in 1918 on a farmland, this great hustler established his first retail store in 1945 when he was just 26. He was growing up in the time of The Great Depression, a period when many lost their jobs and lives.
As a young boy, Sam Walton supported his family by milking the cow and doing other chores around the house. Alongside he’d bottle up the extra milk and would sell it too! He used to deliver newspapers for the Columbia Daily Tribune to make a living. Sam Walton enrolled into the college despite financial hardships. He worked many odd jobs while in college in exchange for meals. He graduated with a Bachelor of Economics.
The retail career
Following college, Walton landed his first job with the J.C. Penney Company where he worked for 18 months on a salary of $75 per month. After his stint with J.C. Penney, he enrolled in the Military Services where he realized that his calling was the retail industry. After serving the Army during World War II for 3 years, Sam Walton returned to Arkansas and utilized a $25,000 credit from his father-in-law and $5000 from his own pocket to establish his first store in 1945. It was a Ben Franklin establishment in Newport, Arkansas. Ben Franklin is believed to be the pioneer of franchising in the United States of America.
From 1945 to 1950, Sam Walton tripled the annual sales of this store from $85000 to $225000 which made it the leading store in six states. Since initial days Walton adopted the policy of selling items at cheaper rates than others.
Those were the times when people from small towns had to drive for hours to buy from bigger stores in bigger cities at cheaper prices. Sam Walton went on to directly sell to these customers at the same cheap rates in their small towns because the competition was lesser in these towns. However, his success caught the eye of his landlord Holme who wanted to buy this profitable franchise for his own son-in-law. When Walton refused to sell it, Holmes refused to renew the lease. So Walton was forced to sell the store which he did at a fair purchase price of $50000 for the inventory. Walton then moved to Bentonville, Arkansas where he bought a small variety purchase store. Learning from his mistakes, this time he also bought the title to the building in which the store was located and also secured a lease to the adjusting store for 99 years. Continuing with the success wagon in upcoming years, at one point he came to own 15 Ben Franklin stores. But the limited choice of inventory for buyers in these small towns kept him from raking in the desired profit margins. He pitched the idea of starting supermarkets in these towns to wholesalers Butler Brothers, the owners of the Ben Franklin franchise. However, they turned it down since Walton’s proposal of keeping the retail prices low in turn meant cutting the wholesaler’s profits in half.
Frustrated by this, Sam Walton decided to play this gamble all by himself. Putting his house on mortgage and borrowing as much as he could, in 1962 Walton opened his first Walmart store in Rogers, Arkansas. Thus started the journey of Walmart and the rest is history.
RJ Shara commented on the secret behind Walmart’s success where she attributed it to Agile/Business Agility. She says that Walmart is a prime example of how a big business also needs to change and adapt in order to respond to the market needs and challenges induced by recession and by competitors like Amazon. She even touched the topic of Sam Walton’s ten commandments but it’s a topic for another podcast.
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