PDF Summary:Sam Walton: Made in America, by Sam Walton

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This prompted Sam to buy a Ben Franklin variety store in Newport, Arkansas. He funded this with $20,000 as a loan from his father-in-law, plus $5,000 from personal savings.

The variety store (also known as a “five and dime” store) was a type of retail store that offered a wide range of inexpensive household goods.

Walton’s first store was the crucible where he learned the fundamentals of retail. Here he created a distinct retail strategy that set his store apart from competitors:

• Lower pricing—Walton wanted to sell products at lower prices and lower profits, believing that sales volume and customer loyalty would compensate.
• Promotion—Walton knew that a spectacle would draw customers from other stores. He served ice cream and had popcorn stands outside the shop.
• Suppliers—he found offbeat sources for low-cost goods, which allowed him to undercut his competitors on pricing.

These principles would continue to underlie Wal-Mart for decades to come.

In his first year of ownership, sales increased 45%. After 5 years, his Ben Franklin store became the highest selling in 6 states.

Unfortunately, the lease for Walton’s store expired, and his contract had no...

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• His buyers cautioned vendors to offer their best possible price, because if they went to the vendor’s competitor and they offered a better price, the competitor would get the business.

The principle extends downward to the lowest, most granular level. Wal-Mart needs to constantly battle “big company” disease.

• Walton mused constantly about the customer experience. When customers walk around aisles, how will they see and buy items? How do they feel on entering and leaving a store? How do they feel about getting help?
• Each Wal-Mart needs to cater to its particular customers. A Wal-Mart servicing tourists needs to have different merchandise from a general population Wal-Mart 5 miles away.
• Regional managers and buyers aren’t above the ground-floor work in operating stores. They’re required to visit stores to see firsthand how they’re doing, and even try to manage the store for a few days. It must be ingrained that their real job is to support the merchants in the stores.
• In turn, department and store managers need to visit headquarters to communicate what they see in their stores.
• Walton said, “a computer can tell you down to the time what you’ve sold....

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• When discount stores were becoming a larger trend, Walton proposed creating discount stores to the Butler Brothers, the owner of the Ben Franklin franchise. They rejected the idea. Walton reflected, “I got a little angry, and maybe that helped me decide to swim upstream on my own.”

As a habit, Sam Walton constantly eyed the competition and borrowed the best ideas from them.

• He advised his staff, “Go in and check our competition. And don’t look for the bad. Look for the good. If you get one good idea, that’s one more than you went into the store with, and we must try to incorporate it into our company.”
• If other stores offered sales, he wanted his prices lower.
• This became such a habit that on family vacations outside town, he would visit stores to study their practices. His wife Helen commented, “Sam never went by a Kmart that he didn’t stop and look at it.”
• Sam was brazen enough to go directly to his competitors’ management, saying he had a small company in Arkansas, and ask strategic questions. Wal-Mart was too small to worry about in the beginning.
• Even outside retail, Walton picked up the idea of “associates,” morning calisthenics, and company...

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• In the book, Walton repeatedly mentions bins of “ladies’ panties, three for a dollar.”
• Some popular items like makeup and antifreeze are sold at cost, drawing in customers who then buy marked-up (but still cheap) items.

Wal-Mart stores were designed to be functional and omitted frills. Walton admits the stores were “truly ugly,” but they had prices 20% lower than the competition. This proved that people were ultimately looking for the best bargain.

At one point, a manager got a deal on an item with a list price of $1.98; he was able to buy it for 50 cents. The manager proposed selling it for $1.25. Sam objected: “No. We paid 50 cents for it. Mark it up 30%, and that’s it. If we get a great deal, pass it on to the customer.”

Merchandising and Promotion

Walton considered merchandising critical to retail—both stocking unique goods, as well as promoting them.

• In his first stores, Sam obsessed about finding unique goods that he could bring into his store and sell at a discount—like thong sandals and mattress toppers. When they couldn’t procure real Hula Hoops, he partnered with a rival store to make their own.
• Wal-Mart holds VPI (Volume...

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• He made ambitious bets on company performance, with outrageous payoffs.
• He had managers switch jobs with one another to stay challenged and learn more dimensions of the company. “The best executives have touched all the bases and have the best overall concept of the corporation.”

Saturday Morning Management Meetings

Wal-Mart long had the tradition of holding management meetings on Saturday morning. Hundreds of senior executives would attend, celebrating successes, discussing company strategy, and finding areas of improvement.

Why the odd time? Walton felt that if store associates had to work on weekends, then the managers at headquarters should show up on Saturday too.

Instead of talking at a high-level, the group dove deep into individual stores, the smallest operating unit of the company. They would talk about how the store was doing against a single competitor in its market, how single items were selling, and what specific practices could be shared with other stores.

Sam Walton believed novelty in each meeting was critical to compensate for its imposition on the managers’ weekend.

• Famous guests like Jack Welch would sometimes appear and be Q&A’d. *...