|
Sam Walton: Made in America
- Sam Walton (1918-1992) with John Huey
(The Story of Walmart)
Recently read Sam Walton's
biography about the story of Sam Walton and Wal-Mart. Was wanting to do it for long time and having read it, am totally fascinated with the story of the biggest retail chain in world and also THE biggest company in the world today. A company whose sales top 220b$ sales today (Microsoft ~28b$; India's GDP: ~400b$), has the most interesting origins and journey to the top.
Here, I am noting down excerpts and general insights from the book. The figures in brackets are page numbers, in case I need to refer the book again (DoubleDay, NY. First Edition, HardCover, 269 pages).
Some Setbacks
-
After highly successful first store in Newport (started in 1945), he had to give it up five years later and start all over again because he hadn't included the option to renew the store lease from the landlord in the contract. (30)
-
His first store in a shopping centre, the highly successful Ruskin Heights store was leveled by a typhoon in 1957. (39)
-
Waltons' current home is built
on the site of the earlier home which burned down in 1972 after being struck
by lightning. (photo)
On/About Competition
-
Acknowldeges competitors:
"Wal-Mart wouldn't be what it is today without a host of fine
competition, most especially Harry Cunningham of Kmart, who really designed
the first discount store, and who in my opinion, should be remembered as one
of the leading retailers of all time." (Acknowledgement at the
beginning)
-
Competition that led him to
move from being a franchisee to opening up of first Wal-Mart discount store
on July 2, 1962, was this barber, Herb Gibson who had started his stores
with simple philosophy: "Buy it low, stack it high, sell it
cheap". (42)
-
Marty Chase of Ann & Hope
acknowledged as the father of discounting. (42)
Personal
-
Wanted to be a big insurance
salesman, like his dad. (9)
-
Wanted to join the Wharton
School of Finance, but decided to take up a campus interview job (at
University of Missouri) with J C Penny's due to Wharton course being very
expensive. (17)
-
Always used to carry yellow
notepad and a tape-recorder, taking notes and recording conversations with
people.
-
Helen Walton, Sam Walton's
wife, laid down the law that she didn't want to move to any town bigger than
10,000 people. (21)
Interesting Points
-
Took an old dirt road to bypass
a weigh station because he knew the load was illegal several different ways!
(33)
-
Charlie Baum recalls: "We
had a nice big sale, and we put barrels full of stuff all around the floor.
Elderly ladies would come and bend way down over into those barrels. I'll
never forget this. Same takes a look, frowns, and says: 'One thing for we
gotta do, Charlie. We gotta be real strong in lingerie.' (33)
-
In Fayetteville, while booting
up second Walton's Five and a Dime, 'two local codgers' gave him 'sixty
days, maybe ninety. He won't be there too long.' (34)
-
Name WalMart was suggested by
Bob Bogle, first manageer, Walton's Five and a Dime, Bentoville on a flying
trip. To start with, his reason was that Walmart has just 7 letters as
against earlier 'Ben Franklin' 11 letters. Hence it could save a lot of
money in neon letters!! Sam didn't say anything at that time but later when
Bob went by the new store's building he saw worker putting up neon signs of
W-A-L and was headed up the ladder with an 'M'. He smiled and went on. (44)
-
Amongst other reasons for going
for his own stores, one was that Butler Brothers (Chicago) denied him for
opening their franchised stores.
-
Nobody wanted to gamble on
first Wal-Mart. His brother Bud put in 3%. Sam put in 95% of the dollars.
(43)
-
Don Whitaker, first manager at
WalMart had barely finished high school. (53)
-
As against today's fancy LIFO
and FIFO accounting methods, back then they used ESP method: Error Some
Place! (53)
-
While landing at Carthage,
Missouri, almost crashed his plane into another one sitting on the runway.
He was coming back from showing Ron Mayer around (making a recruitment pitch
to Ron to join WalMart). Ron joined in 1968 as VP, Finance &
Distribution. Later, he would be instrumental in putting up the first
computer systems in place. (90)
-
In 1969, Prudential said 'they
couldn't afford to gamble with WalMart' to a loan pitch by WalMart. (95)
Walmart went public on Oct 1, 1970, traded over the counter. They offered
approx. 20% of the company - 300,000 shares - @ $15, but it sold for $16.50.
Approx. 800 shareholders after the issue. By June 1990, they had nine
two-for-one splits. If someone bought 100 shares at IPO, his investment in
1990 would have been worth right around $3million! While going back to
Arkansasa after IPO, A guy from T. Rowe Price - a money management firm in
Baltimore - caught up with Sam and Ron at NY airport. Sam/Ron made him
believe that they were going to do very well. This guy went back and bought
huge amount of WalMart stock for his firm. They held it for 10-15 years and
became the star of the industry. (97)
-
About a French investor Pierre:
"We almost drowned him that first year we floated down Sugar Creek (at
AGM), and I was afraid we'd never see him again. But Pierre started
believeing, and he started acquiring our stock... He's been with us for
about 15 years, and he's had exceptionally good success with our
company." (105)
-
Did the Hawaiian shirt and
grass skirt hula on Wall Street in 1984. Hula was a result of his losing bet
to David Glass that 'we couldn't possibly produce a pretax profit of more
than 8 percent'. (159)
-
Ron Loveless, an ex-WalMart
executive, after retirement would come at every year-end meeting and present
his LEIR report, the Loveless Economic Indicator Report, based on the number
of edible dead chickens foudn on the roadside - with charts and graphs and
the whole bit. (The harder times are, the fewer edibles you find on the
roadside.) (160)
-
He was caught taping
conversation with staff in his competitior Sol Price's store by a
manager/staff. As his tape had stuff from other places also, he didn't want
to loose it. Hence Sam submitted the tape to the manager with a note to
Robert Price, son of Sol Price. In about four days he got the tape back
untouched from Robert! Sam says he was treated by Robert "better than I
deserved". (202)
-
Sam Walton wanted to be the
BEST retailer and NOT the BIGGEST! (217)
Management fundas/gyaan
-
Promised
stock/equity/percentage of profit to lure good managers.
-
Sam's equation for merchandise
sourcing trips "to NYC: Trip's Expense should be less than one percent
of purchases made. (65)
-
"If you don't want to work
weekends, you shouldn't be in retail." (75)
-
"In Retail, you are either
operations driven - where your main thrust is towards reducing expenses and
improving efficiency - or you are merchandise driven. The ones that are
truly merchandise driven can always work on improving operations. But the
ones that are operations driven tend to level off and begin to
deteriorate." (61-62)
-
Flying was very important in
scouting for store locations. "I'd get down low, turn my plane up on
its side, and fly right over a town... There's another good reason I don't
like jets. You can'r get down low enough to really tell what's going on, the
way I could in my little planes. Until we had 500 stores, or at least 400 or
so, I kept up with every real estate deal we made and got to view most
locations before we signed any kind of commitment" (112)
-
Calls this style of his
"Management by walking and flying around". (115)
-
Another management style of
his: "Management by wearing you down". This is said of Sam by
David Glass ("When Sam feels a certain way, he is relentless. He will
just wear you out.... I guess it could be called management by wearing you
out.") (117)
-
Yet another management style of
his: ""Management by looking over your shoulder". This is
said by A.L.Johnson, Vice Chairman, Walmart ("As famous as Sam is for
being a great motivator.... he's equally good at checking on the people he
has motivated. You might call his style: management by looking over your
shoulder.") (118)
-
Did not emphasize much on
formal education/training of employees. Ferold Arend: "He'd take people
with hardly any retail experience, give them six months with us, and if he
thought they showed any real potential to merchandise a store and manage
people, he'd give them a chance." (120)
-
P&G didn't pay any
attention to WalMart until 1987 when WalMart began to "turn a basically
adversarial vendor/retailer relationship into one that we think is the wave
of the future: a win-win partnership between two big companies trying to
serve the same customer." At the time biography was written, WalMart
was P&G's biggest single customer! (186)
General
-
Blasts American CEOs for their
spendthrift ways. (9)
-
Offers greatest insight into
retailing and discounting with this story: Selling more panties by pricing
them a bit lower than the usual price, and hence still managing to have
greater overall profit. (25)
-
Bought an 1800$ ice-cream
machine as a prop for his first store (Ben Franklin franchise) (26). His
brother Bud Walton says Sam gave him the job to clean the machine because
Same knew that he hated milk. (27)
-
Bought his first 'aircraft', a
two-seater Air Coupe for $1850, whose engine once failed just after take-off
from Fort Smith. (40)
-
"First lesson we learned
was that there was much, much more business out there in small-town America
that anybody, including me, had ever dreamed of." (50) (Comment -
Does it have any implications for India?)
-
"Maybe its time for a
Walton to .... become missionary for free enterprise in the Third
World." (77)
-
The IPO stock got very little
support from folks right there in northwest Arkansas, home of WalMart.
"I always thought people around here thought that.. we were doing it
with mirrors. They couldn't help but think we were just lucky... I think it
must be human nature that when somebody homegrown gets on to something, the
folks around them sometimes are the last to recognize it." (100)
-
He had semi-retired in 1974
when Ron Mayer became CEO. (150-151)
-
But he was too much of a
hands-on a guy to stay away and hence came back in June of 1976 as CEO. He
had given Ron Mayer an option of becoming Vice Chairman and CFO but Ron
chose to leave instead and that Saturday's meeting is known as
"Saturday night massacre" in WalMart lore. (152)
-
He's been accused of pitting
people against each other, but he doesn't see it that way. He says he's
always 'cross-pollinated folks'.(155)
-
WalMart had (has?) a gospel
group The Singing Truck Drivers and a management singing group called
"Jimmy Walker and the Accountants". (157)
-
Phil Green, who once made the
world's largest Tide display at one of the oldest WalMart stores, promised a
TV for 22 cents in a promotion to celebrate George Washington's birthday,
which was on February 22nd. The only hitch was customers had to find the TV
set. It was hidden in the store! The crowd brought the house down! He
admitted that "playing hide-and-seek with merchandise was a terrible
idea."! (161)
-
Walmart's cheerleading squad
Shrinkettes ("WHAT DO YOU DO ABOUT SHRINKAGE? CRUSH IT! CRUSH
IT!") stole the show at one of the annual meetings with
"CALIFORNIA ORANGES, TEXAS CACTUS, WE THINK KMART COULD USE SOME
PRACTICE!" (162)
-
While talking about culture of
the company, Sam Walton says that company thrives on the traditions of
small-town America and especially because it is more fun when you're an
adult who usually spends all your time working. (162)
-
Sam says that the outcry by the
towners that ensues at closing down a store because Walmart couldn't make it
profitable is "something awful" and that "its a price you pay
for success". (182)
Negotiate hard with your vendors/suppliers 'cause if you pay higher than he
deserves, you are buying someone else's inefficiency! (185)
-
Whoever said 'Retail is Detail'
is absolutely 100 percent right. (188)
-
Even though WalMart is known
for best and innovative applications of Information Technology, Sam never
appreciated investment in computers much. His reason: " A computer can
tell you down to the dime what you've sold. But it can never tell you how
much you could have sold." ! Computer, he says, will never be a
substitute for getting out in your stores and learning what's going on.
(224)
-
A lot of folks used to ask Sam
Walton: "Could a Wal-Mart-type story still occur in this day and age?
My answer is of course it could happen again. Somewhere out there right now
there's someone - probably hundreds of thousands of someones - with good
enough ideas to go it all the way. It will be done again, over and over,
providing that someone wants it badly enough to do what it takes to get
there. It's all a matter of attitude and the capacity to constantly study
and question the management of the business." (256)
|
