In 1962, the median lifespan of a US man was 67 years old. Arkansas, with 1.79 million residents, had the 33rd lowest GDP in the United States, $3.8 billion.
That year, Sam Walton, at age 44, opened a new type of store in his hometown of Bentonville, Arkansas, naming it Walmart.
Walton’s strategy was to place low-priced stores in areas that had small retailers who usually relied on high margins to stay in business. He reasoned that enough stores would eventually produce enough volume to reduce prices across a large network of no-frills low-cost stores.
Large volume stores had existed for ages. By 1962, A&P was the largest retailer in the world, a position they already held for a decade. Like A&P, Walmart fought for ever-decreasing prices in a general-purpose store rather than as a grocer.
Walmart relied on both scale and automation. They rapidly adopted retailing technology, especially barcodes and large-scale automated ordering systems, to continually lower prices.
Eventually, in 1987, Walmart opened “Hypermart USA stores” that combined traditional Walmart’s with food. Following their success, “Supercenters” opened in 1988, with larger food selections.
In 2010, Walmart became the largest food retailer in the US.
Walmart remains headquartered in Bentonville. In 2019, their revenue of $514.4 billion is significantly higher than Arkansas’s total GDP of $109 billion. Sam Walton died in 1992 and his stock was distributed to his heirs. If he’d lived, his shares would make him the wealthiest man in the world in 2019.
“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