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1-Page PDF Summary of Sam Walton: Made in America

Wal-Mart is the largest retailer on the planet, exceeding $500 billion in sales and 12,000 stores worldwide. This retail titan began in 1945 with founder Sam Walton managing a single store in Newport, AR, a town of 7,000 people. In this small town, Walton learned the retail and management strategies that became the foundation of Wal-Mart’s staggering worldwide growth.

Sam Walton wrote his autobiography Made in America in the last year before he died, as he struggled with cancer. This book is a candid, energetic retelling of the Wal-Mart story and the principles that led Walton and his partners to incredible success. Learn what Wal-Mart did in its early life that every major competitor ignored, and how Sam Walton his competitors' best ideas—and did them better.

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  • Set up stores in small towns. The Wal-Mart model worked in towns even with a population under 5,000 people, while Kmart only chased cities above 50k.
  • As Wal-Mart expanded, they established stores with a radius of a day’s drive from a distribution center. They then filled in that territory, town by town, state by state until they saturated the area.
  • If customer experience was good (including cost, quality, selection), word of mouth would drive more traffic. Towns would hunger for Wal-Mart to enter.

People tend to simplify the Wal-Mart success story as “they did discount stores in small towns where big players didn’t want to win.” This ignores the heavy competition they faced from local variety stores, the substitute options its customers had (to drive an hour away to a store in the city), and the execution required to expand as successfully as they did.

Wal-Mart’s Retail Strategies

The mission of Wal-Mart is to reduce the price of living for its customers. Customer satisfaction is their guiding principle—in merchandising, low prices, shopping experience, and more.

  • Sam had little sympathy for retailers who closed down after Wal-Mart entered. Customers closed the shop, not Wal-Mart, by voting with their dollars. The existing shops couldn’t compete by offering superior selection, pricing, or convenience relative to Wal-Mart. They shouldn’t exist if they don’t provide the best quality of life for their customers.

Low Prices, High Volume

Sam Walton believed that lower prices brought in more customers, period. Even though a lower markup meant lowered profits, they could more than make up for it with higher volume. In pursuit of lower prices, Wal-Mart omitted frills and passed savings from vendors and efficient operations onto customers.

Experimenting/Innovation

Sam Walton was relentless in his drive to improve Wal-Mart. Never satisfied with where the company was, he boldly experimented with new ideas to improve stores, even creating entirely new retail store concepts.

Innovation was purposefully encouraged by store managers, who had freedom to try crazy things since they had a personal stake in the store’s success. For instance, one store manager once ran a massive promotion, selling 2,500 detergent boxes stacked up in front of the store in an impressive visual display.

Team Participation

Walton considered the Wal-Mart team the most important ingredient in the company’s success. Walton instilled a culture of teamwork in a wide range of dimensions:

  • Wal-Mart calls all their employees “associates” to give a sense of partnership.
  • Walton believed good ideas could come from anyone, and he eagerly sought opinions from employees on all levels for new ideas.
  • Walton believed in liberally sharing private information and company financials with his associates.
  • Wal-Mart regularly practiced profit sharing of some kind with employees. Having employees share financially in the success of Wal-Mart made them committed to the company’s success.

Sam Walton’s Management Practices

Sam Walton practiced these essential management practices:

  • Learn from the competition—visit their stores and pick up one good idea when you leave. Borrow ideas liberally and improve on them. Competition makes every competitor better, and the customer is the final beneficiary of that improvement.
  • Have fun—don’t take things so seriously; don’t walk around scowling all day. Have a “whistle while you work” philosophy. Celebrate successes, and be a bit goofy.
  • Innovation—change is a constant, and adaptation must happen. Wal-Mart adopted computer systems earlier than most. It encouraged store managers with autonomy to run crazy promotions.
  • Frugality—Walton believed that every time they wasted a dollar, that was a dollar right out of their customers’ pockets.
  • Saturday morning management meetings—these weekly meetings were a chance to share best practices, drill down on individual stores and products, and teach new management strategy.
  • Servant leadership—management’s role is to serve the individual stores and help them do their job. Managers aren’t above the people on the frontlines.

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PDF Summary Brief Biography of Sam Walton and Wal-Mart

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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...

PDF Summary The #1 Principle of Wal-Mart: Customer Focus

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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....

PDF Summary Sam Walton's Personality Traits

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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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PDF Summary Wal-Mart's Operating Strategies

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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...

PDF Summary Sam Walton's Management Style

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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. *...

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