Mr. Sam Walton founded the company in 1962 at Bentonville, Arkansas, USA. He was the owner of several 'Ben Franklin' franchises and number of retail stores. He was a brilliant and excellent merchandiser. He understood what discount retailing was all about. He knew employees were the key assets and called them 'associates'. He also offered stock ownership to all of them. From a 1.2 billion discount chain, it became the biggest corporation in the world in 2003, with a turnover of USD 250 billion approximately. That is, a 208 times growth in 41 years! Majority of Wal-Mart employees are dollar millionaires not rupees. The Walton's are the richest family in the world. In 1989, Mr. John Huey, a business correspondent for the 'Fortune' magazine wrote "Wal-Mart- will it take over the world". It has done it in 2003. It is expanding fast in Japan and China. India is the last bastion to be conquered. According to latest reports in January 2006, their total income in 2005 was USD 295 billion.
According to reports, he had a very Spartan and none lavishly furnished office for a Chairman & CEO of such a big corporation, hated ostentatious display of wealth and used to shout at his employees who displayed their newly acquired wealth. Compare this to some of the CEOs who prefer to have paintings of great artists in their offices, without knowing what art is all about. Thriftiness is often confused with miserliness by mediocre minds. At the same time, Mr. Sam Walton spent USD 700 million, 25 years ago, on a satellite based communication system that linked his then 2500 stores in USA. This enabled Wal-Mart to track movement of goods and replace them much faster than anybody else. It was also linked to all suppliers like P & G, who could replenish the stocks immediately, where and when required. Every investment made by him was to add value to his business.
Wal-Mart has the highest profitability per area occupied among all retailers. Its pilferage rate is the lowest. Its productivity per employee is the highest among large retail chains. When Wal-Mart and K-Mart started, they were considered upstarts by the then biggest chain, Sears Roebuck. Sears lost its leadership and K-Mart filed for bankruptcy protection under Chapter 11, a few years ago. Most big retailers think that if they expand and have more stores all over, they will do well. This is not so. The secret lies elsewhere. You should know where to open your stores. Mr. Sam Walton was the best at that. When you visit retail stores belonging to large chains, all of them look alike in displays, goods etc., Retailing is all about location, location & location. Pricing and packaging is an art. What prevents one from selling standard products at cost, not below cost because that will come under anti trust or MRTP laws and makes a killing on non standard products?
Mr. Sam Walton said "Customer is the Boss. He can fire anybody from the CEO to people down the line”. He also said any employee who does not smile at a customer, within 10 feet of him, should not work for him. He was very demanding, but rewarded people who responded to him. All great people are extremely demanding and work to very high standards. They also drive themselves to the limits. The difference between bad leaders and good leaders is that they care for fellow human beings. Great and good leaders just can't stand mediocrity.
I heard on Sky News three years ago that Wal-Mart had been accused of being unfair to its employees by not allowing them half an hour lunch break. They have been fined hundreds of millions of dollars. I heard Senator Edward Kennedy accusing them of being Un-American in values. It is rather uncharacteristic of a company of the size of Wal-Mart. If they were a country, they would fall in the top 30. Agreed that their business is highly competitive and they operate on very low margins. Cost cutting is a priority area, but it cannot be in something like not allowing employees time out for lunch. If Mr. Sam Walton was alive, perhaps such things might not have occurred. Often when ambitious professionals take over such great individual driven companies after their demise, such things do happen. It is always difficult to fill such great shoes.
Main Reference: Mr. John Huey - "Wal-Mart - will it take over the world" - Fortune, January 1989 and other publications like the New York Times.
© Copyright. Written on September 2, 2008. Without prejudice. All rights reserved
(Late) Mr. Sam Walton and Wal-Mart - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
.
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