STEVE McHENRY/AP Sam Walton in 1986 making a case in Little Rock, Ark., that buying American products could be the answer to the country's trade deficit

Monday, Dec. 7, 1998
Though it's hard to believe today, discount retailing was a controversial concept when it began to gain ground in the '50s at stores such as Ann & Hope, which opened in a reclaimed mill in Cumberland, R.I.

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Traditional retailers hated it, and so did manufacturers; it threatened their control of the marketplace. Most states had restrictions on the practice. When the business began to emerge in the early '60s, Walton was a fairly rich merchant in his 40s, operating some 15 variety stores spread mostly around Arkansas, Missouri and Oklahoma. They were traditional small-town stores with relatively high price markups.

Walton was an active student of retailing — all family vacations included store visits — so by the time a barber named Herb Gibson from Berryville, Ark., began opening discount stores outside towns where Sam ran variety stores, Walton saw what was coming. On July 2, 1962, at the age of 44, he opened his first Wal-Mart store, in Rogers, Ark. That same year, S.S. Kresge launched K Mart, F.W. Woolworth started Woolco and Dayton Hudson began its Target chain. Discounting had hit America in a big way. At that time, Walton was too far off the beaten path to attract the attention of competitors or suppliers, much less Wall Street.

Once committed to discounting, Walton began a crusade that lasted the rest of his life: to drive costs out of the merchandising system wherever they lay — in the stores, in the manufacturers' profit margins and with the middleman — all in the service of driving prices down, down, down.

Using that formula, which cut his margins to the bone, it was imperative that Wal-Mart grow sales at a relentless pace. It did, of course, and Walton hit the road to open stores wherever he saw opportunity. He would buzz towns in his low-flying airplane studying the lay of the land. When he had triangulated the proper intersection between a few small towns, he would touch down, buy a piece of farmland at that intersection and order up another Wal-Mart store, which his troops could roll out like a rug.

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June 15, 1992

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