Made In America by Sam Walton


Life has been great to me, probably better than any man has a right to expect.

I realize that ours is a story about the kinds of traditional principles that made America great in the first place. It is a story about entrepreneurship, and risk, and hard work, and knowing where you want to go and being willing to do what it takes to get there. It’s a story about believing in your idea even when maybe some other folks don’t, and about sticking to your guns. But I think more than anything it proves there’s absolutely no limit to what plain, ordinary working people can accomplish if they’re given the opportunity and the encouragement and the incentive to do their best. Because that’s how Wal-Mart became Wal-Mart: ordinary people joined together to accomplish extraordinary things. At first, we amazed ourselves. And before too long, we amazed everybody else, especially folks who thought America was just too complicated and sophisticated a place for this sort of thing to work anymore.

The best way to reduce paying estate taxes is to give your assets away before they appreciate.

We believe in the value of the dollar. We exist to provide value to our customers, which means that in addition to quality and service, we have to save them money. Every time Wal-Mart spends one dollar foolishly, it comes right out of our customers’ pockets. Every time we save them a dollar, that puts us one more step ahead of the competition—which is where we always plan to be.

It never occurred to be that I might lose; to me, it was almost as if I had a right to win. Thinking like that often seems to turn into sort of a self-fulfilling prophecy.

It was a real blessing for me to be so green and ignorant, because it was from that experience that I learned a lesson which has stuck with me all through the years: you can learn from everybody.

Here’s the simple lesson we learned. Say I bought an item for 80 cents. I found that by pricing it at $1.00 I could sell three times more of it than by pricing it at $1.20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much great. Simple enough. But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you can earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.

Church is an important part of society, especially in small towns. Whether it’s the contacts and associations you make or the contributions you might make towards helping other folks, it all sort of ties together.

Every crazy thing we tried hadn’t turned out as well as the ice cream machine, of course, but we hadn’t made any mistakes we couldn’t correct quickly, none so big that they threatened the business.

It’s not just a corny saying that you can make a positive out of most any negative if you work at it hard enough.

I didn’t dwell on my disappointment. The challenge at hand was simple enough to figure out: I had to pick myself up and get on with it, do it all over again, only even better this time.

Most everything I’ve done I’ve copied from somebody else.

Initially, I would say, ‘Well, it’s originally $1.98, so why don’t we sell it for $1.25?’ And he’d say, ‘No. We paid 50 cents for it. Mark it up 30 percent, and that’s it. No matter what you pay for it, if we get a great deal, pass it on to the customer. 

The basic discounter’s idea was to attract customers into the store by pricing these items—toothpaste, mouthwash, headache remedies, soap, shampoo—right down at cost. Those were what the you pushed in your newspaper advertising—like the twenty-seven cent Crest at Springdale—and you stacked it high in the stores to call attention to what a great deal it was. Word would get around that you had really low prices. Everything else in the store was price low too, but it had a 30 percent margin. Health and beauty aids were priced to give away.

Your stores are full of items that can explode into big volume and big profits if you are just smart enough to identify them and take the trouble to promote them. It has been a real key to helping this company dramatically increase its sales per square foot. If you are going to show the kind of double-digit comparable store sales increases that we show every year, and grow a company the way we’ve grown ours, you have to be merchandise driven. In retail, you are either operations driven—where your main thrust is towards reducing expenses and improving efficiency—of you are merchandise driven. The ones that are truly merchandise driven can always work on improving operations. But the ones that are operations drivers tend to level off and begin to deteriorate. 

We’re really not concerned with what they’re doing wrong, we’re concerned with what they’re doing right, and everyone is doing something right. 

Do anything you’re big enough to do.

To get more technical, that helps you control what we call turn, or inventory turnover—the ratio of sales to inventor. That’s a key. The more you turn your inventory, the less capital is required. And all this involves getting the merchandise to the store at the right time, communicating how it’s being priced and how it’s being marked down, whatever. Logistics. 

I always questioned everything. It was important to me to make them think that maybe the technology wasn’t as good as they thought it was, or that maybe it really wasn’t the end-all they promised it would be. It seems to me they try just a little harder and check into things a little bit closer if they think they might have a chance to prove me wrong.

My role has been to pick good people and give them the maximum authority and responsibility. 

Keep our prices as low as possible by keeping our costs as low as possible. 

No matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margin. That was true then, and it’s still true today. Back then, though, I was so obsessed with turning in a profit margin of 6 percent or higher that I ignored some of the basic needs of our people, and I feel bad about it. The larger truth that I failed to see turned out to be another of those paradoxes—like the discounters’ principle of the less you charge, the more you’ll earn. And here it is: the more you share profits with your associates—whether it’s in salaries or incentives or bonuses or stock discounts—the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers are at the heart of Wal-Mart’s spectacular profit margins, and those customers are loyal to us all because our associates treat them better than salespeople in other stores do. So, in the whole Wal-Mart scheme of things, the most important contact ever made is between the associates in the store and the customer. 

You’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.

The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledge service; convenient hours; free parking; a pleasant shopping experience. You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or just pretends you’re invisible. 

The whole thing taught me a lesson about the way the national media seems to thin. When you start out as an unknown quantity with just a dream and a commitment, you couldn’t buy a mention of your company in one of these publications. When you become moderately successful, they still ignore you unless something had happens to you. Then, the more successful you become, the more suspicious they become of you. And if you ever become a large-scale success, it’s Katie bar the door. Suddenly, you make a very convenient villain because everybody seems to love shooting at who’s on top.

We are the agents for our customers. And to do the best job possible, we’ve got to become the most efficient deliverer of merchandise that we can.

There’s a difference between being tough and being obnoxious. But every buyer has to be tough. That’s the job. I always told the buyers: You’re not negotiating for Wal-Mart, you’re negotiating for your customer. And your customer deserves the best price you can get. Don’t ever feel sorry for a vendor. He knows what he can sell for, and we want his bottom price. And that’s what we did, and what Wal-Mart still does. We would tell the vendors, ‘Don’t leave in any room for a kickback because we don’t do that here. And we don’t want your advertising program or your delivery program. Our truck will pick i up at your warehouse. Now what is your best price?’ And if they told me it’s a dollar, I would say, ‘Fine, I’ll consider it, but I’m going to go to your competitor, and if he says 90 cents, he’s going to get the business. So make sure a dollar is your best price.’

Meet them head-on. Competition will make us a better company.

When you own and manage your distribution and logistics channels, you have a great competitive advantage over companies that rely on third-party suppliers. It automatically shorts your lead times, but also you can constantly look for ways to improve your operation and try to make it more efficient.