After Sam: Did Wal-Mart Lose Its Way After Walton Died?

by Mark Friedman  on Monday, Jul. 2, 2012 12:00 am  

Time Magazine featured a posthumous tribute to Sam Walton, calling the Wal-Mart founder "America's favorite shopkeeper".

In 2001, a group of women sued Wal-Mart for allegedly discriminating in pay and promotions. In 2004, a federal judge ruled that the case could proceed as a class action, making it the largest civil rights lawsuit brought against a private employer in the U.S. with a potential for 1.6 million women in the class. Wal-Mart appealed the case to the U.S. Supreme Court, which in 2011 tossed the class-action portion of the complaint. Business groups cheered the decision.

Mr. Sam’s Philosophy

Wal-Mart succeeded because of Walton’s focus on keeping prices low. In fact, Walton wrote in his autobiography that he settled on the name Wal-Mart in 1962 because it had only seven letters, meaning signs would be cheaper to buy and repair than if the store’s name were longer.

Walton said in his autobiography that even after Wal-Mart generated billions in annual sales, people asked him why the company continued to pinch pennies.

“That’s simple: because we believe in the value of the dollar,” Walton said. “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.”

After Sam

After Walton’s death, Wal-Mart hit its biggest growth spurt. Wal-Mart’s first CEO after Walton’s death was David Glass, who pushed forward with the international expansion that fueled the retailer’s growth.

Glass had been Wal-Mart’s longtime chief financial officer, and Walton had promoted him to president in 1984. Between 1992 and 1995, sales jumped 113.7 percent to $93.6 billion with profit of $2.7 billion.

But scrutiny of Wal-Mart’s business practices also intensified. Wal-Mart’s “Buy America” mantra came under inspection shortly after Walton’s death, and some communities began to resist the chain whose arrival often spelled the death of locally owned mom-and-pop retailers.

Even Walton’s brother, James L. “Bud” Walton, who co-founded Wal-Mart, criticized the company after Sam Walton’s death. Bud, who died in 1995, thought the company was moving away from Sam’s philosophy, especially between management and workers, according to Bob Ortega’s 1998 book, “In Sam We Trust.”

Missed Opportunities

While Wal-Mart focused on inter-national growth, it missed the biggest shift in retail since the suburban mall: the rise of the Internet. Wal-Mart’s online adventures have been filled with a number of missteps.

 

 

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