Walmart’s (NYSE:WMT) global brick-and-mortar presence needs no introduction. The company is valued at around $400 billion and placed the Walton family among the wealthiest in the world.
Not only that, but its massive growth makes it one of few legitimate competitors to Amazon.com Inc. (NASDAQ:AMZN) and its plans for world domination.
But the story of how Walmart got started is a much humbler story.
Every giant is built brick-by-brick, and this retail behemoth is no exception. Long before Amazon became a killer of traditional Mom-and-Pop retail stores, Walmart held that title. The company aggressively expanded its brick-and-mortar footprint through an impressive real estate strategy.
That’s right – although it’s known as a big box retail store, it’s the distribution center and massive land grab it made to own its shopping centers that is the diamond within the empire. The company owns about 4,701 of its 5,542 U.S. properties, and that includes Walmart and Sam’s Club-branded stores.
And it leases its extra land to all the other retailers you see in their shopping centers. That helps the company hedge its bets while building out a distribution system to compete with the Amazon (AMZN) revolution.
When Was Walmart Started and By Whom?
Walmart was founded on July 2, 1962 in Rogers, Arkansas as Wal-Mart Discount City. However, the company’s history actually dates back to 1945, when former J.C. Penney employee Sam Walton bought a pre-existing store that he grew and adapted to create the original Five and Dime store.
Walton portrayed himself as a man of the people and focused on bringing consumers the lowest possible prices, which helped continuously grow the company’s sales over the next thirty years.
By 1969, the company incorporated as Wal-Mart, Inc and soon opened its first distribution center. That’s when it really accelerated down the path that made it the big-box juggernaut we know today.
How Did Walmart Start Off?
Once it proved itself within the state of Arkansas, the company expanded to take over the entire region through the 1970s. The company opened stores in Kansas, Louisiana, Missouri, Oklahoma, Tennessee, Kentucky, and Mississippi through that decade.
This rapid expansion helped the company maintain low prices by purchasing products in bulk and feeding it into its distribution system. All stores were also linked via a $24 million satellite network that enabled real-time communication between individual stores and the back offices.
Because of this, the company could instantly track inventory and send corporate changes to the entire network of stores. And while it solidified this supply chain, it also worked to open the first Walmart Supercenter.
What Was Walmart Originally Created for?
Walmart was created to provide anything you need at a low price, and as the world evolved, so did our needs. This triggered Walton to create a supercenter that provided products from as many categories as possible. It was meant to be a one-stop shop with everything under one roof that could compete with the rise of the indoor shopping mall.
On top of this, the company focused on serving smaller towns instead of just large cities. This helped rural America access the same products they could in the metropolitan areas.
It wasn’t long before the company overtook existing national retailers like Toys R Us, Kmart, and Sears. By the 1990s, Walmart was the largest U.S. retailer by revenue and completed its expansion through the west coast. It also started its spread internationally, beginning with Mexico.
By then Walton had already stepped down from his role of CEO by this point.
When Did Sam Walton Leave Walmart?
Walton left his position as chief executive officer in 1988, although he remained the company’s chairman until his death in 1992. By that point, there were over 1,700 Wal-Mart stores, 212 Sam’s Clubs and 13 Superstores employing 380,000 people and earning $50 billion in annual revenue.
About half of Walmart’s stock is held by the seven heirs of Sam and his brother James “Bud” Walton. This includes Sam’s children Rob, Jim, and Alice. Rob still serves on the Walmart board, alongside his son-in-law. This makes Walmart one of the largest family-owned businesses in the world too.
But that’s not how it started.
How Did Walmart Get Funded Early on?
After graduating from college, Walton started working for retailer J.C. Penney. He then served as an Army captain in military intelligence during World War II before taking a $25,000 loan from his father-in-law to purchase his first store.
That store was made immediately profitable and continued to grow its profitability as Sam and James eventually took over 15 Ben Franklin stores. Although they optimized the process, they were unhappy working under the company management.
The brothers wanted to expand into rural areas, and when it was denied, they used the money to open their own store in Walmart.
When Did Walmart Go Public?
Walmart went public through an initial public offering on October 1, 1970. The stock’s price at the time was $16.50 per share. If you purchased 100 shares at $1,650.00 during the IPO, you would own $4.3 million at today’s prices.
This accounts for 11 two-for-one stock splits from 1971 through 1999. Since then it hasn’t had another split in over 20 years and instead focused on growing the share price to well over $100.00 per share; in the process it has reached a $400 billion market capitalization.
So, what’s the key to that growth?
3 Strategies That Help Walmart Grow
Walmart is one of the biggest companies in the world, but it didn’t start that way. It had an aggressive growth strategy that management continues to refine to this day. That’s why it has survived longer than many of its retail competitors.
Here are three main strategies that continue to support the company’s sustained growth, even at its large size.
1. Walmart Focuses on Efficiency
The reason Walmart is so efficient is because it ensures everyone follows the same processes across the board. Like McDonalds, the company optimized and documented processes to find the best possible way to make its entire supply chain more efficient.
In doing so, it ensures consistent quality no matter which Walmart you go to across the world. And it helps to monitor and distribute products in the most profitable way while maintaining its famous low prices.
2. Walmart Has Wide Variety at Low Prices
Walmart opened in rural areas and undercut everyone else in the region. This is the strategy that helped it upend mom-and-pop retail in middle America while establishing itself in every community. If you can drive down the street and buy the same thing for a lower price, the choice is easy.
And because the company’s shelves are stocked with all the essentials, the store proved that it’s a necessary business. The coronavirus pandemic shut down much of retail, but Walmarts were largely open. That’s a sign of how essential Walmart is to the lifeblood of American life.
3. Walmart Is a Tech-Centric Company
Above all else, Walmart focuses on leveraging technology. Remember it was the satellite communications that ultimately helped it grow at the start. These days, it leverages automation, third-party shopping and delivery services to efficiently compete with e-commerce sites like Amazon.
And Walmart’s website is one of few marketplaces that can compete with Amazon (AMZN) and eBay (EBAY). It’s the rare store that focused heavily on staying on the cutting edge of the latest technology developments; examples includes its rollout of customer self-checkouts.
This is what ultimately defines Walmart as a company and has helped it to grow to its current size.
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