Sam Walton: Made in America (Walmart)

Walmart is one of the best performing stocks of all time.  Sam Walton’s stake in the company made him the world’s richest person.  I enjoyed his book as it gives a good historical perspective on the sector and has some useful business insights.

Key lessons from the book

• Sam Walton would visit competitors’ stores looking for ideas.  Even if the competitor wasn’t good, he would always look for things that they were doing right.
• Even on vacation he would visit Walmart stores and those of competitors.
• Most of his ideas were stolen from competitors.  He did not come up with the retail concept of discounting, hypermarkets (which morphed into Walmart’s Supercenters), or Costco’s format (which is imitated by Sam’s Club).  The idea of using greeters to deter shoplifting was lifted from a competitor.
• Think from the customer’s perspective.  A retailer needs to offer things customers want, whether it is low prices, friendly staff, knowledgeable staff, a store where it is easy to find products, etc. etc.
• He wasn’t afraid to let his employees try crazy ideas (e.g. sales with extreme volume and low prices) and to experiment.
• He wasn’t afraid to scrap ideas that didn’t work.

Things that don’t seem to matter

• Early on, Walmart put many inexperienced people into management positions since it was growing so fast.  Walton notes that this worked out fine.
• He did not understand computers well but made an effort to learn as much as he could about them.
• He was very conservative in spending money on IT and warehouses likely because he did not want to overspend.  His employees were sometimes frustrated that they did not get as much money as they asked for.
• In its early days, Walmart displayed its products poorly and some of its store openings were a disaster.  It was still shockingly profitable.
• Advertising.

Possible reasons why Sam Walton succeeded as a CEO

• He loves his job and continued working even though he didn’t need to.
• He works really hard.
• He is ready to admit to mistakes.
• He is humble and never tried to build an empire as a status symbol.
• He isn’t afraid of bucking conventional wisdom and what other people (e.g. his employees) think.

Interesting observations in the book

• Back then, it would have been difficult to predict that Walmart would go on to become the dominant retailer in the US.  It was far smaller than other retail chains at the time and Walmart stores were not that impressive visually (ugly interior design).  Many of Walmart’s top officers (e.g. David Glass) were not impressed by Walmart initially.