Sam Walton Merchandising Quotes

My favorite buyer program is one called Eat What You Cook. Once a quarter, every buyer has to go out to a different store and act as manager for a couple of days in the department he or she buys merchandise for. I guarantee you that after they’ve eaten what they cooked enough times, these buyers don’t load up too many Moon Pies to send to Wisconsin, or beach towels for Hiawatha, Kansas.

But I’m going to say it again anyway: 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, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.

We used to get in some terrific fights. You have to be just as tough as they are. You can’t let them get by with anything because they are going to take care of themselves, and your job is to take care of the customer. I’d threaten Procter & Gamble with not carrying their merchandise, and they’d say, ‘Oh, you can’t get by without carrying our merchandise.’ And I’d say, ‘You watch me put it on a side counter, and I’ll put Colgate on the endcap at a penny less, and you just watch me.’ They got offended and went to Sam, and he said, ‘Whatever Claude says, that’s what it’s going to be.’ Well, now we have a real good relationship with Procter & Gamble. It’s a model that everybody talks about. But let me tell you, one reason for that is that they learned to respect us. They learned that they couldn’t bulldoze us like everybody else, and that when we said we were representing the customer, we were dead serious.” In

The company even drew unlikely customers. From rural Arkansas, operating just five comically cheap-looking stores—a rounding error compared with the largest retailers—Sam Walton made his way to an IBM conference for retailers. While he shied away from investing anything in any emotional aspect of retailing, delivering the lowest prices meant mastering logistics and information. To one speaker at the conference, Abe Marks, modern retailing meant knowing exactly “how much merchandise is in the store? What’s selling and what’s not? What is to be ordered, marked down or replaced? . . . The more you turn your inventory, the less capital is required.” Altering his first impression, Marks found that Walton’s simpleton comportment masked his genius as a retailer, eventually calling him the “best utilizer of information that there’s ever been.” A little over two decades later, Sam Walton would become the richest man in America; he would attribute his competitive advantage to his investment in computing systems in his early days. The small-town merchant who expected that knowing his customers’ names or sponsoring the local Little League team would give him some enduring advantage simply didn’t understand the sport. American consumers, technocrats at heart, rewarded efficiency as reflected by the prices on the shelves, not the quaint sentiments of a friendly proprietor. To gain this efficiency, information systems were seen as vital.

None of these fellows like Don or Claude had any college, and they didn’t want me hiring any college men. They had the idea that college graduates wouldn’t get down and scrub floors and wash windows. The classic training in those days was to put a two-wheeler—you know, a cart that you carry merchandise on—into a guy’s hands within the first thirty minutes he came to work and get him pushing freight out of the back room. They all came out of these variety stores with the same background and the same kind of philosophy and education. And we looked for the action-oriented, do-it-now, go type of folks.

That was the start of a lot of the practices and philosophies that still prevail at Wal-Mart today. I was always looking for offbeat suppliers or sources. I started driving over to Tennessee to some fellows I found who would give me special buys at prices way below what Ben Franklin was charging me. One I remember was Wright Merchandising Co. in Union City, which would sell to small businesses like mine at good wholesale prices. I’d work in the store all day, then take off around closing and drive that windy road over to the Mississippi River ferry at Cottonwood Point, Missouri, and then into Tennessee with an old homemade trailer hitched to my car. I’d stuff that car and trailer with whatever I could get good deals on—usually on softlines: ladies’ panties and nylons, men’s shirts—and I’d bring them back, price them low, and just blow that stuff out the store.

I was impressed with the giant Carrefours stores in Brazil, which got me started on a campaign to bring home a concept called Hypermart—giant stores with groceries and general merchandise under one roof.

At Wal-Mart, if you have some important business problem on your mind, you should be bringing it out in the open at a Friday morning session called the merchandising meeting or at the Saturday morning meeting, so we can all try to solve it together. But while we’re doing all this work, we like to have a good time. It’s sort of a “whistle while you work” philosophy,

Rogers had been open about a year, and everything was just piled up on tables, with no rhyme or reason whatsoever. Sam asked me to kind of group the stuff by category or department, and that’s when we began our department system. The thing I remember most, though, was the way we priced goods. Merchandise would come in and we would just lay it down on the floor and get out the invoice. Sam wouldn’t let us hedge on a price at all. Say the list price was $1.98, but we had only paid 50 cents. 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.’ And of course that’s what we did.” It

They expanded quickly without building the organizations and the support—such as distribution centers—needed to expand those companies. They didn’t get out into their stores to see what was going on. Then Kmart got their machine in gear and began to do it better and better. I remember going in their stores—I’ll bet I’ve been in more Kmarts than anybody—and I would really envy their merchandise mix and the way they presented it. So much about their stores was superior to ours back then that sometimes I felt like we couldn’t compete. Of course that didn’t stop us from trying. And Target came along and did a fine job, taking the whole idea a little more upscale. As these big operators became more organized, the competition grew a lot more difficult. That’s when all those guys who were failing to meet their customers’ needs and who didn’t build strong organizations—all those promoters—started to fall apart and, eventually, fall out.

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, knowledgeable 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.

what I enjoy doing as much as anything in the business. I really love to pick an item—maybe the most basic merchandise—and then call attention to it. We used to say you could sell anything if you hung it from the ceiling. So we would buy huge quantities of something and dramatize it. We would blow it out of there when everybody knew we would have only sold a few had we just left it in the normal store position. It is one of the things that has set our company apart from the very beginning and really made us difficult to compete with. And, man, in the early days of Wal-Mart it really got crazy sometimes.

So for the first time since I had begun retailing in 1945, I was beginning to back off from the business. I was getting slightly less involved in the day-to-day decisions and leaning a bit more on Ron Mayer and Ferold Arend—our two executive vice presidents. I was still chairman and CEO. Ferold, at age forty-five, ran merchandising, while Ron Mayer, who was only forty, ran finance and distribution. To handle the explosive growth, we were bringing on new people in the general office. Ron brought in a lot of people to handle data processing and finance and distribution. What happened then is the one period in Wal-Mart’s history that I am still the least comfortable talking about today.