Wal-Mart Dominates Retail in Arkansas and the World.

Opening of Rogers Store in 1962 Defining Moment for Retailing

IF executives with Butler Brothers' variety store division, Ben Franklin, had listened to the suggestion of a 42-year-old franchisee in the 1960s, Ben Franklin might be the world's largest retailer today.

Instead, Samuel Moore Walton couldn't convince his bosses that operating discount stores in rural towns was a good idea. It turned out to be the best possible answer for Walton.

Walton, who operated the largest Ben Franklin franchise with 16 stores, opened his first Wal-Mart Discount City in Rogers on July 2, 1962. It was probably not coincidental that Ben Franklin also had a store in Rogers at the time.

Lee Smith, an early Wal-Mart associate, recalls that first Wal-Mart store in Walton's biography, Sam Walton: Made in America.

"Along with the crowd of shoppers a group of officials from Ben Franklin in Chicago -- all dressed in pin-striped suits -- showed up," Smith says. "They marched in like a military delegation ... and marched on back to Sam's office without a word.

"They were back there about a half hour, and then they marched out without so much as a good-bye. A few minutes later, Sam came down and told [Don] Whitaker [who owned 2 percent of that first Wal-Mart] and me that they had issued an ultimatum: Don't build any more of these Wal-Mart stores. We knew he felt threatened because he had all those Ben Franklin franchises. But we also knew Sam Walton wasn't the kind of guy you issued ultimatums to."

TURNING POINT

That store opening--the beginning of the Wal-Mart empire -- is the turning point for retailing in Arkansas and the country in the 20th century. From that unimposing, 16,000-SF store in northwest Arkansas, the dominant retail chain in the world was born.

Wal-Mart Stores Inc. now does more in retail sales -- $139 billion in 1998 -- than the country's next four largest retailers combined. It profits more annually -- $4.4 billion in 1998 -- than 30 percent of the Fortune 500 corporations generate in revenue annually.

The Bentonville-based company has almost 4,000 stores in the United States, Mexico, Canada, Puerto Rico, Argentina, Brazil, China, South Korea, Germany and Great Britain. It has more employees -- or associates, as Walton liked to call them -- than any employer in the country besides the federal government.

And Walton left a fortune after his death in 1992 that made his widow and four children the wealthiest family in the world, now worth almost $100 billion.

Walton's legacy is recognized by experts in business.

But as dominating as Sam Walton and Wal-Mart have been to retail in Arkansas, there have been other major retailing stories over the past 100 years:

* William T. Dillard, from tiny Mineral Springs (Howard County), founded what is now Dillard's Inc. in 1938. Dillard's is the third largest department store chain in the country with 339 stores in 29 states and should approach $8 billion in revenue this fiscal year.

* Frank Hickingbotham, an entrepreneur who had tried other smaller food franchises in the 1970s, founded TCBY Enterprises Inc. in 1981. From a small store in west Little Rock, TCBY grew to about 2,800 franchise stores at its height in 1994. In the past several years, TCBY has concentrated on co-branding its TCBY products with other stores such as Burger King and Subway. It now has more than 3,000 locations, but only about a third are franchised stores.

* Out-of-state chains have moved into Arkansas and challenged homegrown businesses. In the past several years, the big-box retailers -- such as The Home Depot, Lowe's, Best Buy, Books-a-Million, Barnes & Noble, Toys R Us -- have sprinkled locations all over Arkansas.

Many local operations that have survived have been forced to curtail operations significantly. Publicly traded National Home Centers Inc. went toe-to-toe with home improvement giants The Home Depot and Lowe's but couldn't continue the fight for long. National Home Centers cut back on its retail business and succeeded in focusing on supplying contractors.

* Retail in general has followed the population from downtown stores, often mom-and-pop operations, to suburban shopping centers and malls. The first shopping center in Arkansas probably was Park Plaza, which opened in about 1960. It underwent a complete rebuilding in the late 1980s. In the last decade, there has been some small migration back to downtowns.

"Convenience became a central theme, probably starting in the 1960s," says Tom Jensen, chairman of the department of marketing and transportation at the University of Arkansas at Fayettevilie. "Actually, married women going into the labor force resulted in convenience being an issue. Convenience has brought about the notion of malls being closer to where they live, as opposed to central downtown.

* The phenomenal emergence of information technology in the past 20 years has helped every retailer,. and especially the larger companies, because it has given them a tremendous amount of knowledge of their customers.

"Retailers have information about customers' buying patterns," says Jensen, who also holds the Wal-Mart lectureship in retailing at UAF. "Initially, retailers closely guarded that information. Then companies such as Wal-Mart began sharing that information with the manufacturers, creating a win-win situation for everybody."

SON OF A MERCHANT

The first major event in retailing in the state was the 1938 opening of William T. Dillard's first store in Nashville, the county seat of Howard County near Dillard's home town of Mineral Springs.

Dillard is the son of a merchant who spent his life in Mineral Springs. According to an authorized history of Dillard's Inc., Dillard always wanted to follow in his father's footsteps, but he realized he'd have to move beyond Mineral Springs and eventually the state to build the company he wanted.

Dillard, who had spent several months in the Sears Roebuck & Co. training program, used his father's name for that first store, T.J. Dillard & Co. He was only 23.

Dillard stretched outside Arkansas in 1956 with the purchase of the Mayer & Schmidt store in Tyler, Texas. In 1960 he bought a failing operation in Tulsa, Okla., and soon turned it around.

His most notable early acquisition, at least in the minds of Arkansans, was the purchase of the Joseph Pfeifer Department Stores in Little Rock and Hot Springs in 1963.

Dillard had wanted to buy Gus Blass Co., with department stores in Pine Bluff and Little Rock. But the family refused to sell and Dillard walked down the street to Pfeifer's.

He did buy Blass, however, in 1964, probably paying about $3.5 million although no purchase price was mentioned. Dillard operated his six Arkansas stores under the Pfeifer-Blass name through most of the 1960s.

A St. Louis investment banker, Stein Frank & Shirk Inc., took Dillard's public on May 9, 1969, raising more than $4 million for growth of the company.

In the last 30 years, Dillard's Inc. has grown to a well-respected department store chain with locations in every region of the country. Dillard's purchase of Fairfield, Ohio-based Mercantile Stores Co. last year for $2.9 billion was by far the biggest in its history.

"The most important thing in running a successful business is to have customer confidence," Dillard told an audience in Mineral Springs in 1985 when the home folks threw a banquet honoring him. "You've got to satisfy your customers, and most important, you've got to give your customers their money's worth."

LISTENING TO WISE ADVICE

Seven years after Dillard opened his first store, Sam Walton opened a Ben Franklin franchise store in Newport in 1945. In five years, Walton was so successful with that store that his landlord thought retailing must be the easiest job on earth. He refused to renew Walton's lease and took over the store, soon returning it to its failing ways before Walton had arrived.

Walton had the opportunity to buy into a large retail store in St. Louis, but his wife, Helen, put her foot down. She didn't want to live in a large town. So Sam began looking for store locations in northwest Arkansas.

He soon settled on Bentonville, where he opened Walton's Five and Dime in 1950. Despite the name, it was a Ben Franklin franchise store.

Walton excelled with the Ben Franklin franchises, but he never followed the strict pattern the company wanted. If Walton saw a way to buy a product at a low price and sell it in his stores, he didn't care that Ben Franklin might not be the supplier. The company overlooked Walton's style because he was successful.

When Butler Brothers turned down his discount store idea in the early 1960s, it wasn't long before Walton opened his first Wal-Mart. He was 44 when the Rogers store opened.

Walton never slowed down in his passion to make Wal-Mart the best stores possible. The company went public in 1970. From a company that was almost unknown nationally in the 1970s, Walton took Wal-Mart to the largest retailer in the country in 1990.

Soon afterwards, he was diagnosed with multiple myeloma, a cancer of the bone marrow. Even that didn't stop him from traveling to stores. But by late 1991, the disease did slow him down.

On March 17, 1992, President George Bush presented Walton the Presidential Medal of Freedom, the country's highest civilian award. Nineteen days later, on April 5, Walton died at University Hospital in Little Rock.

"Arkansas has had wonderful luck with entrepreneurs, especially in the retailing sector," Jensen says. "Arkansas has been very good to retailers and retailing has been very good to the state."

                           WAL-MART STOCK SPLIT
2-FOR-1                 MARKET PRICE  NO. OF  VALUE OF 100
STOCK SPLITS            ON SPLIT DATE SHARES   IPO SHARES
October 1970 (IPO)         $16.50         100      $1,650
May 1971                    47.00         100       4,700
March 1972                  47.50         200       9,500
August 1975                 23.00         400       9,200
November 1980               50.00         800      40,000
June 1982                   49.88       1,600      79,808
June 1983                   81.63       3,200     261,216
September 1985              49.75       6,400     318,400
June 1987                   66.63      12,800     852,864
June 1990                   62.50      25,600   1,600,000
February 1993               63.63      51,200   3,257,856
March 1999                  89.75     102,400   9,190,400
Current price, holdings     58.21     204,800  11,921,408

THE CENTURY IN RETAIL

* FEB. 12, 1988

William Dillard opens his first store in Nashville, Ark.

* SEP. 1, 1945

Sam Walton opens his first store, a Ben Franklin outlet, in Newport.

* 1960

The first shopping center in Arkansas, park Plaza, opens in Little Rock

* JULY 2, 1962

Walton opens the first Wal-Mart in Rogers.

* MAY 9, 1969

Stein Frank and Shirk Inc. of St. Louis takes Dillard's public with 242,430 shares sold at $19.

* OCT. 1, 1970

Stephens Inc. end White Weld & Co. of New York take Wal-Mart public with 300,000 shares listed at $16.50.

* MAY 1971

Wal-Mart's stock splits 2-for-1, the first of 11 such splits in 28 years.

* 1974

Dillard's changes its name and the name of all of its stores to Dillard Department Stores Inc.

* 1983

Wal-Mart opens its first Sam's Club in Oklahoma City.

* NOVEMBER 1985

William Dillard is inducted into the Apparel Industry Hall of Fame in New York.

* 1988

First Wal-Mart Supercenter opens in Washington, Mo.; David Glass is named chief officer of Wal-Mart.

* 1990

Wal-Mart becomes largest retailer in the country with $32.6 billion in sales, surpassing Kmart Corp. and Sears Roebuck & Co.

* 1991

Wal-Mart enters into a joint venture with Citra S.A. of Mexico, marking Wal-Mart's first international expansion.

* MARCH 17, 1992

Sam Walton receives the Presidential Medal of Freedom from President George Bush.

* APRIL 5, 1992

Sam Walton dies in Little Rock after a bout with multiple myeloma.

* 1994

Wal-Mart pays Woolworth Corp. about $300 million for its 120-store Woolco Canada division. Within three years, Wal-Mart is the leading retailer in Canada.

* 1996

Wal-Mart passes $100 billion in sales ($104.9 billion to be exact), four years before Sam Walton predicted in 1990 that the company would hit that milestone.

* MAY 1998

Dillard's announces its biggest acquisition ever, spending $2.9 billion to buy 103-store, Fairfield, Ohio-based Mercantile Stores Co.

* MAY 1998

Dillard Department Stores changes its name back to Dillard's Inc.

* JUNE 1999

Wal-Mart completes its largest acquisition ever, spending $10.8 billion to buy the 229-store British supermarket chain, Asda.

Sources: "Sam Walton: Made in America"; "Dillard's: The First Fifty Years"; Discount Store News.

Will There Be a $1 Trillion Retailer?

WHAT does 2000 and beyond hold for retailers in Arkansas?

As mind-boggling as it may sound, one of the most-respected retail analysts in the country believes the next century will produce the first $1 trillion retailer in the world.

Maggie Gilliam, then with CS First Boston, raised that possibility in 1996. Gilliam, who now owns her own research firm, Gilliam & Associates, says Wal-Mart has the potential to be that retailer.

"If anybody has a shot at it, it's Wal-Mart because of the principles of the company are so firmly embedded," Gilliam said. "Also, don't forget what a huge [international] arena they are playing in."

Discount Store News, a trade publication, has plotted Wal-Mart's probable growth over the next 10 years. The magazine expects Wal-Mart to do $165 billion this year, hit $329 billion by 2004, $424 billion in 2006, $545 billion in 2008, $606 billion in 2009 and $676 billion in 2010.

It's not hard to see a jump from there to $1 trillion.

"If you plot out the trends, Wal-Mart very soon, probably within the next year, will be the largest corporation [in the world] in sales," says Tom Jensen, chairman of the department of marketing and transportation at the University of Arkansas at Fayetteville. "Then if that trend continues, what your competition is are some of these big conglomerates internationally. And if you look at Wal-Mart's expansion internationally, I think they have that potential [to reach $1 trillion in sales]."

But to stay in business, much less hit $1 trillion in sales, Wal-Mart and every other retailer in the world must face the toughest challenge for brick-and-mortar stores: the Internet.

"There is a tremendous growth [in the Internet]," Jensen says. "My prediction is that we'll find catalogs themselves appearing online. What we'll see is more micro-level marketing, more customized goods for individuals. There will be more importance placed on delivery issues, hence logistics and transportation as it relates to a retail operation.

"The projections on the numbers are mind-boggling. Any number you mention is going to be inaccurate by tomorrow.

"The [major Internet] issues will be connectivity and bandwidth. How many people can you get connected at what bandwidth? I think cable and the bandwidth it offers -- the fact it can be in everybody's home -- will have a good chance."

Jensen, however, doesn't expect the Internet will ever replace traditional stores.

"There is informational value, socialization value and an entertainment value [in traditional stores]," Jensen says. "And I don't care what you do, you're not going to be able to touch that pair of pants or that shirt on the Internet. High tech is the Internet in shopping, but high touch is where you're going to have to go in bricks and mortar. I have to in some way come into contact with the product."