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Competition spurs move into the discounting game.

ROGERS, Ark.--Because Walmart's brand of discounting was born far from the national spotlight, in the small towns of northwest Arkansas, it took a while before its impact on American retailing was realized.

Meanwhile, bigger companies with higher profiles were also venturing into the discounting arena for the first time, creating a nationwide phenomenon that was dominated by a host of regional retailers--some in very large metropolitan areas.

A single store in this small town was little more than an afterthought for most of those in the industry at that time.

Especially since Walmart would not open a second outlet until almost two years after its initial store debuted.

For Walmart founder Sam Walton, getting into the discount store business was partly a defensive move. Along with his brother Bud, Walton owned and operated 16 Ben Franklin variety stores in Arkansas, Missouri and Kansas.

With it becoming clearer that the growing number of discount stores popping up across the country would threaten their business, Sam Walton felt the best strategic move would be to get into the discounting game.


His decision to move into the discount arena, however, was made somewhat reluctantly.

"I knew the discount idea was the future," Walton recounted in his 1992 autobiography, Sam Walton: Made In America. "But I was used to franchising, and I liked the mind-set, I generally liked my experience with Ben Franklin and I didn't want to get involved in having to build a company with all that apparatus."

Their first move was to turn to Butler Bros., the company they worked with in their franchised Ben Franklin stores.

Sam Walton wanted Butler to serve as the wholesale arm for his discount stores, but the company was not interested.

He then approached Gibson Products Co., one of the nation's largest operators of discount stores, in the hopes of becoming a Gibson franchisee.

That deal also fell through.

So Walton raised the money he needed and on July 2, 1962, he opened his first Walmart Discount City.

The 16,000-square-foot store featured merchandise assortments that were organized into 22 departments, ranging from jewelry to automotive supplies.

The store quickly caught on with shoppers and was soon doing $1 million a year in sales.

Noting that the store's volume was well beyond what he was getting from most of his variety stores, Walton began to seriously consider expanding his network of discount stores.

"Once we opened in Rogers," Sam Walton recalled in his autobiography, "we sat there and held our breath for two years. Then we put stores up in Springdale, a bigger town near Rogers, and Harrison, a smaller town."

Soon after its opening, the 35,000-square-foot Springdale store--more than twice the size of the company's other two units--became the Walmart's top-selling outlet.

Having found that his strategy of opening discount stores in small towns was a good one, Walton was fearful that others would do the same.

"Walmart was offto a good start, and we saw lots of potential," he recalled in his autobiography. "But now other folks were beginning to look at the smaller towns and say, 'Hey, maybe there is something out there that we ought to look into."'

Walton's solution was to push ahead as fast as possible, opening more Walmart stores as quickly as he could.

By the end of the 1960s Walmart had grown to 18 discount stores, and by 1972--two years after it went public--it had grown its store base to 34 outlets.
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Title Annotation:50 Walmart
Geographic Code:1U7AR
Date:Jul 23, 2012
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