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Discounting would sweep' U.S.

BENTONVILLE, Ark -- The genesis of the company that is now the world's largest corporation lay in the variety store business. Sam Walton, the founder of Wal-Mart Stores Inc., started out in retailing operating a Ben Franklin variety store franchise in Newport, Ark., in the 1950s.

Walton added additional five-and-dime outlets, hut by the early 1960s he and others had recognized the potential for a new format -- the discount store. As a result, 1962 turned out to be a watershed year in retailing history. S.S. Kresge Co. opened the first Kmart store. Dayton Hudson Corp. launched the first Target outlet, and Walton opened the first Wal-Mart in neighboring Rogers, Ark.

"You didn't have to be a genius to see discounting as a new trend that was going to sweep the country," recalled Walton in his 1992 autobiography Sam Walton: Made in America.

Walton's distinctive strategy was to focus on rural and small town America, initially in the South, where retail choices for consumers were few. That approach, combined with an unswerving emphasis on low prices and low-cost operations, propelled the retailer's early growth.

By the end of the 1960s the company consisted of 18 Wal-Mart discount units and 15 Ben Franklin variety stores that were operated under the Walton's 5 & 10 banner. Annual sales had reached the $44 million mark.

In 1970 Walton took the company public, initiating a decade of rapid growth. By 1979 Wal-Mart fielded 229 discount outlets generating $900 million in sales.

Wal-Mart's success and Walton's growing celebrity did not produce complacency in the founder. Rather, he remained keenly interested in testing such new formats as the membership warehouse club and the hypermarket. In the mid-1980s Wal-Mart also explored the deep-discount drug format, a venture it would later quietly drop.

However, in 1983 the first Sam's Club debuted, and in 1987 the company opened its first Wal-Mart Hypermart USA in Garland, Texas, a 220,000-square-foot unit that became the forerunner of the company's current primary growth vehicle, the Wal-Mart Supercenter.

The following year the first Supercenter, which combined a complete supermarket with a full general merchandise selection (pharmacies are now a standard feature as well), debuted in Washington, Mo. At the grand opening Walton remarked, 'This, or some version of this, is probably going to be good for our future.'

Walton was perhaps more prescient than he realized, as the Supercenter gradually emerged during the latter half of the 1990s as the company's primary growth engine. Walton did not live to see that trend, however, succumbing to bone cancer in 1992.

Under David Glass, who succeeded Walton as chief executive officer in 1988, Wal-Mart experienced a decade-plus of spectacular growth. The company became an international retailer in 1993 when it initiated operations in Mexico, followed the next year by its entry into Canada. During the course of the decade Wal-Mart would extend its presence to Argentina, Brazil, Germany and Korea.

In 1997 the company passed the $100 billion mark in sales with a top line of $104.9 billion for fiscal 1997. In addition to its stunning financial performance, Wal-Mart had established itself as the industry leader in the use of information technology, particularly in improving supply chain efficiency.

As the retailer entered the 21st century it experienced another leadership transition, as Glass retired and was replaced by Lee Scott, who had made his mark while first leading the company's logistics group and then as head of merchandising.

During his tenure Scott has already seen Wal-Mart break the $200 billion sales barrier in fiscal 2002 - just five years after achieving $100 billion. With a new format, the Neighborhood Market, ready for rollout and additional global markets beckoning, the only question would seem to be when the retailer will exceed $300 billion in sales.
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Title Annotation:Wal-Mart Stores Inc.
Comment:Discounting would sweep' U.S.(Wal-Mart Stores Inc.)
Publication:Chain Drug Review
Article Type:Brief Article
Geographic Code:1USA
Date:Jul 22, 2002
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