The History of Walmart

Walmart, or Walmart, Inc., previously known as Wal-Mart Stores, Inc., is an American multinational retail corporation and operator of discount department stores, hypermarkets, and grocery stores headquartered in Bentonville, Arkansas.

The beginning

Wal-Mart was founded by local businessman Sam Walton in Rogers, Arkansas, in 1962 and the company was focused in rural areas and emerging suburbs, where major retailers such as Sears and Kmart did not operate.

In 1983 and in 1988, the company used various different retail formats such as Sam’s Club discount warehouses and Wal-Mart Supercenters, respectively. Their operation proved to be crucial, as in 10 years Wal-Mart had become one of the largest grocers in the United States. In the 1990s, their marketing and general philosophy helped the brand expand and reach more customers by focusing on direct mail advertising, low-cost imports and regional warehousing. These cost-effective and customer-friendly tactics helped Wal-Mart become the largest retailer in the US in the 1990s. By 1990, Walmart was ready to branch out internationally, and the brand opened stores in Mexico, the UK, Germany, China, and Canada.

Following Walton’s death in 1992, sales declined but soon bounced back with the launch of the Great Value line in 1993. The company accrued corporate debt while financing new strategies which eventually paid off as, in 1995, Wal-Mart’s sales doubled. By 2001 sales had increased remarkably, transforming Wal-Mart into the largest corporation in the world. As a leader in its industry, Wal-Mart began to acquire such e-commerce businesses as Jet.com (2016) and Moosejaw (2017). The company was named Walmart in 2018.

Taking over the world

A Fortune article published in January 1989 was titled “Walmart: Will it Take Over the World?” and successfully captured how big the company was going to be. The article predicted that Walmart would be the largest retailer in the US and that readers might not have shopped in a Walmart as the company is only just starting out, but that soon “there’s bound to be a Walmart in your future.”

In 2011, in a shareholders meeting, CEO Mike Duke told investors that the “same culture that drove our growth during our first 50 years can drive our growth for the next 50 years,” as Walmart is the “best positioned retailer on the globe.”

It is surprising for many that one of the largest and most technology-driven enterprises in the world started in rural Arkansas, which is famous for its beautiful lakes, rivers, and hot springs. It is the number one state in the US for rice and poultry production. But this has not stopped Walmart from becoming one of the largest enterprises on earth and the most influential in the global retail and consumer goods industries.

Walmart has changed the way companies distribute their products and influenced the technology used to reach shoppers and provide them with the products they need. Walmart has also made billions of dollars by bringing lower prices to shoppers. The annual sales of Walmart in 2010 totalled $419 billion. It is the world’s largest commercial employer and the second largest employer in the world behind the Chinese military. Four of the top ten richest people in the US are from the Walton family.

Rise of Consumerism and Branding

Walmart began at a time where varying forces were shaping the societal landscape. As Sam Walton himself noted, “In the fifties and sixties, everything about America was changing rapidly.” Walmart’s founder has written in his autobiography about how things at the time, following the end of the World War II, were changing and how consumers in the US experienced economic and individual prosperity. He wrote: “During the Depression, few of us had enough money to shop very often, and during World War II, everything … was rationed. But by the time I started out, the shortages were pretty much over, and the economy was growing. Compared to the Depression we had been used to, boom times had arrived.” This is the time where brands were also starting to become a symbol of status. Consumers in the mid-1950s were a central figure, encapsulating the spirit of the time and being the driving force behind the newfound appetite for consumption.

Lower prices

Walmart’s recipe for success was the availability of a wide range of brands at low prices. This has been Walmart’s winning formula over the past 50 years as offering popular brands at great value proved to be a success that drove many companies to file for bankruptcy protection or go out of business altogether.

Walmart’s former motto was “We sell for less…always,” which meant that the company was able to sell for less because it bought for less. Walmart’s ability to offer big discounts on national recognisable brands was due to its efficiency and cost-cutting measures. Walmart managed to remove middlemen, reduce packaging, invest in technology, and pressurise suppliers. By doing so it was able to sell quality brands cheaper and earn a market share as a discount retailer without sacrificing product quality. Don Soderquist, a former Senior Vice Chairman and Chief Operating officer (COO) at Walmart wrote in his book The Wal-Mart Way, that Wal-Mart has been a retailer that always supported national and international brand merchandise and for many consumers, brands have been synonymous with quality. This is why Walmart’s strategy was to offer recognizable and popular brands at everyday low discount prices, thereby providing Walmart clients with better value than most of its competitors.

Walmart’s Stock Performance

Walmart first offered common stock in 1970 and began trading on the New York Stock Exchange (NYSE:WMT) on 25th of August 1972.

Walmart’s stock is currently trading at $139 per share. The company’s highest-ever stock market closing price occurred on 30th of November 2020, when it hit $152 per share. The company has a massive $396.11 billion market capitalisation as of 19th April 2021.

Disclaimer:

This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

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