In the era of e-commerce popularity, Wal Mart is still the world's largest company for a long time. What's its secret?
"Forget Gates and Buffett. In the United States, the Walton family has truly had an impact on the economy and society," said Fortune magazine.
In 2023, Wal Mart will become the largest company on the Fortune Global 500 list for the 10th consecutive year, which is the 18th time since 1995 that Wal Mart has won the honor. According to the latest annual report of the company in 2023, Wal Mart's operating revenue in 2024 is 648.125 billion dollars, and its net profit is 15.511 billion dollars.
On the one hand is Carrefour, which has almost quit China, on the other hand is Sam's Supermarket, which is crowded with people, and Wal Mart, which is far ahead of the world's top 500. How did the Walton family maintain its position as the richest family in the world in the Jianghu, and Wal Mart's position as a leader in the retail industry?
"The wood that embraces each other is born in the end; the nine story platform is born in the accumulated soil." Whether it is a political powerhouse or a super rich person, the entrepreneurial generation cannot escape a single word - poverty.
Born in a poor small place and experiencing the Great Depression of the American economy, no one understands the difficulties of life better than Sam Walton. He maintained his basic livelihood by farming and doing odd jobs, and entered the battlefield during World War II. Sam, who grew up in difficulties, is diligent, frugal, resolute, and optimistic.
Meeting his wife Helen Robson should have been a turning point in Sam's life.
This wealthy woman from a wealthy family, as well as his banker father, were all attracted by Sam's completely different simplicity and perseverance from the playboys. Helen and Sam didn't want to live under their father's protection, so they decided to look for their own career.
Due to his previous experience of doing odd jobs, Sam decided to open a "5&10" grocery store in 1950 (with products sold for 5-10 cents, similar to the current two dollar store). Tired of the hustle and bustle of the city and the complexity, Helen suggested that Sam open his shop in a small town with a population of less than 10000, which is where she wants to take her one year old son Robean's home.
Rob, the eldest son, recalled: "Dad always likes to listen to his mother. If he doesn't listen, his mother will let him listen." Sam originally planned to build Wal Mart stores in big cities, but because Helen insisted on choosing a small town with a population of less than 10000, Sam finally decided to start from Bentonville.
They launched a battle of "encircling the city from the countryside" in this small town that big retailers looked down upon. "We attach importance to the value of every penny, and we need to prove the value of our existence to customers." This concept has laid the foundation for Wal Mart's prudent business.
Sam arrives at the store at 4:30 am every morning and works late into the night to save on labor costs. In order to obtain lower purchase prices, he did not order from brands like most stores, but drove to wholesalers to find cheaper goods, and he habitually negotiated with dealers to earn more money.
Sam is always cheerful, and the car is always packed so much that there is almost no enough space for driving. The purchase price is lower than that of competitors, and the selling price is naturally lower, so there are naturally more buyers. Price and service are the core weapons for Wal Mart to establish itself in the world.
Helen appreciated Sam's meticulous budgeting from beginning to end. In order to pass on the frugal family style to her children, she even asked Sam to let them live in the small town until they were 18 years old, so that they could not be polluted by the extravagant lifestyle of "frugality for virtue". His four children naturally join their parents to help promote products in the store and earn pocket money.
Their family of six often worked and played together, and the joyful family atmosphere greatly healed Sam's sense of insecurity caused by his parents' endless arguments when he was a child.
As his business grew, Sam decided to join the Ben Franklin chain store. This move allowed Sam to have more stores, but the high franchise fee and the requirement that 80% of the products must be purchased from headquarters made Sam and his wife feel that their intelligence and talents cannot be fully utilized.
In 1962, Sam, who had already opened dozens of chain stores, made an astonishing decision - to close all franchise stores and create his own brand. With previous experience, Wal Mart's first store in the town was a great success. When Sam's first store achieved an annual turnover of $1 million, at a young age, he began to think about how to save his inheritance tax in a hundred years.
In order to "save" this expensive expense in the future, Sam decided to split Wal Mart. He divided the shares of Wal Mart equally into five shares, one for each of the four teenagers, and one for himself and his wife. The best way to reduce inheritance tax is to give it out before asset appreciation. This saved him a lot of expenses when he passed away in 1992, and this approach also attracted many large families to follow suit.
Sam is very frugal. He saves not only money in his pocket, but also money for a very distant future that many people cannot see. He enjoys doing beneficial, useful, and challenging things.
Sam is frugal but not stingy, and he often throws a lot of money to save future money. In order to improve the efficiency of selecting new store locations, Sam piloted a plane to conduct aerial surveys, which was at least ten years earlier than other retailers in the United States. In the 1960s, Wal Mart, which was expanding rapidly, started informatization simultaneously.
Scale is not equal to efficiency, it is just the condition of efficiency. In the 1970s, Kmart chain, which was once popular in the United States, collapsed because of poor management, outdated products and poor prices. Now Carrefour also has such problems. The key to winning in the demand chain is always to better control costs than competitors.
In 1970, in order to turn aerial observation into real-time monitoring, Sam also invested in launching a commercial satellite to track logistics and sales at each store, thereby achieving rapid turnover and reducing backlog of goods. Sam has established the largest private satellite communication system and the largest private transportation team in the United States, and the procurement and logistics systems have achieved rapid response demand chain management based on big data analysis.
This is a costly and cutting-edge decision, which has created a strong supply chain for Wal Mart and laid its deep moat.
Sam is equally adept at running the company. He once hid a TV in the store and advertised to invite residents to search for treasure: whoever found the TV could buy it for 22 cents. He also summarized the famous "women's pants theory": a pair of women's pants priced at 80 cents, initially priced at $1.2; If the price is lowered to $1 later, it can double the sales volume.
However, in contrast, Sam's children are not entirely fond of running a business. His second son abandoned his wealth and joined the military, becoming a special forces soldier. After retiring, he worked as a sailor, pilot, investor, and even flew an airplane to sprinkle pesticides. Sam did not interfere with the child's choice, but he began to think about how to maintain the sustainable operation of Wal Mart, which is the root of thrift.
In 1972, after Wal Mart went public, Sam began to look for suitable professional managers while clarifying Wal Mart's corporate culture of "respecting individuals, serving customers, and pursuing excellence" and its business philosophy of "low price every day, ensuring your satisfaction". Wal Mart also requires employees to stop, smile and say hello within three meters.
Sam spent 12 years persuading professional manager David Glass to join Wal Mart, laying down the management structure of Wal Mart's "son following father+professional manager", so as to balance the urgent needs of family businesses and modern enterprises. Sam has a good eye for people. During David's 16 years as president, Wal Mart stores have grown from less than 300 to more than 4000 around the world.
In order to fully respect the professional abilities of professional managers, Sam stipulated that family members should not hold more than 40% of the shares, strictly prohibit family interference in internal affairs, and ensure the publicity and depersonalization of family businesses.
In 1982, Wal Mart became the number one in the world. Journalists from all over the world rushed into their small town with curiosity about the world's richest man. The "world's richest man", who drove a red, air-conditioned Ford jeep with coffee stains on the seat, wore a cheap baseball cap, and only cut his hair in the cheapest barber shop on the street without tipping, surprised journalists.
Sam's office is only 10 square meters, and printing is always on the back of waste paper. His clothes can be bought in Wal Mart. He has only been in first class once in his life, and he often shares rooms with others on business trips. He has also lived in an eight bedroom hotel. Since 1965, when he purchased a 20 acre piece of land in the suburbs of Bentonville and built a house for $100000, he has never purchased any property again.
"The news media usually portrays me as a shabby and eccentric local tycoon, a country bumpkin sleeping with a dog, despite hiding billions of dollars in assets in a cave." Sam's malice towards American media is simply not taken seriously. He said, "Money itself has little meaning for the Walton family, because a person can only wear one pair of pants, and no matter how rich they are, they can only wear one. Wearing two pairs is not a wealthy person, but a mental problem."
The Walton family advocates frugality, they dislike indulgence and playboys, and even hire employees with extravagant hobbies out of the company. Under the guarantee of system and organization, Sam's "shabby" style, which has passed away for 30 years, continues in Wal Mart:
There is no specialized paper for copying in the company, only the back of the waste report is used.
The office space of Wal Mart is very small and the decoration is simple, so is the office of the city headquarters.
Entering the peak sales season, all managers and middle-level managers are required to go to the sales front line to be responsible for handling, installation, cash register and other work, in order to save labor costs.
The residence for employees on business trips is a simple ordinary guesthouse that can meet the basic needs of bathing and rest.
On the one hand, it is poor, and on the other hand, it is Wal Mart's big money.
Wal Mart's investment in purchasing and inventory control is never ambiguous, and this capability is transferred to suppliers like P&G through the integrated information system, so that manufacturers can master the sales and inventory dynamics of goods, and can replenish inventory in real time, which has created an unbreakable relationship between Wal Mart and the brand.
This makes Carrefour, a large retailer, just a capillary of brand blood flow, while Wal Mart, through its forward-looking integrated information system, becomes the aorta of the brand.
Family business inheritance is a question that goes beyond entrepreneurs, products, family members, and wealth, including organizational, institutional, and value inheritance. The proper handling of successors is the cornerstone of enterprise development.
Helen chose a simple town environment for her children, which is an important fertile ground for conveying the frugal family style of the Walton family. When his family was wealthy enough to rival his country, his eldest son Ross inherited a huge family business, but he only booked economy class when he went out.
Helen spends most of her time with the children, and although Sam works more than 6 days a week, she tries to stay at home every Friday night to participate in the children's competitions. Helen and Sam will persist in taking their entire family on trips or camping, maintaining family harmony and providing their children with childhood experiences to enhance empathy and temper their willpower.
So, Helen and Sam, as well as their three sons and one daughter, have a very harmonious relationship, and each child is very frugal and low-key. This is also the emotional cornerstone of Sam's courage to divide the company's stock equally among the children early on.
"As long as I am still alive, most of the shares of Wal Mart Group will not move - and I believe that this attitude will remain unchanged for the next generation at least. After the company has been established for a long time, some families will sell their shares to maintain a luxurious life, and then -" bang "- the shares will be completely bought by someone, and the company will change hands. One of the real reasons why I wrote this book (autobiography "Rich America") is so that my grandchildren and great grandchildren can one day read it and understand this: as long as you start making the foolish actions mentioned above, I will climb out of the grave to settle accounts with you. So don't even think about it. " Sam said.
Rob once said, "I learned from my father that changes and experiments are frequent and important, and you must constantly try new things.
As my father said in "The Ten Laws of Running a Business": "Celebrate to the fullest when you succeed, and be able to self deprecate and relax when you fail, so that everyone can relax." Rob walked forward without any burden in such wisdom.
In order to better convey the family tradition, Helen held a family gathering every two weeks during her lifetime, where the whole family met to discuss the future of the company, such as developing overseas markets, sales planning, or charitable causes. Nowadays, the Walton family still holds three meetings every year, and all members of the family, including children, must attend to cultivate the emotions of the third generation children towards the company and the family. The members also take a collective short trip every year.
The position of Wal Mart's chairman has passed to the third generation, and Rob's son-in-law Gregory Penner has taken over. Judging from the result that Wal Mart has won the first place among the world's top 500 enterprises for 10 years, the Walton family has lived up to Sam's painstaking design. But Wal Mart is not without its challengers.
American life is full of material extravagance and extravagance, and the incompatible Walton family has been criticized by the media for its "shabby and eccentric" lifestyle. As time passed, people began to realize the charm of being low-key and frugal, but questioning the Walton family did not stop there.
Wal Mart, which is "extremely rich", is a typical example of supply chain perfection and a representative of economies of scale. The Walton family, which is growing in Wal Mart and holds more than 30% of Wal Mart shares, is growing rapidly at the rate of 100 million dollars a day. But more and more people have found the negative social impact of Wal Mart's rapid expansion.
Wal Mart, which emphasizes low prices and services, as well as the endorsement of the supply chain, is so powerful that it has crushed the viability of retailers in many small places. More than 8000 Wal Mart shopping malls, Sam's Club, Wal Mart stores, and Wal Mart community stores in 15 countries around the world have diversified types of stores, making Wal Mart extremely risk resistant. Local people can hardly start businesses successfully and can only become employees of Wal Mart.
Although Wal Mart ranks first in the industry, it is not without competitors in business.
The pressure of transformation for traditional supermarkets, as well as the drastic impact of fresh food supermarkets and community group buying on supermarket business, have made it difficult for some supermarkets to sustain their operations. The basic development of consumption habits among middle-class families in China has led to a significant explosion in membership stores. In 2019, Costco opened its first store in Shanghai, with paid members quickly reaching 200000 and membership fee revenue approaching 60 million RMB, breaking a record in 35 years.
Costco and Sam's Club under Wal Mart, as the leader and second in the membership based warehousing and retail industry, are a pair of enemies. The competition between the two has never stopped. Sam's Club has had five CEOs in ten years, hoping to surpass Costco, but currently it still lags behind.
Both of them sell goods at a low price. The profit from selling goods is only used to pay for the basic operating expenses of the store. They operate by the way of maintaining profits from members' income. But at present, the service that once made Wal Mart proud is becoming a stumbling block for it to attack in the member store.
In the US market, Costco's members are more high-end customers and small enterprises, unlike Sam who faces traditional Wal Mart members