The Walton vision comes to fruition

Discount Store News, Oct, 1999

Wal-Mart's ascent to the top of the retail world that began during the '80s, accelerated throughout the '90s as the retailer achieved its most dramatic growth.

The '90s would also prove to be a decade in which Wal-Mart faced enormous challenges even as its sales blew through $100 billion. Early in the decade, Wal-Mart had to cope with the loss of its founder and critics who said the company was somehow different without the charismatic Walton at its helm. The loss of Walton came as the company's international investments, skills as a food merchant and ability to spread its culture to an increasing number of associates were being questioned.

Throughout the decade, though, the company stuck with the management principles that had helped it grow so successfully the previous two decades. Back in 1990, Wal-Mart purchased McLane Company, a wholesale distributor that knew the food distribution business. That same year it also bought the 27-unit Wholesale Club for its Sam's division, a forerunner to the larger acquisition of Kmart's Pace warehouse club operation that took place in 1993.

By early 1991, Wal-Mart announced plans to enter the Puerto Rican marketplace, foreshadowing further international moves that would take place throughout the decade.

Wal-Mart also achieved a significant milestone early in the decade when it surpassed Kmart as the nation's largest discount retailer. Wal-Mart racked up $25 billion in annual sales for fiscal 1990, a 21.5% gain over 1989, versus Kmart's $24.8 billion in sales, a 1.5% gain versus a year earlier. Target trailed with $8.2 billion on an 8.8% sales improvement. As 1991 finished, Wal-Mart's sales were up 35% to $43.9 billion versus Kmart's $34.6 billion, up 7.8%. Sears fell to number three with sales of $33.7 billion.

Sam Walton would die the following year on April 5, 1992, but was active in the business until just a few months before his death. On March 17, 1992, President George Bush flew to Arkansas and presented Walton with the Medal of Freedom, the nation's highest civilian award. Bush called Walton "an American original who embodied the entrepreneurial spirit and epitomized the American dream."

Rob Walton replaced his father as chairman of the company, and Wal-Mart carried on without its dynamic founder. By 1994, Wal-Mart was executing plans to expand significantly throughout North America. The company was already in Mexico with Sam's Club and the Cifra partnership, and plans were laid to open 38 to 40 stores during the year including both warehouse clubs and Wal-Mart Supercenters. On the northern front, Wal-Mart was working on converting the 122 stores acquired when it purchased Woolco operations in Canada.

At year's end, Wal-Mart had once again posted record results with sales of $67.5 billion and earnings of $2.33 billion.

In 1995, Wal-Mart opened its first store, a supercenter, in Argentina, with a second opening the following year. In 1996, its plans to open warehouse club in China and supercenter operations were made public, and a supercenter opened in Indonesia, with a second following in early 1997.

In 1997, Wal-Mart achieved something extraordinary, but something that Sam Walton predicted the company would do by the year 2000: The company eclipsed the $100 billion sales mark. In mid 1997, vice chairman Don Soderquist and Glass told the company's annual meeting how Wal-Mart would reach $200 billion in sales.

Those gains would come from continued expansion of discount stores, supercenters and the addition of new international units. Wal-Mart began to build fewer, but larger discount stores, it continued to replace older discount stores with large supercenters at an increasingly aggressive pace, and it entered Korea, Germany and the United Kingdom with acquisitions. A new domestic store format emerged called Neighborhood Market.

During the fiscal year ended January 31, 1999, Wal-Mart's sales reached $137 billion and profits were $4.4 billion. The '90s may have begun as the decade of doubt, but as 1999 draws to a close the company's actions and the performance of its 1.1 million associates have resoundingly silenced the skeptics. It's hard to imagine how Wal-Mart can keep topping its past performance, but the belief at the company today that is its best days are still ahead.