"Sam hired me in 1970 as district manager in charge of new store openings. He had eighteen Wal-Martsand some variety stores doing about $31 million a year. I moved my family, and as the van was unloadingthe furniture into our rented house, they called from the office and said, 'Can you go set up this new storein Missouri' My wife, who had three babies and a moving van to deal with, helped me find someclothes, and I left. I didn't see her again for two weeks. Then there was a managers' meeting so I didn'tsee her for two more weeks. It would be safe to say that in those days we all worked a minimum ofsixteen hours a day."----JACK SHEWMAKER,former president and COO of Wal-MartNow that we were out of debt, we could really do something with our key strategy, which was simply toput good-sized discount stores into little one-horse towns which everybody else was ignoring. In thosedays, Kmart wasn't going to towns below 50,000, and even Gibson's wouldn't go to towns much smallerthan 10,000 or 12,000. We knew our formula was working even in towns smaller than 5,000 people,and there were plenty of those towns out there for us to expand into. When people want to simplify theWal-Mart story, that's usually how they sum up the secret of our success: "Oh, they went into smalltowns when nobody else would." And a long time ago, when we were first being noticed, a lot of folks inthe industry wrote us off as a bunch of country hicks who had stumbled onto this idea by a big accident.

Maybe it was an accident, but that strategy wouldn't have worked at all if we hadn't come up with amethod for implementing it. That method was to saturate a market area by spreading out, then filling in. Inthe early growth years of discounting, a lot of national companies with distribution systems already inplaceKmart, for examplewere growing by sticking stores all over the country. Obviously, we couldn'tsupport anything like that.

But while the big guys were leapfrogging from large city to large city, they became so spread out and soinvolved in real estate and zoning laws and city politics that they left huge pockets of business out therefor us. Our growth strategy was born out of necessity, but at least we recognized it as a strategy prettyearly on. We figured we had to build our stores so that our distribution centers, or warehouses, couldtake care of them, but also so those stores could be controlled. We wanted them within reach of ourdistrict managers, and of ourselves here in Bentonville, so we could get out there and look after them.

Each store had to be within a day's drive of a distribution center. So we would go as far as we couldfrom a warehouse and put in a store. Then we would fill in the map of that territory, state by state, countyseat by county seat, until we had saturated that market area.

We saturated northwest Arkansas. We saturated Oklahoma. We saturated Missouri. We went fromNeosho to Joplin, to Monett and Aurora, to Nevada and Belton, to Harrisonville, and then on to FortScott and Olathe in Kansasand so on. Sometimes we would jump over an area, like when we openedstore number 23 in Ruston, Louisiana, and we didn't have a thing in south Arkansas, which is between usand Ruston. So then we started back-filling south Arkansas. In those days we didn't really plan for thefuture. We just felt like we could keep rolling these stores out this way, and they would keep working, inTennessee, or Kansas, or Nebraskawherever we decided to go. But we did try to think ahead somewhen it came to the cities. We never planned on actually going into the cities. What we did instead wasbuild our stores in a ring around a citypretty far outand wait for the growth to come to us. That strategyworked practically everywhere. We started early with Tulsa, putting stores in Broken Arrow and SandSprings. Around Kansas City, we built in Warrensburg, Belton, and Grandview on the Missouri side oftown and in Bonner Springs and Leavenworth across the river in Kansas. We did the same thing inDallas.

This saturation strategy had all sorts of benefits beyond control and distribution. From the verybeginning, we never believed in spending much money on advertising, and saturation helped us to save afortune in that department. When you move like we did from town to town in these mostly rural areas,word of mouth gets your message out to customers pretty quickly without much advertising. When wehad seventy-five stores in Arkansas, seventy-five in Missouri, eighty in Oklahoma, whatever, peopleknew who we were, and everybody except the merchants who weren't discounting looked forward toour coming to their town. By doing it this way, we usually could get by with distributing just oneadvertising circular a month instead of running a whole lot of newspaper advertising. We've never beenbig advertisers, and, relative to our size today, we still aren't. Just like today, we became our owncompetitors. In the Springfield, Missouri, area, for example, we had forty stores within 100 miles. WhenKmart finally came in there with three stores, they had a rough time going up against our kind of strength.

So for the most part, we just started repeating what worked, stamping out stores cookie-cutter style.

The only decision we had to make was what size format to put in what market. We had five differentstore sizes running from about 30,000 to 60,000 square feetand we would hardly ever pass up anymarket because it was too small. I had traveled so much myself looking at competitors in the variety storebusiness that I had a good feel for the kind of potential in these communities. Bud and I knew what wewanted in the way of locations.

Like so many of the ideas that have made our company work from the beginning, we're still more or lessfollowing this same strategy, although today we've moved into some cities outright. But I think our mainreal estate effort should be directed at getting out in front of expansion and letting the population build outto us. Just like in the beginning, we start around these small towns, people drive past our stores, get toknow us, and become customers. The amazing thing to me is how quickly it works. We have created somany new friends down in FloridaYankee friends, folks who live up Northwho see our stores inFlorida while they're down there for the winter, and they can't wait for us to get up there.

Believe it or not, I get letters all the time asking us to put a store in some place up North because ourcustomers miss us when they go back home. It's the same way in the Rio Grande Valley. All the farmersfrom North Dakota, South Dakota, and Minnesota go down there for the winter and get to know us. Sowe are presold, almost, when we go into some of these areas that are new for us. We're still spreadingout and filling in, and we've got a heck of a long way to go before we saturate territory which weconsider to be basically friendly to Wal-Mart.

There's no question whatsoever that we could not have done what we did back then if I hadn't had myairplanes. I bought that first plane for business, to travel between the stores and keep in touch with whatwas going on. But once we started really rolling out the stores, the airplane turned into a great tool forscouting real estate. We were probably ten years ahead of most other retailers in scouting locations fromthe air, and we got a lot of great ones that way. From up in the air we could check out traffic flows, seewhich way cities and towns were growing, and evaluate the location of the competitionif there was any.

Then we would develop our real estate strategy for that market.

I loved doing it myself. I'd get down low, turn my plane up on its side, and fly right over a town. Oncewe had a spot picked out, we'd land, go find out who owned the property, and try to negotiate the dealright then. That's another good reason I don't like jets. You can't get down low enough to really tellwhat's going on, the way I could in my little planes. Bud and I picked almost all our sites that way untilwe grew to about 120 or 130 stores. I was always proud of our technique and the results we got. Iguarantee you not many principals of retailing companies were flying around sideways studyingdevelopment patterns, but it worked really well for us. Until we had 500 stores, or at least 400 or so, Ikept up with every real estate deal we made and got to view most locations before we signed any kind ofcommitment. A good location, and what we have to pay for it, is so important to the success of a store.

And it's one area of the company in which we've always had family involvement. Jim did it for a while.

And even today, Rob goes on real estate trips and attends every real estate meeting.

Once we found a good location, we just got after it and put up a store there. We built our own fixturesthen, and we still do today. We had what we called a Store Opening Plan, but basically we would call inthe troopsusually we called in all the available assistant managersand put together a store. I'll bet a guylike Al Miles has put together 100 stores and been to over 300 store openings. We had to assemble thefixtures, order the merchandise, and plan the advertisingnot to mention hiring and training the folks to runthe store. We just all dove in and got it done. There are all kinds of stories about those things. Iremember one time I didn't want to spend any money on motels so we all slept in sleeping bags on thefloor of one of our guys' houses. His furniture hadn't gotten there yet.

Ferold Arend made a big difference in the early rollout of Wal-Marts. He was a very organized personin a way that I wasn't. I always told him it was because he was German. But he was the kind of fellowwho, if he had ten things to do in a day, would write them all down and then work to get them done. Hewould double back to see that people did what he told them to do. I never did that as a rule in thosedays. I just kept moving.

I think a powerful sense of needing to take off to the next town or the next store when I'm ready, withoutwasting any time waiting on somebody else, is probably the main reason I never was able to work realwell with pilots. It seemed like they were never ready to go when I was. Anyway, I love the flying, thechallenge of finding my way all over the country, evaluating the weather and making the instrumentapproaches and doing everything myself. But even more than that, I love the independence of being ableto go where I want to, when I want toin a hurry. Plus, I always like to see people working, and thenature of a corporate pilot's job includes a lot of downtime. So, when we first got a few pilots aroundhere I conceived this brilliant idea: "Okay, guys," I said. "If you want to fly airplanes, I want you to gointo the stores and check on our in-stock positions in all our departments when you aren't flying." It madeperfect sense to me. They needed to learn more about the business, they would be helping us, and theycould have had some fun with it. My idea lasted about three months and provoked all kinds of grumbling.

I heard every excuse in the book. We've got to check the weather and make sure the planes are takencare of and all that. Finally, I gave in. And today, our pilots stay in the air about as much as anybody intheir business.

JACK SHEWMAKER:

"The first store we opened after I got there was number 21 in Saint Robert, Missouri. Our store openingcrew was supposed to take possession of a store after construction was complete. It didn't always workout that way. When we took that store, the parking lot wasn't done. I mean, it was gravel and had nostriping, no cording of cars or anything. So the store manager, Gary Reinboth, and I were trying to figureout how to avoid chaos at the opening. Our eyes lit up when we saw this snack bar vendor hauling usedcooking grease in these huge yellow barrels in the back of his truck. So we made a deal with him. Hecould buy all our grease at a good price if we could have all his grease barrels for the grand opening. Wetied flags and rope on them and made a parking lot. That's the way we thought in those days. Samwanted a job done, and he was willing to accept creativity as long as the job got done. Our minds werefreewheeling. We rushed to get things done.

"I remember another opening. We had finally built a new store in Morrilton, Arkansas, out nearInterstate 40, to replace that incredible store Sam was so proud of in the old Coca-Cola plant. My bosswas Ferold Arend, and he told me we were going to set a new record of opening a store in three weeks.

I said okay. But he had made a mistake by a week so we really had a target date of two weeks from theday we began. We tried desperately, but we didn't quite make it. We opened on Thanksgiving Day, andthe store was horrible. I was standing out in front when Sam drove up. He saw the disaster, but he wassmart enough to know how hard we'd been working and that if he told the truth we would have justdisintegrated. He said, The store looks really good, guys.' And he drove away and left us."Obviously, because I have spent as much time as I could out where it counts, in the stores, seeing ifwe're doing the job we should be, it has put a very heavy load on all our executives, especially since Iexpect them to get out in the stores too. My style has always been to lay off a lot of the day-to-dayoperating responsibilities to folks like Ferold Arend and Ron Mayer in the early days, later on to JackShewmaker, and eventually to David Glass and Don Soderquist. So my role has been to pick goodpeople and give them the maximum authority and responsibility.

I've been asked if I was a hands-on manager or an arms-length type. I think really I'm more of amanager by walking and flying around, and in the process I stick my fingers into everything I can to seehow it's coming along. I've let our executives make their decisionsand their mistakesbut I've critiquedand advised them. My appreciation for numbers has kept me close to our operational statements, and toall the other information we have pouring in from so many different places. In that sense, I think my styleas an executive has been pretty much dictated by my talents. I've played to my strengths and relied onothers to make up for my weaknesses.

As I mentioned, I found out early that one of my talents is remembering numbers. I can't recall namesand a lot of other things as well as I would like to. But numbers just stick with me, and always have.

That's why I come in every Saturday morning usually around two or three, and go through all the weeklynumbers. I steal a march on everybody else for the Saturday morning meeting. I can go through thosesheets and look at a store, and even though I haven't been there in a while, I can remind myself ofsomething about it, the manager "maybe, and then I can remember later that they are doing this muchbusiness this week and that their wage cost is such and such. I do this with each store every Saturdaymorning. It usually takes about three hours, but when I'm done I have as good a feel for what's going onin the company as anybody heremaybe better on some days.

But if you asked me am I an organized person, I would have to say flat out no, not at all. Beingorganized would really slow me down. In fact, it would probably render me helpless. I try to keep trackof what I'm supposed to do, and where I'm supposed to be, but it's true I don't keep much of a schedule.

I think my way of operating has more or less driven Loretta Boss, and later Becky Elliott, my twosecretaries, around the bend. My style is pretty haphazard.

LORETTA BOSS PARKER, PERSONAL SECRETARY FOR TWENTY-FIVE YEARS:

"He hasalways been like this. His mind works ten times faster than everybody else's. I mean he just getsgoing and stays two or three jumps ahead, and he's quick to go with what's on his mind. If he getssomething in his mind that needs to be done regardless of what else might have been plannedthe newidea takes priority, and it has to be done now. Everybody has their day scheduled, and thenbang! Hejust calls a meeting on something.

"In the early years, this caused a number of embarrassments. I would make appointments for him andthen tell him about themwe kept two calendars, one on his desk and one on minebut he would justtotally forget. I've had people fly in here from Dallas all set to see him. I'd come in at 8a.m. to meet themand find out he had flown out of town at 5a.m. without telling anybody where he was going. I would justhave to look at this man from Dallas and say, 'He's gone.' So after a few times like that, I finally said, 'I'mnot going to make appointments for you anymore.' And he said, 'Well, that's probably best.' Then hewould make his own appointments and forget abo............