فصل 08

8

Rolling Out the Formula

“Sam hired me in 1970 as district manager in charge of new store openings. He had eighteen Wal-Marts and some variety stores doing about $31 million a year. I moved my family, and as the van was unloading the furniture into our rented house, they called from the office and said, ‘Can you go set up this new store in Missouri?’ My wife, who had three babies and a moving van to deal with, helped me find some clothes, and I left. I didn’t see her again for two weeks. Then there was a managers’ meeting so I didn’t see her for two more weeks. It would be safe to say that in those days we all worked a minimum of sixteen hours a day.”

—-JACK SHEWMAKER, former president and COO of Wal-Mart

Now that we were out of debt, we could really do something with our key strategy, which was simply to put good-sized discount stores into little one-horse towns which everybody else was ignoring. In those days, Kmart wasn’t going to towns below 50,000, and even Gibson’s wouldn’t go to towns much smaller than 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 the Wal-Mart story, that’s usually how they sum up the secret of our success: “Oh, they went into small towns when nobody else would.” And a long time ago, when we were first being noticed, a lot of folks in the 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 a method for implementing it. That method was to saturate a market area by spreading out, then filling in. In the early growth years of discounting, a lot of national companies with distribution systems already in place—Kmart, for example—were growing by sticking stores all over the country. Obviously, we couldn’t support anything like that.

But while the big guys were leapfrogging from large city to large city, they became so spread out and so involved in real estate and zoning laws and city politics that they left huge pockets of business out there for us. Our growth strategy was born out of necessity, but at least we recognized it as a strategy pretty early on. We figured we had to build our stores so that our distribution centers, or warehouses, could take care of them, but also so those stores could be controlled. We wanted them within reach of our district 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 could from a warehouse and put in a store. Then we would fill in the map of that territory, state by state, county seat by county seat, until we had saturated that market area.

We saturated northwest Arkansas. We saturated Oklahoma. We saturated Missouri. We went from Neosho to Joplin, to Monett and Aurora, to Nevada and Belton, to Harrisonville, and then on to Fort Scott and Olathe in Kansas—and so on. Sometimes we would jump over an area, like when we opened store number 23 in Ruston, Louisiana, and we didn’t have a thing in south Arkansas, which is between us and Ruston. So then we started back-filling south Arkansas. In those days we didn’t really plan for the future. We just felt like we could keep rolling these stores out this way, and they would keep working, in Tennessee, or Kansas, or Nebraska—wherever we decided to go. But we did try to think ahead some when it came to the cities. We never planned on actually going into the cities. What we did instead was build our stores in a ring around a city—pretty far out—and wait for the growth to come to us. That strategy worked practically everywhere. We started early with Tulsa, putting stores in Broken Arrow and Sand Springs. Around Kansas City, we built in Warrensburg, Belton, and Grandview on the Missouri side of town and in Bonner Springs and Leavenworth across the river in Kansas. We did the same thing in Dallas.

This saturation strategy had all sorts of benefits beyond control and distribution. From the very beginning, we never believed in spending much money on advertising, and saturation helped us to save a fortune 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 we had seventy-five stores in Arkansas, seventy-five in Missouri, eighty in Oklahoma, whatever, people knew who we were, and everybody except the merchants who weren’t discounting looked forward to our coming to their town. By doing it this way, we usually could get by with distributing just one advertising circular a month instead of running a whole lot of newspaper advertising. We’ve never been big advertisers, and, relative to our size today, we still aren’t. Just like today, we became our own competitors. In the Springfield, Missouri, area, for example, we had forty stores within 100 miles. When Kmart 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 different store sizes —running from about 30,000 to 60,000 square feet—and we would hardly ever pass up any market because it was too small. I had traveled so much myself looking at competitors in the variety store business that I had a good feel for the kind of potential in these communities. Bud and I knew what we wanted 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 less following this same strategy, although today we’ve moved into some cities outright. But I think our main real estate effort should be directed at getting out in front of expansion and letting the population build out to us. Just like in the beginning, we start around these small towns, people drive past our stores, get to know us, and become customers. The amazing thing to me is how quickly it works. We have created so many new friends down in Florida—Yankee friends, folks who live up North—who see our stores in Florida 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 our customers miss us when they go back home. It’s the same way in the Rio Grande Valley. All the farmers from North Dakota, South Dakota, and Minnesota go down there for the winter and get to know us. So we are presold, almost, when we go into some of these areas that are new for us. We’re still spreading out and filling in, and we’ve got a heck of a long way to go before we saturate territory which we consider 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 my airplanes. I bought that first plane for business, to travel between the stores and keep in touch with what was going on. But once we started really rolling out the stores, the airplane turned into a great tool for scouting real estate. We were probably ten years ahead of most other retailers in scouting locations from the air, and we got a lot of great ones that way. From up in the air we could check out traffic flows, see which way cities and towns were growing, and evaluate the location of the competition—if 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. Once we had a spot picked out, we’d land, go find out who owned the property, and try to negotiate the deal right then. That’s another good reason I don’t like jets. You can’t get down low enough to really tell what’s going on, the way I could in my little planes. Bud and I picked almost all our sites that way until we grew to about 120 or 130 stores. I was always proud of our technique and the results we got. I guarantee you not many principals of retailing companies were flying around sideways studying development patterns, but it worked really well for us. Until we had 500 stores, or at least 400 or so, I kept up with every real estate deal we made and got to view most locations before we signed any kind of commitment. 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 fixtures then, and we still do today. We had what we called a Store Opening Plan, but basically we would call in the troops—usually we called in all the available assistant managers—and put together a store. I’ll bet a guy like Al Miles has put together 100 stores and been to over 300 store openings. We had to assemble the fixtures, order the merchandise, and plan the advertising—not to mention hiring and training the folks to run the store. We just all dove in and got it done. There are all kinds of stories about those things. I remember one time I didn’t want to spend any money on motels so we all slept in sleeping bags on the floor 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 person in a way that I wasn’t. I always told him it was because he was German. But he was the kind of fellow who, if he had ten things to do in a day, would write them all down and then work to get them done. He would double back to see that people did what he told them to do. I never did that as a rule in those days. 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, without wasting any time waiting on somebody else, is probably the main reason I never was able to work real well with pilots. It seemed like they were never ready to go when I was. Anyway, I love the flying, the challenge of finding my way all over the country, evaluating the weather and making the instrument approaches and doing everything myself. But even more than that, I love the independence of being able to go where I want to, when I want to—in a hurry. Plus, I always like to see people working, and the nature of a corporate pilot’s job includes a lot of downtime. So, when we first got a few pilots around here I conceived this brilliant idea: “Okay, guys,” I said. “If you want to fly airplanes, I want you to go into the stores and check on our in-stock positions in all our departments when you aren’t flying.” It made perfect sense to me. They needed to learn more about the business, they would be helping us, and they could 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 taken care of and all that. Finally, I gave in. And today, our pilots stay in the air about as much as anybody in their business.

JACK SHEWMAKER:

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

“I remember another opening. We had finally built a new store in Morrilton, Arkansas, out near Interstate 40, to replace that incredible store Sam was so proud of in the old Coca-Cola plant. My boss was 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 the day we began. We tried desperately, but we didn’t quite make it. We opened on Thanksgiving Day, and the store was horrible. I was standing out in front when Sam drove up. He saw the disaster, but he was smart enough to know how hard we’d been working and that if he told the truth we would have just disintegrated. 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 if we’re doing the job we should be, it has put a very heavy load on all our executives, especially since I expect them to get out in the stores too. My style has always been to lay off a lot of the day-to-day operating responsibilities to folks like Ferold Arend and Ron Mayer in the early days, later on to Jack Shewmaker, and eventually to David Glass and Don Soderquist. So my role has been to pick good people 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 a manager by walking and flying around, and in the process I stick my fingers into everything I can to see how it’s coming along. I’ve let our executives make their decisions—and their mistakes—but I’ve critiqued and advised them. My appreciation for numbers has kept me close to our operational statements, and to all the other information we have pouring in from so many different places. In that sense, I think my style as an executive has been pretty much dictated by my talents. I’ve played to my strengths and relied on others 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 names and 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 weekly numbers. I steal a march on everybody else for the Saturday morning meeting. I can go through those sheets and look at a store, and even though I haven’t been there in a while, I can remind myself of something about it, the manager “maybe, and then I can remember later that they are doing this much business this week and that their wage cost is such and such. I do this with each store every Saturday morning. It usually takes about three hours, but when I’m done I have as good a feel for what’s going on in the company as anybody here—maybe 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. Being organized would really slow me down. In fact, it would probably render me helpless. I try to keep track of 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 two secretaries, around the bend. My style is pretty haphazard.

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

“He has always been like this. His mind works ten times faster than everybody else’s. I mean he just gets going and stays two or three jumps ahead, and he’s quick to go with what’s on his mind. If he gets something in his mind that needs to be done —regardless of what else might have been planned—the new idea takes priority, and it has to be done now. Everybody has their day scheduled, and then bang! He just calls a meeting on something.

“In the early years, this caused a number of embarrassments. I would make appointments for him and then tell him about them—we kept two calendars, one on his desk and one on mine—but he would just totally forget. I’ve had people fly in here from Dallas all set to see him. I’d come in at 8 a.m. to meet them and find out he had flown out of town at 5 a.m. without telling anybody where he was going. I would just have to look at this man from Dallas and say, ‘He’s gone.’ So after a few times like that, I finally said, ‘I’m not going to make appointments for you anymore.’ And he said, ‘Well, that’s probably best.’ Then he would make his own appointments and forget about them, and I was still the one who had to give them the bad news. I couldn’t organize him in a quarter of a century, and I don’t think anyone else is ever going to.”

Except for reading my numbers on Saturday morning and going to our regular meetings, I don’t have much of a routine for anything else. I always carry my little tape recorder on trips, to record ideas that come up in my conversations with the associates. I usually have my yellow legal pad with me, with a list of ten or fifteen things we need to be working on as a company. My list drives the executives around here crazy, but it’s probably one of my more important contributions.

DAVID GLASS:

“When Sam feels a certain way, he is relentless. He will just wear you out. He will bring up an idea, we’ll all discuss it and then decide maybe that it’s not something we should be doing right now—or ever. Fine. Case closed. But as long as he is convinced that it is the right thing, it just keeps coming up—week after week after week—until finally everybody capitulates and says, well, it’s easier to do it than to keep fighting this fight. I guess it could be called management by wearing you down.”

One way I’ve managed to keep up with everything on my plate is by coming in to the office really early almost every day, even when I don’t have those Saturday numbers to look over. Four-thirty wouldn’t be all that unusual a time for me to get started down at the office. That early morning time is tremendously valuable: it’s uninterrupted time when I think and plan and sort things out. I write my letters and my articles for Wal-Mart World, our company newsletter.

A. L. JOHNSON, VICE CHAIRMAN, WAL-MART:

“I think one of Sam’s greatest strengths is that he is totally unpredictable. He is always his own person, totally independent in his thinking. As a result, he is not a rubber-stamp manager. He never rubber-stamps anything for anyone.

“Back when I was general merchandise manager, we didn’t have much computer support. So every Friday morning for six years, I would take my columnar pad with all the numbers on it into Sam’s office for him to review. Every morning that I went through those numbers, Sam would jot them down on his own pad and work through all the calculations himself. I never felt that he didn’t trust my judgment. He just felt that it was his function to make sure of everything. Sometimes he would work the numbers a little differently from the way I had, or argue with some of my conclusions, which kept me on my toes. The point is: I always knew I could not just go in there and lay a sheet of numbers in front of him and expect him to just accept it.

“As famous as Sam is for being a great motivator—and he deserves even more credit than he’s gotten for that—he is equally good at checking on the people he has motivated. You might call his style: management by looking over your shoulder.”

I’m always asked if there ever came a point, once we got rolling, when I knew what lay ahead. I don’t think that I did. All I knew was that we were rolling and that we were successful. We enjoyed it, and it looked like something we could continue. We had found a concept, certainly, that the customers liked. Even back then, I always said at the first sign of it getting out of control, the first time our numbers don’t come through as they should, we will pull in and put our arms around what we’ve built. Up to this point, of course, we haven’t had to do it.

FEROLD AREND:

“The truth is, we were working with a great idea. It was really easy to develop discounting in those small communities before things got competitive.

There wasn’t a lot of competition for us in the early days because nobody was discounting in the small communities. So when we discounted items, it was just an unheard-of concept outside the larger towns. The customers, of course, weren’t dumb. They had friends and relatives in the cities, and they had visited places where discounters were operating, so when they saw this happening in their town, well, shoot, they just flocked to our stores to take advantage of it.”

I guess Ferold is right about the competition—if you’re talking strictly about discounters. But there’s a paradox here that I think confused a lot of folks about us for a long time. For twenty years back East, they always said Wal-Mart never had any competition, and that we wouldn’t know what to do with it when it hit us. They forgot that we had come out of the variety store business, and that the heartland was the home ground for practically all the regional variety chains that developed in the U.S. In our Ben Franklin days, we had all the competition you could ever want from Sterling and TG&Y and Kuhn’s and all those other regionals. So while we may not have had any competition for discounting in those little towns, we weren’t strangers to competition. We were always looking at Gibson’s and any other regionals that might decide to come our way, and we knew what to do when they did: keep our prices as low as possible by keeping our costs as low as possible.

Managing that whole period of growth was the most exciting time of all for me personally. Really, there has never been anything quite like it in the history of retailing. It was the retail equivalent of a real gusher: the whole thing, as they say in Oklahoma and Texas, just sort of blowed. We were bringing great folks on board to help make it happen, but at that time, I was involved in every phase of the business: merchandising, real estate, construction, studying the competition, arranging the financing, keeping the books —everything. We were all working untold hours, and we were tremendously excited about what was going on. I’m not sure we even had time to realize just how phenomenal our growth rate in the seventies would look on a chart years later:

   STORES      SALES

1970 32 $ 31 million

1972 51 $ 78 million’

1974 78 $ 168 million

1976 125 $ 340 million

1978 195 $ 678 million

1980 276 $ 1.2 billion

In the early seventies, we had formed this cooperative research group among some of us discounters —mostly regionals—who didn’t compete with one another. Comparing notes with them made me realize just what an amazing performance Wal-Mart was turning in. I remember they were just astonished. They could not believe we could be establishing the number of stores that we were. We would be putting in fifty stores a year, when most of our group would be trying to start three, four, five, or six a year. It always confounded them. They would always ask, “How do you do it? There’s no way you can be doing that.”

But we were doing it. We just stayed on top of it, and, along with increasing our sales, we increased our profitability—from $1.2 million in 1970, to $41 million in 1980. On paper, we really had no right to do what we did. We were all pounding sand, and stretching our people and our talents to the absolute maximum. And don’t get me wrong: I’m not saying we didn’t have our share of growing pains.

FEROLD AREND:

“More than anything else, we had manpower problems—finding good people and getting them trained in a hurry. Because we always ran a real tight organization, we had no excess people in the stores so they had to get real good real fast. Back when I had been at Hested’s, and at Newberry’s, too, a guy had to have ten years’ experience before we’d even consider him to be what we called a manager-in-training. Down here, Sam would take people with hardly any retail experience, give them six months with us, and if he thought they showed any real potential to merchandise a store and manage people, he’d give them a chance. He’d make them an assistant manager. They were the ones who would go around and open all the new stores, and they would be next in line to manage their own store. In my opinion, most of them weren’t anywhere near ready to run stores, but Sam proved me wrong there. He finally convinced me. If you take someone who lacks the experience and the know-how but has the real desire and the willingness to work his tail off to get the job done, he’ll make up for what he lacks. And that proved true nine times out of ten. It was one way we were able to grow so fast.”

We were trying to put in as many merchandising programs as we could and give our stores as much support as possible during all this growth, but in the early seventies, that Wal-Mart manager was still pretty much out there on his own when it came to promoting items and moving the merchandise.

THOMAS JEFFERSON, EARLY WAL-MART DISTRICT MANAGER, HIRED FROM STERLING STORES, LATER. OPERATIONS MANAGER:

“Several times a year, most stores would have a big sidewalk promotion. In those days, we sold about as much merchandise off the sidewalks on weekends as we sold inside the store. You know, we’d rope off part of the parking lot, get a band, and have maybe a boatload sale. We would take our boats—we sold these John boats—put them up on sawhorses, and dump one item into each boat. We’d put big signs up calling them Boatload Sales. They still have sidewalk promotions today, but not like we once did. It doesn’t work that well anymore.”

While all this was going on in the early seventies, Ferold Arend and Ron Mayer and Bob Thornton and myself were still trying to get a handle on how to distribute to a growing number of stores in these small towns off the beaten path. It was one of those things that used to drive me crazy. I was always walking through the warehouse in Bentonville saying, “Where does this go?” “Who bought this?” “We’ve got too much of that!” Meanwhile, the guys out in the stores would be crying for this stuff, and we couldn’t get it out to them. I remember being very nervous when everybody decided we needed to buy our own trucks, but we did it. We had two tractors and four trailers, and the folks in the warehouse got to where they thought we needed four tractors and six trailers. I thought that was pretty extreme. So word would get out that I was coming out to the warehouse, and if they had an extra tractor or trailer sitting idle, they would haul it around to the other side of the building and hide it so I wouldn’t know we had anything empty.

THOMAS JEFFERSON:

“The faster we grew, the further behind we fell. We were always behind with our distribution. We never opened a warehouse soon enough, and we always had too many stores to service before the warehouse would get opened. Nowadays, I think they stay about one and a half distribution centers out front of demand, but back then we had a terrible time getting the freight to the stores. So we were renting outside warehouses, which were very expensive to operate, and we just had more than we could handle. Sometimes we would have five hundred trailers full of merchandise sitting around one of those warehouses. And it took time to deal with all that. We couldn’t get it out. Then the next day we’d get sixty boxcar loads. We’d have to unload the doggoned boxcars, and here the merchandise they wanted in the stores would be sitting there sometimes a week or a week and a half.”

It was a big problem, and one that worried me a lot, which is probably why as we moved along in the seventies, I just kept after folks like David Glass, who was still in the discount drug business up in Missouri, and Don Soderquist, who was running Ben Franklin, to come to work for us. I knew they were both big talents, and I knew we were going to need all the help we could get in all areas—but especially in the ones I wasn’t all that great at, such as distribution and systems. Like I said before, Ron Mayer had worked hard on that distribution system, introducing all the concepts like merchandise assembly, cross-docking, and transshipment. But I don’t think our distribution system ever really got under complete control until David Glass finally relented and came on board in 1976. More than anybody else, he’s responsible for building the sophisticated and efficient system we use today.

While Ron and Ferold were helping me run the company, and well before David joined us in the mid-seventies, Jack Shewmaker was coming on strong as a big talent. He had done a fantastic job in opening stores. Jack had been the manager of a Kroger SuperCenter which was a concept combining groceries and general merchandise not unlike our own supercenters today. So he had been a merchant, but he wasn’t overly experienced when I hired him. He was in that first wave of college men I had started to hire, and, being a graduate of Georgia Tech, he had that engineer’s love of systems and organization that we were still badly in need of. By now, I was really surrounding myself with guys who were good at all the things I tended to just sluff off, like organizing the company to handle the growth explosion we had started. If I hadn’t gone after those folks, and kept on doing it, we would have come apart somewhere there in the seventies, or we certainly wouldn’t have been able to pull off our really incredible expansion in the eighties. Getting an early start on all these systems, building a foundation for our distribution center development, starting to put data processing into the stores, really saved our bacon later on.

JACK SHEWMAKER:

“Sam and Ferold called me in one day and said, ‘We understand you’ve got some experience in writing policy manuals.’ I had written some for both Kroger and Coast-to-Coast Hardware Stores out of Minneapolis. So they said, ‘We want you to come in and write up our policies and procedures for us.’ I said, ‘Well, that’s nice, but that’s not really what I would like to do. I want to work with the merchandising people.’ And Sam said, ‘Well, we would kind of like you to do it anyway. How long do you think it will take to do it?’ I knew from experience it would take six months to a year to properly do this job. But I said, ‘I’ll do it in ninety days.’ Sam replied, ‘You’ve got sixty days.’ Sam never wants to wait for anything. He has no patience. That was probably the meld between us. That bias toward action. Anyway, we published it —360 pages of it—in fifty-nine days.”

As you’ll see later, Jack may have been the most controversial guy we ever had in senior management, but he dove right into systematizing things, and he became a great merchant too.

THOMAS JEFFERSON:

“That whole period, Mayer’s time of duty, and early Shewmaker, was when we really saw the systems and computers begin to come into our lives at the operations level—the store level. We had been using Class 5 cash registers in all our stores, old hand-crank jobs, you know, which were very slow. Ron talked Sam into buying Singer electric cash registers for the stores, which was a great idea because you couldn’t really have run a business much longer without electric registers. Only trouble was those Singer registers turned out to be temperamental as hell. Al Miles was the only manager we had who ever really figured out how to work one. So Mayer had the right idea but the wrong register.

“As for in-store computers, you’d have to give Shewmaker the credit for that. Not many of us gave in-store computers much thought. But Shewmaker studied all that stuff, and we would run with whatever he talked Sam into putting in the stores. It seems like we tried to better ourselves with some new gadget every year. That was the beginning of what turned into Wal-Mart’s communications system, I guess. But most of us were too busy in the stores to even think about where it was all leading.”

As we moved along in the seventies, we had very definitely become an effective retail entity, and we had set the stage for the even more phenomenal growth that was going to follow. It’s amazing that our competitors didn’t catch on to us quicker and try harder to stop us. Whenever we put a Wal-Mart store into a town, customers would just flock to us from the variety stores. It didn’t take those stores long to figure out that if they were going to stay in business against this thing Wal-Mart had created, they were going to have to go into it themselves. And most of them did eventually convert to discounting. Kuhn’s Big K became a discount chain. Sterling launched its Magic Mart discount chain. And Duckwall went into discounting.

Now, most of these guys already had distribution centers and systems in place, while we had to build one from scratch. So on paper we really didn’t stand a chance. What happened was that they didn’t really commit to discounting. They held on to their old variety store concepts too long. They were so accustomed to getting their 45 percent markup, they never let go. It was hard for them to take a blouse they’d been selling for $8.00, and sell it for $5.00, and only make 30 percent. With our low costs, our low expense structures, and our low prices, we were ending an era in the heartland. We shut the door on variety store thinking