How Walmart Grew From Small Towns, and Why South Korea Was Different

Walmart made a business of selling ordinary goods at low prices to a great many people. I had seen how well that idea could travel and knew at least one place where the stores had not stayed.

The company’s size gives the story its stakes. The more interesting question for me was what a shop had to do every day to make that size possible.

What happened in South Korea

Walmart sold its South Korean retail business to Shinsegae in 2006. The business operated 16 stores when the sale was announced.

Several explanations for its difficulties came to mind as I read.

1. A store format that did not fit the way many customers shopped.
2. Limited options for reaching some stores without a car.
3. A selection and presentation that could miss what customers came to buy.

A big parking lot and warehouse-style displays suit a customer making a large trip by car. They can be less attractive to somebody dropping in for dinner ingredients on the way home.

Access matters as much as the price on the shelf. Some sites were hard to reach by public transport, and local competitors had experience bringing customers in before rules restricted department-store and discount-store shuttles.

Fresh vegetables and other groceries matter to a shopper planning a Korean meal. How produce looks and what can be bought in a familiar quantity can matter as much as the overall range.

I read the withdrawal as a reminder that a store has to fit a set of trips and habits people already have.

The years Slater follows

Slater’s book appeared in 2003. It follows the beginnings of the business and the people who expanded it after Sam Walton, before Walmart’s South Korean withdrawal and other later changes.

That makes the book a history of how the company learned to grow. It gives you a chance to see why some of its choices looked sensible to the people making them at the time.

From Newport and Bentonville to the first Walmart

Walton began running a Ben Franklin variety-store franchise in Newport, Arkansas, in 1945. He later opened Walton’s 5&10 in Bentonville. The first Walmart opened in Rogers, Arkansas, in 1962.

Bentonville was a small town. Slater presents the choice to serve smaller places as part of the business rather than a temporary stop on the way to bigger cities.

Smaller markets offered customers who wanted lower prices and a chance to expand away from the immediate attention of larger competitors.

What Sam Walton did on store visits

The founder paid close attention to what a customer could buy at his stores and what the same goods cost somewhere else. Slater describes him visiting stores and asking about prices in person.

Walton spent where he thought a customer would notice the difference. He also spoke to staff to learn how a store worked when the people running it were busy.

The book remembers him turning up in a pickup and ordinary clothes, long after he had many stores to visit. The company also put its expectations into a few principles employees could remember.

Three expectations for the staff

1. Respect the people you work with.
2. Serve the customer.
3. Keep trying to do the work better.

Slater also recounts how a trip to South Korea inspired Walton to bring a group cheer back to Walmart. It is one example of the way he brought an observation from a visit into the daily life of the company.

Rules a store could use

The person who greets customers at the entrance became a recognizable feature of the store. It gives someone arriving a chance to ask a question before working out where to look.

The “sundown rule” asked staff to deal with requests that day. I can see how a short name made the expectation easier to repeat.

The “ten-foot rule” called on employees to acknowledge a shopper who came close and offer help.

Walton wanted to keep procedures simple as the business grew. Those rules show how he tried to bring the point of the job down to a specific exchange.

Going abroad

Walmart’s first international venture was in Mexico. It opened a Sam’s Club in Mexico City through a joint venture with Cifra in 1991.

Expansion continued under leaders including David Glass and Lee Scott. South Korea was among the markets the company entered. Its withdrawal would come after this book was published.

In Britain, Walmart entered by acquiring Asda. Slater presents the familiarity of the two companies’ approaches to discount retail as one reason the acquisition looked promising.

The German discount market

Germany was another difficult market. Established discount chains already understood how to operate spare stores and sell at prices customers expected.

The results Slater describes give a sense of how little margin the company had to work with. Walmart later agreed to dispose of its German operation as well.

A retailer that had to learn to face the media

Staying out of the news may have been possible when Walton’s stores were still concentrated in small towns. Slater describes a company that struggled to adjust once its decisions became a national story.

One account follows a television feature the company had hoped would reflect well on it. Management’s expectations and the story viewers saw turned out to be very different.

A different approach to legal disputes

Slater also discusses how the company handled litigation. After costly confrontations, it brought more resources into its legal operation and changed how it approached disputes.

The book gives more detail on each of those choices. I kept returning to the connection between a store’s daily habits and the kind of organization it becomes as those habits are repeated.

It made me want to walk through a Walmart and pay more attention than I would on a quick trip for groceries. In South Korea I would have to find other stores to make the comparison.

Coupang and E-Mart already give me some points of reference at home. Walmart’s history gave me another way to ask why the place I choose to shop can depend on where I am and how I intend to get there.

Book details

The Wal-Mart Decade

Author

Robert Slater (Korean translation by Nam Mun-hui)

Korean edition published

November 20, 2003

ISBN-13

9788973375929

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