wal mart store 1997Annual ReportDocument Transcript
A ‘global brand’: Hometown values circle the globe
The value of
Keeping the FUN in QUALITY& VALUE!
available exclusively at
TABLE OF CONTENTS
About the cover
Tracey Murphy, her father
Bob Brown and her husband Dale
Murphy are all managers with
Wal-Mart — and don’t forget her
brother, mother-in-law and
brother-in-law! For more on Tracey
2 President’s Message and her Wal-Mart family, see page 16.
4 Inside Track
9 Rebirth in Vermont year was record-
Wal-Mart anchors revitalized downtown shattering ... and the
best is yet to come,
9 Making miracles David Glass says in
Our associates’ own “Children’s Miracle” Message. See page 2.
12 Magic Wand Washington powerhouse
Life in the technological fast lane (and sculptor) Paula
Stern is just one of the
14 Everybody’s Hometown notables who lend their
know-how to Wal-Mart’s
Wal-Mart culture drives international growth
Board of Directors. See
Inside Track, page 4.
16 The Future of Retailing
Supercenters lead way to 21st century Cutting edge
20 The Value Equation technology is a
Building membership benefits at SAM’S Club
FINANCIALS page 12.
22 11 Year Financial Summary
24 Management’s Discussion and Analysis
26 Consolidated Statements of Income Agnes Seto is
“having much more
27 Consolidated Balance Sheets fun” now that
28 Consolidated Statements of Shareholders’ Equity expanded to Canada
— not to mention
29 Consolidated Statements of Cash Flows six other countries
See page 14.
37 Corporate Information
Paul R. Carter
John A. Cooper, Jr.
Stanley C. Gault
David D. Glass
Frederick S. Humphries
E. Stanley Kroenke
Elizabeth A. Sanders
Jack C. Shewmaker
Donald G. Soderquist
John T. Walton
S. Robson Walton
Chairman of the Board
S. Robson Walton
Chief Executive Officer
CEO David Glass looks forward to a world of future prospects.
David D. Glass
Chief Operating Officer
Donald G. Soderquist
Executive Vice President
President, Wal-Mart Realty
Building shareholder value
Paul R. Carter
Executive Vice President -
al-Mart has a history of rising growth in the Company’s cash
Thomas M. Coughlin
to the challenge. After a flow, we now can finance our
Executive Vice President -
disappointing year in fiscal aggressive capital expenditures
1996, our associates responded program internally and still
with a solid performance in have excess cash available for
Executive Vice President
fiscal 1997. Sales for the fiscal distribution to our shareholders.
President - Sam’s
year approached $105 billion This strong sustainable cash
Joseph S. Hardin, Jr.
and earnings topped $3 billion. flow allowed us to announce
Executive Vice President Each operating division two actions to enhance
President - International
generated higher comparable shareholder value. The first was
Bob L. Martin
sales growth and improved to increase our dividend by 29%
Executive Vice President operating margins. Our and the second was to increase
Chief Financial Officer
Wal-Mart operations experienced the size of our share repurchase
John B. Menzer
some of the best customer program with the intent to
approval scores in our history repurchase up to $2 billion
Executive Vice President -
and SAM’S Club showed solid worth of stock over the next
H. Lee Scott, Jr.
improvement in comparable 12 to 18 months.
sales, membership, merchan- Our first priority remains
Executive Vice President -
Supercenter dise selection and income. profitable internal growth.
Nick White Asset management and cash Future increases in the
flow were key themes this year. dividend and repurchase
Secretary, General Counsel
We generated over $3 billion in program will depend on the
Robert K. Rhoads
free cash flow and increased availability of our growth
our return on assets. With the opportunities.
plenty of room left to grow. The value our customers
In the United States, Wal-Mart respond to in the United States
holds only 7% of a $1.4 trillion is enthusiastically received
retail market. That leaves a wherever we go. In China,
tremendous opportunity for where we recently opened our
future growth. first units, the people already
The supermarket industry, know what Wal-Mart is all
amounting to $425 billion a about. Our three story
year, is a great opportunity for Supercenter had 80,000 visitors
continued growth. It’s almost on its first Saturday.
three times the size of the With over 300 locations and
discount store industry, where more than 50,000 associates
Wal-Mart is one of the three outside the United States,
retailers that, combined, hold Wal-Mart has become a true
almost 85 percent of the market. global brand name, with
Yet in the grocery segment, the worldwide appeal resembling
top five players constitute less Coca-Cola or McDonald’s.
than 25%. The Wal-Mart way of doing
The significant increase in Then there is the rest of the business makes us one of
both the dividend and the world. Our international the world’s most recognizable
share repurchase program division reported sales in companies - which translates
demonstrate our confidence excess of $5 billion and these to loyal customers and steady
in the Company’s future earn- operations could represent profitable growth.
ings and cash flow growth. 10 percent of our total sales in Wal-Mart associates have
We believe our double digit the next 5 years. every right to be proud of what
earnings growth combined with The international division we’ve built, from our very first
the new shareholder initiatives was profitable for the year with store to today’s worldwide
will allow us to achieve network of nearly 3,000
our targeted annual
In June of 1990, Sam stores and clubs. We’re the
total shareholder return company that works
Walton predicted Wal-Mart
of 15%. because of our people - the
In June of 1990, at our associates who make it
would reach $100 billion in
annual shareholder’s happen every day.
meeting, Sam Walton So if anyone wonders
sales by the year 2000. At
predicted Wal-Mart where our next $100
would reach $100 billion billion will come from – it
that time, we thought the
in sales by the year will come from customers
goal was quite a stretch.
2000. At that time, we who recognize value
thought the goal was throughout the world and
quite a stretch. After all, from our associates who
it took us 10 years to reach Canada and Puerto Rico will deliver it with a smile.
$100 million and another 7 to showing excellent results and I am really excited about the
reach our first billion. But our Mexico achieving profitability next year. We have so much
strength has always been our in a difficult economy. opportunity and our team is
dedicated associates, their ability Only three years after focused on continuing to serve
to work together, and the acquiring the Woolco stores in our customers in such a way
support of our loyal customers. Canada, Wal-Mart has become that clearly indicates they are
So 3 years ahead of schedule, Canada’s highest volume the boss. But more importantly,
we reached that goal. discount retailer and in Mexico they are focused on value.
Even though we exceeded our joint venture is also the Value to our customers and
that lofty goal, there is still country’s largest retailer. value to our shareholders.
‘Wal-Mart is welcoming’:
Values are the ties that bind our
A sense of community draws Paula Stern to
Wal-Mart. The Washington, D.C.-based
international trade consultant feels at home
shopping at Wal-Mart, where the associates are
friendly and the customers diverse. “Wal-Mart
is so inclusive,” she says.
Stern, one of nine outside directors on the
Wal-Mart board, is proud to be associated with
the company because of its positive impact.
“In significant ways, Wal-Mart has affected the Frederick Humphries bought his Prince tennis
racket at Wal-Mart, along with another important
standard of living of American families,” agrees
outdoor item. “I have found a wonderful barbecue
grill,” he says. “I like the quality of goods there.”
director Betsy Sanders, a management consultant.
Humphries, the president of Florida A&M
Here’s an inside look at the values these University in Tallahassee since 1985, also likes
the “upbeatness” of Wal-Mart associates. Humphries
important members bring to our Wal-Mart family. is pretty upbeat himself — about Wal-Mart’s
community involvement and associate recruitment
programs, and its efforts to create jobs.
Artistry helps consultant sculpt trade policy
Paula Stern advises President
Clinton on international trade policy
and is chairwoman of the Advisory
Committee of the U.S. Export-Import
bank. She’s an important figure in
Washington. But there’s also an
artistic side to this former
chairwoman of the International
Trade Commission. Stern loves to
sculpt in clay, especially busts of
family members. If she weren’t an
international trade consultant, Stern
says, she’d spend her days in artistic
pursuits. “Instead of intellectualizing,
I’d be reading a lot more poetry and
listening to a lot more individual
expression,” she says. She also would
spend more time with her family
before her children leave the nest.
Can’t beat the upbeat...
A personal ‘search for excellence’
Stephen Friedman, senior chairman and limited partner of
Goldman Sachs & Co., equates Wal-Mart with excellence.
The company constantly strives to satisfy customers and
refuses to settle for “good enough,” he says. “It is one of the
very few companies in the world which has genuinely
sparked a revolution.” Besides his position on the Wal-Mart
board, Friedman holds leadership roles including vice
chairman of the Columbia University trustees and executive
committee chairman of the Brookings Institution.
Jack Shewmaker somehow
finds time to fish in the
‘Vision, mission and camaraderie’
Patagonia Mountains of South
America, consult with retail,
distribution and manufacturing
companies in South Africa,
Australia and Asia, and ski
with his grandchildren.
He announced his “semi-
retirement” from Wal-Mart
in 1988 after 18 years with our
company, during which he
rose from district manager to
Vice Chairman and Chief
Financial Officer. “I started
there when Wal-Mart was
small, with $30 million
in sales,” he says. “No one
imagined it would be as big as
it is today.” Shewmaker, named
one of the 10 Most Influential
People in Mass Retail Today
by Discount Merchandiser
in 1997, says Wal-Mart is a
phenomenon that grew from
“a desire to do something
different, better, and more
efficiently with a sense of vision,
mission, and camaraderie.”
Hobbies? Service is his hobby!
Raised on retailing
Stan Kroenke. Retailing has been part of Stan
Kroenke’s life since he swept out his father’s hard-
ware store as a child. Kroenke later worked in
retail to put himself through college and graduate
school. “Being exposed to people like Bud and Sam
Walton had a major impact on my life,” Kroenke
says. Today, he owns the Kroenke Group, a nation-
al investment, development, and commercial real
estate company based in Columbia, Missouri. He’s
also co-owner of the St. Louis Rams football team.
“Expanding into the sports business has been an
interesting and challenging experience,” he says.
John Cooper, chairman of the Arkansas
land development company, Cooper
Communities Inc., could retire and take
the time to enjoy the beauty of the Arkansas
outdoors. But there’s no golfing or fishing
or other leisurely pursuits for Cooper, who
believes one of his most important roles is
serving the community. “I really think
all a person can do is to be helpful to
somebody,” he said. Cooper has helped
his neighbors — and helped protect the
outdoors — as a founding member of the
Arkansas Nature Conservancy. When he’s
not lending his experience to the Wal-Mart
board, he also serves on the boards of
J.B. Hunt and Entergy Corp.
Elizabeth A. “Betsy” Sanders needs solitude to
meditate, write and “be a friend,” to balance out
her heavy business and community commitments.
That’s why she left corporate life in 1990 to form
The Sanders Partnership, a consulting firm.
Sanders and her family live near the Sierra
Nevada mountains in northern California. Before
heading for the hills, Sanders was vice president
and general manager for Nordstrom Inc., earning
national recognition as an expert on customer
service. She’s always admired Wal-Mart for low
prices, top-quality products and, yes, customer
service. This, she says, helps American families
stretch their dollars for other goods and improves
their standard of living. “There’s nothing ordinary
Family, friendship first
about this company,” she says.
The modesty of a man who’s reached the top
Stanley Gault, retired chairman of
the Goodyear Tire & Rubber Co. and,
before that, Rubbermaid Inc., has
been honored by countless business
groups and publications such as
Fortune magazine. Perhaps most
notably, two years ago he was named
International Executive of the Year
by Brigham Young University for
his leadership and high moral
and ethical standards. In addition,
he brings the perspective of
Wal-Mart’s vendor-partners to our
board. Despite the accolades he’s
received, Gault is modest about
his role at Wal-Mart. “I hope to
use my almost 50 years of (business)
experience to the benefit of
Wal-Mart associates, customers
and shareholders,” he says.
Making business better
John Walton likes to have his
“old van worked on” in the
Wal-Mart automotive department
while he shops. Walton enjoys
the associates at his local
Wal-Mart — they’re almost family.
“I’ve grown up with the company,”
says the son of founder
Sam Walton. In fact, John Walton
was Wal-Mart’s second pilot
(Sam was No. 1). John’s current
business interests include invest-
ments in small companies in a
wide variety of industries. As he
considers American business,
Walton is convinced that Wal-Mart
has been a positive force because
of its integrity, customer service,
and its “influence on the shopping
experience.” Before Sam Walton
died, John told him that “what
he had done went far beyond
Wal-Mart to make American
business better.” When he’s not
involved with business, John
Walton is working to make a
difference in American education.
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Children’s Miracle Network
Taylor Dippery is no ordinary
Wal-Mart associate. At Store
#1607 in Lewistown, PA, the
associates consider little Taylor
their special miracle.
At 18 months of age, Taylor
learned to walk at Wal-Mart.
Rebirth in Rutland: From left to right, Mayor Jeff Wennberg and Wal-Mart
associates Chet Landon, Gail Scribner and Brenda Heath proudly show off Using her special walker, she
a revitalized downtown.
now scoots all over the store
with her grandfather, wearing
‘THE JEWEL IN OUR CROWN’ her honorary associate’s name
Wal-Mart helps set downtown on the right track tag and giving smiles and greet-
ings to everyone she passes.
“Phenomenal” is a word Jeff on an aging, 1960s-vintage It was a hospital in the
Wennberg uses a lot — especially strip center.
when he’s talking about Wal-Mart. Then began years of planning
Wennberg is the mayor of to revitalize the city’s core.
Rutland, VT, where a Wal-Mart When the Wal-Mart lease was
store that opened this January announced as the anchor of
is the linchpin of an eight-year the project, the Rutland Daily
downtown revitalization project. Herald wrote in an April
“Wal-Mart has been better 1996 editorial:
than expected for us, and we There is a feel of life on the streets
had extraordinarily high of downtown Rutland that is
expectations,” Wennberg said. new. It is the result of
Rutland, population 18,000, all these developments. It is
is the second-largest city in
the payoff for years of work
“Associate” Taylor Dippery
Vermont. Because its business
by numerous people in the
district serves a sizable
community who have refused to Children’s Miracle Network
surrounding region, downtown
give in to drift and defeatism. (CMN) that made it possible
Rutland is “about what you’d
With the new Wal-Mart, of for Taylor to get around, and
expect for a city of 60,000,”
course, Rutland added 140 new Store #1607 did its part to help.
jobs and learned the Wal-Mart Last year, that store’s associates
Or anyway, it is now — thanks
way of doing business. raised $20,500 for their local
to the redevelopment project
“Their philanthropy is CMN hospital, and helped
legendary, not to mention their hundreds of children like Taylor.
“Eight years ago, downtown
involvement in the community,” Wal-Mart associates have
Rutland was perceived as being
Wennberg said. “What Wal-Mart raised more than $71 million for
in a serious decline,” Wennberg
represents is economic prosper- CMN since Wal-Mart became
said. “There’d been no significant
ity and growth in our central official retail sponsor in 1988.
private-sector investment in quite
business district, because they In calendar 1996, Wal-Mart
some time. Downtown was
are such a phenomenal draw. donated $14.3 million, or 10 per-
suffering a slow death.”
The Wal-Mart opening is the
Rutland’s central business cent, of the $143 million raised
jewel in our crown.”
district, built around 20 acres in the entire CMN campaign.
of railroad yards, was focused
THE “CLAM JUNIOR“ This was an extreme act of
customer service, beyond the
I am writing because
call of duty. For this excellent
of an experience that I shall
always remember with a smile. service (that did not have to
This experience involved many happen), Wal-Mart has earned a
different Wal-Mart associates faithful shopper in me.
in various Wal-Mart stores. Helen Walton, Wal-Mart’s First Lady
After making many calls
Roberta DeLeon A HISTORY OF CHANGE
searching for an ice fishing
Chula Vista, CA Recently, Helen Walton took
shelter, the “Clam Junior,”
a moment to share her thoughts
I reached Dan Curtis at the
GUARDIAN ANGEL on Wal-Mart’s focus, leadership
Concord, NH, store. At 8:45
I am writing this letter to
in the evening, this gentleman
“As our Company has grown,
without reservation and commend one of your assistant
questions have come up about
with total willingness, was managers, Ms. Sue Cantu.
where Wal-Mart is going and if
helping me and then apologized She went well above and
Sam would approve,” Helen said.
because he would have to call beyond what any store manager
“I believe he would. I feel good
me back in 15 minutes. would normally do to help me.
about our leadership, especially
As promised, the phone rang The heat had been out all day
in this last year. People have
at 9 p.m. Dan Curtis was return- in my granddaughter’s dorm
accepted the fact that there is new
ing my call with not only the room, and the temperature
leadership and they are doing a
store locations, but with all the was in the teens. I tried calling
good job. I think their stewardship
phone numbers and the quantity
the residence hall; but they
has been absolutely marvelous,”
that each store might still have.
were closed because of the she said.
The actions and reactions
weather. I then thought of the “We need to continue to
of these employees display the
Wal-Mart Store in Waco — emphasize putting the customer
essence of a quality organization.
I suppose because our local first. Everyone has a customer and
Very Sincerely, Wal-Mart is so helpful to they need to see that the people
Linda A. Betti our community. needing information or attention
Mendon, MA I called Ms. Cantu and asked are getting it. Another thing that
if there was any way she could Sam always said was ‘respect the
WAL-MART DELIVERS individual.’ That is so important.
help. She was shorthanded
“Never fail to be open to change
On 1-9-97 I went to Wal-Mart because of the weather; but
when there are ways to improve
in Chula Vista to purchase a within the hour, she had
what you’re doing,” Helen said.
ping-pong table. Juan Wood, delivered two blankets and
“We can’t say, ‘That’s not the way
an employee in sporting goods, an electric heater to the dorm.
we do it.’ The world is changing
assisted me. I told him I did not Saint Augustine said, “Every
too fast. We’ve got to be ready to
have a truck to transport the visible thing in the world is
change with it.
table. He spoke to his manager, put in charge of an angel.”
“If we keep these things in mind,
Don Olson, to see if they could Ms. Cantu is truly an angel.
Wal-Mart is going to keep growing
Sincerely, and getting better,” said Helen.
On 1-10-97 Juan Wood and
Don Olson delivered the table
to my residence.
1. 11. Name Sam’s favorite dog.
Where is the first
Wal-Mart located? 12. What did Wal-Mart stock
2. Wal-Mart’s first people actually sell for the very
greeter was in first day it was traded?
which store? 13. What year did the first
3. What charity receives Wal-Mart open?
money from sales of 14. What year did Wal-Mart
Sam’s American Choice become a publicly
products? owned company?
4. Where did Sam and 15. Wal-Mart satellite
Helen meet? network began
5. Wal-Mart first hit broadcasting in
$1 billion in profits in what year?
what year? 16. SAM’S Club was started
6. What year was Sam in what year?
Now, no matter where you
Walton born? 17. Helen Walton holds a
shop or what you buy, you can
7. What year did Sam write B.S. in what field?
his autobiography? take advantage of Wal-Mart’s
18. What percentage of sales
8. Sam was presented with goes to run the entire legendary savings and value.
the Presidential Medal of general offices, from the
With the Wal-Mart MasterCard®
Freedom in what year? chairman of the board to
from Chase you pay no annual
9. What year did Sam do
fee and a low 14.48% APR
19. Who came up with the
the Hula on Wall Street?
idea of profit sharing?
10. How much did Wal-Mart fixed rate for purchases.
20. Sam thought about
Store #1 do in its first Plus, save even more with
year of operation? running for what
our low 9.9% fixed APR
on transferred balances.
Did you know? Best of all, the Wal-Mart
name is recognized around
Companywide, Wal-Mart recycles over 700,000 tons of cardboard,
paper and plastic each year. the world. So, you can use
Wal-Mart sold about 80 million Valentine cards this February your new MasterCard at more
across the United States.
than 13 million locations.
Wal-Mart is the largest private sector employer in the United States.
Don’t wait to get great
Wal-Mart’s Private Fleet drives more than 1 million miles a day.
Making this happen requires the purchase of more than $50 million Wal-Mart savings every day,
of fuel a year.
apply in the store or call:
20. President of the United States.
14. 1970. 15. 1983. 16. 1983. 17. Finance. 18. 2%. 19. Helen Walton.
7. 1992. 8. 1992. 9. 1984. 10. $1 million. 11. Old Roy. 12. $16.50. 13. 1962.
3. Competitive Edge Scholarship Program. 4. In a bowling alley. 5. 1990. 6. 1918.
Answers 1. Rogers, Arkansas. 2. Crowley, Louisiana.
in front on price
The magic wand gives our associates a window on a world of Wal-Mart merchandise.
t any given moment, a typical a radio-frequency network to through walls” to find what our
A Wal-Mart Discount Store has in-store terminals. It’s a high-tech customers want, when they want
more than 70,000 standard conduit to an internal information it. But that’s just the proverbial tip
items in stock. Every one of system that gives every associate of Wal-Mart’s high-tech iceberg.
them has to be identified, ordered, a window on the world of “What it’s really about is
inventoried and replenished. Wal-Mart merchandise. putting information in people’s
A typical Supercenter is even There are “magic wands,” hands,” said Randy Mott,
tougher to stock, since it also sometimes dozens of them, Senior Vice President and
carries more than 20,000 in the hands of associates at Chief Information Officer.
additional grocery items, a lot every Wal-Mart store. They help “We’re careful not to get too
of them perishable. So they us keep up-to-the-minute track enamored with all the bells
have to be reordered frequently, of the inventory on hand, and whistles of technology.
sometimes daily. deliveries and backup mer- It’s there to support people.”
So how do we do it? We wave chandise in stock at Wal-Mart With an annual technology
a magic wand! distribution centers. and communication budget of
That “magic wand” is actually The computerized wands $500 million and an information
a handheld computer, linked by are amazing enough, “seeing systems staff of 1,200, Wal-Mart
leads the industry in information expense in planning their where our technology comes
technology — and we’re not production and distribution, in, because the best way to
slowing down. We know our which translates to lower improve both service and
future earnings growth has merchandise costs. merchandising is to get it to
to come not just from increased For another example of our customers faster and
market share, but from increased leveraging technology, Mott more efficiently.
productivity. That means mentioned the item locator “Speed of delivery is a key
Wal-Mart is dedicated to giving system. This system enables competitive advantage, Mott
every associate the technological associates to scan an item and said. Fortunately, he added,
tools to work smarter every day. electronically check on its here at Wal-Mart, one thing
But this is Wal-Mart, we’re availability in other area stores. people are comfortable with
not just developing technology “That’s a function that lets is change.”
for technology’s sake.
Our investments in
“Our technology helps us buy wands” to the
systems are measured
millions of lines of
the right merchandise at the
in terms of their
our own computer
effectiveness for our
right time, and have it in the code and the world’s
stores and customers.
“With this technology,
right place at the right price.” database, Wal-Mart
we’re getting better,
is out in front — and
quicker and more
picking up speed.
accurate information to manage associates leverage our shared
As Don Soderquist, our Chief
and control every aspect of our information to provide even
Operating Officer, is fond of
business,” Mott said. “Wal-Mart better customer service,”
saying, ‘we don’t sell to our
has always been intensely Mott said. “It’s taking
conscious of holding down customers. We buy for our
advantage of technology to
expenses, because that’s customers,’ Mott said. “Our
add a little extra service
another way we can have lower technology helps us buy the
without adding a lot of cost.”
prices, better merchandise and right merchandise at the right
Wal-Mart’s constant drive to
service for our customers and time, and have it in the right
improve can be summed up in
better returns for our investors. place at the right price.”
one word: Efficiency! And that’s
“We may be talking about
systems, but the way we manage
them is pure Wal-Mart.”
In the world of information
technology, Wal-Mart has long
been known as a leader. Earlier
this year, we were recognized
by Computerworld and
Smithsonian Magazine as one
of the top five innovators
in information technology
The award recognized
the Retail Link system, which
provides sales data — by item,
by store, by day — to our
vendor-partners. That helps
suppliers save time and CIO Randy Mott: a bigger bang for the technology buck.
A ‘GLOBAL BRAND’
VALUE IN ANY
gnes Seto will be the
A first person to tell you.
“I consider myself
very fortunate to be
part of the Wal-Mart International
family,” Seto said. “I am having
much more fun than before.”
She leaves no doubt about
that, at least when it comes to
her job. After a long career with
the Woolco chain in Canada,
Seto is now a buyer with
Wal-Mart Canada in Toronto.
Wal-Mart acquired 122
Canadian Woolco stores
in 1994, and immediately
embarked on a multimillion-
dollar plan that saw the stores
revamped and remerchandised
in less than a year. Wal-Mart
Canada has already become
that nation’s No. 1 discount
chain, and is on the verge
of becoming Canada’s largest
retailer of any sort.
And Canada is just one of
the seven countries worldwide
in Wal-Mart’s international
expansion. With more than
50,000 associates and over 300
locations outside the United
States, Wal-Mart is already
serving some 5 million
customers every week.
The International Division was
profitable in fiscal 1997, driven
by a strong fourth quarter. And
Even in Shenzen, China, “Wal-Mart” translates to value. the division’s profitability is
expected to improve this year.
“We set specific goals for sales, “We have always been very
inventory and gross margins. proud of the company,” Garza
“We treat our customers said. “My husband was so
as No. 1. excited when he heard about
“We are all equal in this this, he came home and said,
company–we just have different ‘Guess what? We’re going to
jobs to do.” Monterey! We’re going to pass
Part of the credit for the on the Wal-Mart culture!’
Agnes Seto, Wal-Mart Canada
worldwide expansion of “Our associates in Mexico
Wal-Mart culture should go to know retail; it’s the culture
“The Wal-Mart name is better
known outside the United the 170-some associates who we brought that makes the
States than any of us imagine,” are affectionately known as difference,” Garza said. “It was
said Bob L. Martin, President “expatriates” — associates who so easy for us to work together,
of the International Division. go to work in international like big kids having fun.”
“We are a global brand name. locations for two or three years, Community involvement,
To customers everywhere it sharing their knowledge with responding to local needs,
means low cost, best value,
greatest selection of quality
merchandise and highest
standards of customer service.
“It takes time to make money
in these markets, but the fact
that International has grown
to $5 billion in sales in less than
five years gives us an idea of
how great the potential is.”
The Wal-Mart culture has
proven that it is transportable
The Wal-Mart Supercenter looks right at home anywhere in the world.
to other cultures worldwide.
The international market is new international associates. merchandise preferences, and
virtually unlimited, and the “It doesn’t become dull, buying locally are all hallmarks
farther the Wal-Mart “global not for one moment,” laughed of the international Wal-Marts,
brand” reaches around the Erlinda Garza, who is nearing just as they are in the
world, the greater the opportunity the end of her stint in Monterey, United States.
for long-term growth. Mexico. Garza is a co-manager Perhaps it is Wal-Mart’s
To see just how distinctive — of a Supercenter that was emphasis on serving its
and advantageous — the
built from the ground up hometown — wherever that
Wal-Mart culture is, you only
with the help of a small team may be — that makes Wal-Mart
have to meet someone like
of expatriates. culture travel so well. Garza’s
Seto, who knows the other
Garza and her husband Mexican associates, for
side of the street from first-hand
Chris, who works at another example, quickly became
store in Monterey, are both devotees of the Wal-Mart way.
Asked how things are different
natives of Corpus Christi, Texas. “I’ll miss the people,” Garza
now at Wal-Mart Canada, Seto’s
They had worked at several said as she prepared to return
Wal-Marts in Texas and to the United States. “They’re
“We have the most advanced
Arkansas before they were so motivated, they’re so willing
computer technology as tools to
asked if they’d like to help in the to say, ‘I’m going to do it.’ As
do our job, whereas before a lot
international expansion. Their long as we have people like
of reports were not available for
us to analyze our business. answer? “You bet we would!” that, we’ll be in good shape.”
SUPERCENTERS LEAD THE WAY
TO THE FUTURE OF RETAILING
Truly a Wal-Mart family: Front
row, left to right: Mike Murphy,
Barbara Murphy, Tracey Murphy
and Dale Murphy; back row:
Bob Brown and Mike Brown.
hen Tracey Murphy
W was introduced on
the main stage at
Wal-Mart’s 1997 year-beginning
store managers’ meeting, the
term “Wal-Mart family” took on
a whole new meaning.
Her husband, Dale Murphy,
manages a store in Kansas City,
Missouri. Her father, Bob
Brown, is a district manager
with the Supercenter division.
Her brother, Mike Brown, man-
ages a SAM’S Club location. She
has a mother-in-law who’s a
department manager and a
brother-in-law who’s a store
manager too. “Truly a Wal-Mart
family,” as CEO David Glass
told the 3,500 Wal-Mart associates
at the meeting.
One-stop shopping: Convenience “I grew up with Wal-Mart,”
Tracey Murphy said later,
is key for Supercenter manager
over a cup of coffee at the
Ann Burchett: Personal
shopper in cyberspace.
Supercenter she manages in an age when consumers “Before you needed to go to a
in Harrisonville, Missouri. “My complain that they don’t have grocery store and any number
dad has been with Wal-Mart for enough time to shop. of specialty retailers to get what
20 years, and I always had an The Supercenter “works you needed. Now you can just
interest in retail. So here I am, everywhere, and we think it go to the Supercenter.
after 14 years with Wal-Mart.” is quite likely going to prove “We always preach that we
There are many families to be the most flexible retail sell for less, so we’re saving
like Murphy’s represented concept ever and, by definition, people both time and money,”
in Wal-Mart, and it’s only to have the longest life yet she said. “It’s real convenient
appropriate that she works achieved,” according to a recent for most customers.”
in the Supercenter division, analyst’s report by CS First And while the Supercenter
where Wal-Mart “family Boston Corp. offers the shopping of tomorrow,
values” combine with the Focusing on the Supercenter Ann Burchett is in a stockroom
industry’s hottest shopping division as a growth vehicle, the at the back of the Harrisonville
format to lead our company CS First Boston analyst gave store, getting a peek at the day
into the future of retailing. Wal-Mart stock a “strong after tomorrow.
With its blend of a discount buy” rating. That’s where Burchett,
store with groceries and The Company’s fastest- a seven-year Wal-Mart associate,
such additional services growing division, Supercenters handles fulfillment for orders
as restaurants, Vision Centers, combine one-stop convenience received through Wal-Mart
Lube Express, hair styling, dry with Wal-Mart’s focus on top- Online, our World Wide Web
cleaning, shoe repair and bank- quality merchandise, services site, on which an experimental
ing, the Supercenter is designed and food at everyday low prices. online shopping service was
for shopping convenience — “It’s one-stop shopping for rolled out last November.
Wal-Mart changes because
a sizable competitive advantage most people,” Murphy said.
the world changes. Our customers
FISCAL 1997 END OF
are constantly looking for new
YEAR STORE COUNTS
ways to meet their needs.
That’s why, after studying Supercenters
Discount Stores SAM'S Clubs
catalog shopping and TV
Alabama 54 22 8 14 0
shopping and a plethora of
Alaska 0 3
3 12 0
British Columbia 0
Information Age innovations,
Arizona 33 0 6 9 0
Wal-Mart has gone on line,
Arkansas 54 22 4 4 0
New Brunswick 0
testing one of today’s most excit- California 95 0 24 7 0
ing ways to shop without shops. Colorado 32 4 10 7 0
Nova Scotia 0
Internet or no, Burchett said, Connecticut 0 3
9 1 0
NW Territories 0
the basics of Wal-Mart Online Delaware 1 1
2 50 0
Florida 109 23 31 24 0
are pure Wal-Mart.
Georgia 65 22 15 8 0
“Really, I’m like their personal
Hawaii 0 1
5 136 0 0
shopper,” she said. “They may
Idaho 0 1
be surfing the Web on their 3
Illinois 98 8 24
computer, but when they hit our 2
Indiana 62 11 14
site, we want the service to be 106*
Iowa 45 0 7
just as good as they get walking Kansas 44 3 5
into a Wal-Mart.” Kentucky 53 15 5
Louisiana 58 17
So far, Murphy noted, U.S. 9
Maine 19 0 3
military personnel stationed 249 26 39
Maryland 21 0 10
overseas have been among the *Includes 3 Superamas,
Massachusetts 25 0 4 25 Bodegas, 4 Aurreras,
most enthusiastic customers 67 Vips and 7 Suburbias
Michigan 44 0 21
of Wal-Mart Online. The electronics
Minnesota 33 0 9
department is a particularly big Mississippi 45 11 4
hit with these cyber-customers. Missouri 79 29 11 INT'L.
“Even after shipping cost, Montana 0 1
they’re getting a great price and Nebraska 13 4 3
Nevada 10 0 2
selection”, Murphy said.
New Hampshire 16 0 4
(You can check out the on-line
New Jersey 14 0 6
shopping experience of Wal-Mart
New Mexico 19 0 3
on the Web by going to
New York 48 5 17
http://www.wal-mart.com and INT'L.
North Carolina 82 3 14
clicking on “Go Shopping.”) North Dakota 0 2
From the growth of the Ohio 77 0 22
Supercenter concept to such Oklahoma 61 17 6
futuristic ideas as Internet shop- 0 0
Pennsylvania 49 10 18
ping, Wal-Mart is still on the
Rhode Island 0 1
leading edge of retailing — driven
South Carolina 46 6 8
by associates like Murphy and U.S. INT'L.
South Dakota 0 2
her own Wal-Mart family.
Tennessee 63 25 10
David Glass, President and Texas 173 69 51
CEO, sums up the Supercenter Utah 14 0 5
concept simply: “I believe Vermont 0 0
Supercenters will be to the next Virginia 35 14 10
Washington 18 0 2
decade what discount stores
West Virginia 12 3 3
were to the last, and that means
Wisconsin 54 0 11
Wal-Mart will continue to be
Wyoming 0 2
a better company with each
U.S. TOTAL 1,960 344 436 2,209 370 475
Merchandise, price and more! Dayna King helps SAM’S Club give members the best value in the business.
BUILDS VALUE FOR MEMBERS
he first thing she noticed President for SAM’S Club , King “While wholesale prices on
T when she came to work is responsible for 76 clubs quality merchandise drive our
for Wal-Mart nine years ago, in the northeast United States — business,” King said, “the
Dayna King says, was that an area extending from membership gets even more
“this company has always been Lexington, KY, to Bangor, ME. valuable with our wide variety
interested in what I could offer, Her work and her ideas help of additional services and
both from a work standpoint guide Wal-Mart’s membership member benefits.”
and an idea standpoint. warehouse division as it That kind of value is equally
“I thrived in that kind continues an intensive program relevant to both kinds of
of environment,” King added. of creating more value than ever SAM’S Club members — Business
Indeed. As a Regional Vice for SAM’S Club members. Members and Advantage
(individual) Members. program offers a 1 percent something we just do once
“We strive to create value rebate on everything they buy. and forget about it,” Hardin
for our members, first and said. “We’re trying to exceed
• And the list of membership
foremost by providing small members’ expectations by
benefits just goes on and
businesses with top-quality working to be more consistent.”
on... significant discounts
merchandise at exceptional And so SAM’S Club strides
on cruises through the
prices,” said Joe Hardin, into the future. As always
President of SAM’S Club. at Wal-Mart, change is not
discounts on rental cars,
And that membership value only expected, but encouraged,
hotels, car and boat
translates into shareholder through the ideas and enthusiasm
value, as SAM’S Club showed of associates like King.
improvement in sales and “I’m a product of the invest-
service; and more.
operating profit in the latest ment the company makes in its
The process of building
fiscal year. Membership income people,” King said. “The company
membership value also
was also up, driven by growth allows you to have total owner-
includes an aggressive remodel-
in new Advantage memberships ship of your ideas by letting you
ing program for many clubs,
and renewals. put them in action and watch
and an effort to expand the
Among the ways SAM’S Club them succeed.
clubs’ selection in the fresh
creates membership value: “That approach, that openness
categories — bakery, fresh
to associates’ ideas, has been
• SAM’S Club offers quality meat and produce. “These are
around since the company was
through branded merchan- commodity categories that
started,” she said. “And what
dise at exceptional prices. build excitement, and
I find very promising is that,
encourage people to shop
• The clubs also emphasize
even today, you can still see
at a warehouse club more
bringing in the best regional
frequently,” Hardin said.
brands — the brands many
“The company is always
In a simple but effective move
of our members grew up using.
pushing us to wherever our
to build business, the new lower
• SAM’S Club has moved capabilities will take us.
price points are combined with
aggressively to lower price
Wal-Mart will open the door
a new layout, which encourages
points on the vast majority
to opportunity any time
of its merchandise without
somebody knocks on it.”
Building membership value
giving up quality, through
is “a work in progress, not
better prices from our
vendors or, in some cases, Whether it’s a small business or a large family, SAM’S Club
alternative vendors. membership means value.
This enables the clubs
to encourage impulse
buying with prominent
displays of those items.
• By lowering the number
of individual items a club
stocks, SAM’S Club has
been able to merchandise
the items more effectively.
This reduces operational
costs and enables the clubs
to move huge quantities
• For qualified members,
Business and Advantage
alike, the SAM’S Club credit
Shop at any SAM’S Club today! Use this SAM’S Club one-day guest membership
and see how great these values really are.
Get behind the wheels of a SAM’S Club cart and suddenly One-Day Guest Membership
you’ve got the purchasing power of more than $20 billion Name:
behind you. That means significant everyday savings on Address:
quality brand names from groceries to computers and City ⁄ State ⁄ ZIP Code:
electronics, casual clothes, sporting goods, seasonal items, Membership# 176969285
Expiration Date: 12/31/97
travel and more. Shop from the most unique product 5% upcharge applies on all
purchases when shopping with
this One-Day Guest Membership.
selection under one roof. Cash, Discover® or Novus® Card
SM only (no checks). You may apply
for membership, subject to
qualifications, while visiting any
All it takes is a SAM’S Club membership. Now that’s real value! SAM’S Club SM.
Visit our web site at http://www.samsclub.com Item selection may vary by club location.