The Muskogee/Okmulgee Oklahoma Eagle (Muskogee and Okmulgee, Okla.), Vol. 5, No. 50, Ed. 1 Thursday, January 31, 1980 Page: 4 of 6
This newspaper is part of the collection entitled: Oklahoma Eagle Publishing Company and was provided to The Gateway to Oklahoma History by the Oklahoma Historical Society.
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Increased profits, fast growth cited
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Key to Walmart success
is in small communities
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Wal-Mart is a successful regional discounter
name brand products in ten central and southern
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’Hing stores) increased 15 percent.
The company operates 275 stores that range in size from HIGHER
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MUSKOGEE STORE: The store manager Gary Moore,
said his store employs five assistant managers and ap-
propriately 75-100 employees on an average (depending
on the season). The Wal-Mart Stores rank 25th in
profitability compared to oil, gas and other industry
survey.
shortages and higher fuel prices have plagued many Wal-Mart because families in the rural communities
retailers recently because these conditions reduced might defer shopping trips to the big cities That means
customer traffic. However, higher fuel prices could help they might do more of their shopping at Wal-Mart
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30,000 to 83.000 square feet, with the average size being
45,000 square fet.
A key reason for the Company's success is its unique
market positioning Wal-Mart concentates its expansion in
smaller rural communities generally with a population
base of less than 25,000 people Their strategy is simple,
be the largest retailer in the community Most of their
stores average 10 percent of total retail sales in its
community
This has been a successful strategy as their growth
record and profitability makes them one of the leading
discounters. Wal-Mart’s revenues advanced by an average
of 40 percent during the last five years, and net income
increased by almost 38 percent. Earnings per share gains
averaged nearly 34 percent during the last five years.
Another key ingredient to the growth of Wal-Mart has
been the personal charisma of its founder, chairman and
chief executive officer, Sam Walton, Mr. Walton has
lessened his role in day to day operations of the Com-
pany because he built a strong management team.
However, his influence is still felt throughout the Com-
pany as he personally visits each store twice a year.
UNIT GROWTH SHOULD AVERAGE 20 PERCENT: Wal-
Mart's growth rate will continue its brisk pace through
unit openings and same store sales gains. The Company
should end its fiscal year with approximately 275 stores
open Unit growth should continue at approximately 20
percent during the next five years which means that 50-
60 stores should open in 1980 This expansion rate almost
equals the 24 percent rate achieved during the last five
years Also, the Company expects some store sales gains
to average between 10-15 percent during the next five
years representing 4 percent real growth after inflation.
During the last five years comparable ..tores averaged 15
percent growth which is considerably higher than the
industry average of 8-10 percent.
Wal-Mart will continue to roll out its expansion on a
continuous market basis, another key reason for its
strong growth record. A major advantage of continuous
market expansion is the umbrella effect of advertising.
For example, when TV ads are placed in major
metropolitan markets they are viewed in many of the
outlying rural communities Therefore, Wal-Mart builds
customer acceptance before it enters many of those rural
communities
Since 85 percent of the product line is distributed
through the Company's efficient warehouse system, stores
are located yvithin 400 miles of a warehouse The Com-
pany opened its sauaod warehouse 1396.OQOjgpuare feet)
in Searcy, Arkansas in 1978 to enable increased ex-
pansion in east Arkansas, Missouri, Kentucky, Tennessee
and Mississippi. A third warehouse <500,000 square feet)
is planned in Palestine, Texas and should open in eaily
1981. This facility will enable expansion in southern
Oklahoma, Texas, and Louisiana. These three warehouses
should be able to efficiently service 450 to 500 stores.
Therefore, the Company could double the number of
stores and service them from this planned warehouse
capacity.
It is a false notion to believe that Wal-Mart's success
is attributable to absence of competition in its market-
place. Wal-Mart has many formidable competitors. For
example, approximately 25 percent of their stores are in
direct competition with K-Mart stores. Other key com-
petitors include TG&Y, Gibsons. Targets, Kuhn's Big K,
Fred's and Magic Mart. We believe that Wal-Mart has
been the most successful discount chain to penetrate
small rural markets.
Because of the Company’s development strategy to
concentrate on smallet towns, market saturation is not a
problem for Wal-Mart, Wal-Marts' marektplace can be
characterized as stable communities in the sunbelt that
experience minimal economic swings. While retailers
located in major metropolitan markets are concerned
with market saturation, Wal-Mart could easily double the
number of units in its current marketplace.
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NET SALES REPORTED: Wal-Mart Stores, Inc.,
reported net retail sales for the month of November of
8138,000.000 an increase of 42 percent from sales of
897.427,000 in the same period a year earlier Same store
sales 'excluding the contribution of new stores i increased
12 percent.
For the ten months, sales incre-ced 40 percent to
8969.000,000 from 8690.788.000 for the same period a year
ago Some store sales (excluding the contribution of new
Page * T.W MUSKOGEE-OKMULGEE OKLAHOMA EAGLE Tbunday. January 31. 19M
GAS PRICES COULD
PROFIT MARGIN GROWTH THROUGH INCREASED
SOFT GOODS SALES: In addition to rapid unit ex-
pansion, Wal-Mart has a second major opportunity for
earnings growth through increased soft goods sales.
Historically, Wal-Mart has been regarded as an efficient
distributor of brand name hard goods. Hard good sales
accounted for 70 percent of total sales in FY 1979,
reflecting Wal-Mart's evolution from the variety store
The hard goods' marketing approach was
simple but basic, use heavy promotions that feature their
low prices to generate store traffic.
Expansion of soft goods sales from 30 percent to the
goal of 35 percent would aid sales growth but ad-
ditionally could increase profit margins. Management
recognized this opportunity several years ago and in-
stituted several changes in its softimes merchandising.
For example, experienced softhne management was
recruited. Store managers are beginning to recognize that
increased soft goods sales could increase their bonuses.
Also, an upgraded product line is now featured using
attractive, up-to-date display racks rather than table
displays.
Stores feature “volume" fashion items rather than high
fashion items. Softhne departments depend upon traffic
generated by the heavy promotions in other departments
and the key message of softhne advertising is fashion at
a price All these changes should help increase soft
goods sales
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The Muskogee/Okmulgee Oklahoma Eagle (Muskogee and Okmulgee, Okla.), Vol. 5, No. 50, Ed. 1 Thursday, January 31, 1980, newspaper, January 31, 1980; Tulsa, Oklahoma. (https://gateway.okhistory.org/ark:/67531/metadc1810020/m1/4/?q=%22%22~1: accessed July 16, 2024), The Gateway to Oklahoma History, https://gateway.okhistory.org; crediting Oklahoma Historical Society.