Message to Associates

Partners and good friends of 1991, as usual over this Memorial weekend, I have much on my mind that concerns this great Company of ours. I hardly know where to start. I would just like to share with you so much of what I’m feeling, but time and space will not allow.

As a starter, I’ve been in more Wal-Marts, SAM’S, and many of our competitor’s stores during the past two or three months than in some time, from Kentucky, Virginia, Pennsylvania, New York, Michigan, Wisconsin, Minnesota, Iowa, Wyoming, Utah, Southern California, Arizona, New Mexico, to points in between. I’ve had some great visits in many new stores I had not been in previously. I’ve managed to fly myself, dropping in unannounced, and visiting some really outstanding new Wal-Marts and SAM’S, all over. Best of all, though, was the opportunity to meet so many of our new associates who are doing a great job for us and are quickly beginning to absorb our culture from coast to coast.

We’re truly on a roll and we’re definitely established as the world’s largest retailer, in my opinion, the best. However, if we are going to maintain and improve on our position, as well as serve our customers in the best possible way and expand our market share in these United States and internationally, we must be more aggressive and action-oriented. Our Company’s greatest asset is our Wal-Mart people – you wonderful partners – who have truly set us apart from all other retailers. We must continue at all levels, to put your basic interests and needs first, listen and work together as a team, and continue to do what is always best for our customers. You’re the engine that moves this organization and gets the job done. You know far better than most of us in management what is good for our Company and our customers. Thank goodness, you’re not bashful about speaking out and using our open door policy. I personally appreciate your many direct letters, not only to me but to David Glass, our Wal-Mart President, and other of management. Hopefully, your communication is being responded to. I learn much from your suggestions and try to react in the right way, see that we appreciate your ideas and not allow you to be hassled or demoted for speaking out. For us to be the best, we must hear it like it is from our associates – directly, honestly, good or bad – and make constructive changes as we can. Through the year our Open Door Policy has been a major factor in our Wal-Mart culture and must remain so. Let’s don’t build power cliques anywhere. Let’s approach our problems as opportunities. We should never sweep problems under the rug, but attack them head on, openly and honestly. I realize I’m coming on a bit philosophically but, in my book, we’re definitely at a major crossroad. Leading competitors are improving and making aggressive, action-oriented decisions, desperately trying to overcome our advantages and catch up with us. That, plus the addition of many new and various forms of specialty stores daily and the future escalation of overseas competitors such as the French, Japanese, German, Dutch and Great Britain hypermarts, supercenters, discount foods, and general merchandise stores of all kinds, as well as our own country’s growing food industry, means we must be innovative and creative if we’re going to compete in the 1990s.

We have our work cut out for us, but we’re more than capable of doing the job. Our customers, our supportive communities, our country, and the world need what we have to offer. We must maintain a high level of social responsibility, overall. It is important that we develop and become efficient as caring, proud individual associates of our Wal-Mart Company. We can accomplish our major goals and objectives in the 1990s through:

• Development of technology and communications. We must continue to reduce the cost of doing business, but still give our customers better values on quality merchandise at lower prices.
• Lowest expense structure as a percentage to sales of any of our major competition. For 25 years, we’ve been, by far, the lowest cost producer in the industry, but we must continue to aggressively expand our market share.
• The best state-of-the-art distribution system in the world. We have the finest people operating and serving us in such a responsible way with much pride in their accomplishments. My hat’s off to you all, throughout Wal-Mart Country, from California to Virginia.
• Lower gross margins. In the 1990s, I see us needing to lower our prices and gross margins by an additional 3% to 4% in Wal-Mart, and proportionately in SAM’S, to maintain and gain market share, to which we’re all committed.
• Reduce expenses. In all areas of the Company, we must aggressively attach expenses. Our business must be simplified as much as possible. We must be centrally driven with a great deal of decentralization, passing responsibility on to all level, empowering our hourly partners in all divisions, letting them make decisions to satisfy those wonderful customers at any given moment, however and wherever. Our Store Within A Store program is the greatest, but it must continually change and improve, and each department and store must be tailored to the community to meet customer needs.
• An overall gain in corporate sales growth. With greater importance placed on supercenters and hypermarts, and the addition of the McLane grocery division, our bottom line net profit may decline slightly over the next 10 years, but our gross profit net dollars and return on investment can and will substantially increase as our sales improve and we aggressively gain market share.

My friends, we’re all in this thing together and I hope it will be as much fun for you during the next eventful 10 to 20 years, as it has been to me during the past 45 years. Opportunities for achieving our avowed goals have never been greater. The key is to THINK, ACT, AND CHANGE ahead of our competitors and let them chase us. Let’s be a moving target always. Let’s be so aggressive and determined that we are willing to use our imagination and experiment on a daily basis, all over our Company. Let’s listen to our mavericks who want to try something new. If it’s unsuccessful, go for another idea, pass it on if it’s right, and above all, speak out. At Wal-Mart, our people make the difference. Let it always be so and let our folks be heard and appreciated.

One last thing: Our important and great Wal-Mart Profit Sharing! To you – our new associates on board – how meaningful can this be to you in the next 20 years? In my opinion, it will be as good as during the past 20 years. For example, last month seven hourly partners retired from an Oklahoma store with an average of $200,000 each from our Profit Sharing Trust – all from Company contributions – and on top of that, they had accrued substantial amounts of Wal-Mart stock from payroll deductions. I would suggest that any of you could do the same during the next two or three decades. If we perform as a team, let the stock market do its thing – up or down – and not sweat it. We should just keep doing the right and honest things for our customers and each other, and we can make great things happen!

I’m feeling better and I’ll see you around as I can. Thanks for the first quarter. Sales improved the last three weeks of May and, hopefully, will continue.

Your friend and partner,

Sam M Walton