Gangnam Perspective: The Tech Company Walmart Inc.

American author Tom Peters once said that, if Henry Ford were to be excluded, Sam Walton should be called the greatest entrepreneur of the 20th century. He made that point in his 1985 book In Search of Excellence. Walton, the founder of Walmart Inc., can be summed up as a man who started with a small variety store in a rural town, turned that success into a springboard for a discount store business in the 1960s, and three decades later became the richest person in the world. It may sound like a textbook example of the American dream, but his overall management philosophy was far from simple.
Peters highly values Walton as a manager who put the customer at the very center of everything and pushed simplicity to the extreme. Cheaper, faster, more, and bigger. For 30 years he pursued these four goals without wavering, and in doing so finally achieved the customer satisfaction he was so obsessed with. That is why Peters calls him a hero of the century. Those who divide the history of American retail into the eras before and after Walton would likely base their judgment on similar reasoning.
One early scene at a Walmart Inc. store in Arkansas was striking. Walton bought enough watermelons to fill two trucks and stacked them by the roadside. Donkeys roamed freely around the parking lot. The temperature soared well above 40 degrees Celsius, and the watermelons began to split open. Why would local residents choose to visit this barn-like, shabby store simply because prices were low? According to his autobiography Walmart, Fearless Challenge, customers nevertheless opened their wallets there with little hesitation.
Unlike the established retail chains that dismissed small towns as unprofitable, Walton believed that real consumers actually lived in those small communities. He also lacked the resources to break into big cities already dominated by incumbents. The 1960s were the moment when the baby boomers, often called the largest consumer generation in history, were just starting to enter the market. Towns where Walmart Inc. opened a store soon came to be classified as areas where the cost of living went down.
He grasped that the heart of price competition lay in logistics and made it the core of the business, which proved decisive for his success. In 1970, eight years after founding the company, Walton began building his own distribution centers. He then completed what the industry had never imagined: a proprietary satellite communications network, real-time inventory management, and an automated ordering system for suppliers. In that context, the downfall of Kmart, once hailed as the king of retail, was hardly surprising.
The Walmart Inc. empire slowly began to sink after Walton’s death. A bureaucratic management class became preoccupied with quarterly earnings, profit margins, and meeting Wall Street expectations. On top of internal problems, the rise of Amazon.com Inc. delivered a major shock. E-commerce and the mobile revolution became a reality and once again reshaped consumer culture. Walmart Inc. badly misread the digital age, and the price it paid was brutal. While Amazon.com Inc. was growing at 30 percent, Walmart Inc.’s growth rate was stuck at just 1 percent.
Doug McMillon, who once worked as a part-time cashier at a Walmart Inc. store in Arkansas, reversed that tide. He became the company’s chief executive officer in 2015. Over the past decade, Walmart Inc.’s transformation has been nothing short of dramatic. Declaring that "Walmart is now a tech company," McMillon acquired Jet.com and brought in a large number of developers from Silicon Valley to overhaul the company’s DNA. The nationwide network of physical stores was turned into fulfillment bases for online orders and hubs for pickup and returns. By redesigning stores using artificial intelligence (AI) data, Walmart Inc. has reinvented itself as a lifestyle platform.
During the COVID-19 pandemic, many expected an overwhelming victory for Amazon.com Inc., yet it was Walmart Inc. that enjoyed a bigger boom. Amazon, which relied heavily on long-distance delivery, faced labor and supply risks across its network. It was Walmart Inc. that managed to deliver surging orders for daily necessities reliably and on time. The company even served as part of the national supply chain for quarantine and medical supplies. The offline infrastructure that Amazon.com Inc. lacked is what allowed Walmart Inc. to reclaim dominance in retail.
In the United States, the retail market is firmly shaped by a duopoly: Amazon.com Inc. as the online powerhouse and Walmart Inc. as the offline giant. If one abuses its power, consumers still have another option. In South Korea, however, regulations that constrained large discount stores in the name of protecting traditional markets have produced the distorted result of Coupang’s unchecked dominance. This is a distribution risk that must be corrected. Sweeping regulatory reform and radical innovation by retailers are both needed. There is still a long way to go.
jins@fnnews.com Reporter