Time - Man of the Year/Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso/moy/042092/0420170.000

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                                                                                AMERICAN SCENE, Page 50

The Two Sides of the SAM WALTON Legacy


"Stack it deep, sell it cheap, stack it high and watch it fly!
Hear those downtown merchants cry!" Wal-Mart employee chant

By HUGH SIDEY


    James McConkey, of Albany, Mo. (pop. 2,100), never cried.
But he felt a sadness the nights before Christmas 1985,
standing in his tiny hardware store on the west side of his town
square. He remembers it vividly today. A dream smashed.

    Shiny new bicycles were lined up, prices cut to the core.
Appliances filled the counters. Holiday decorations festooned
the windows. Everything there . . . except customers. Some
evenings when McConkey looked beyond the twinkling lights out
over the square, he could not see a single car. He knew where
they were.

    Two months earlier a Wal-Mart store had opened in
Maryville (pop. 9,500), 34 miles west, and one month earlier
another had opened in Bethany (pop. 3,100), 18 miles east. Their
parking lots were full of McConkey's neighbors and friends,
lured there through the winter's cold by the powerful Wal-Mart
merchandising mystique and retail prices often below his
wholesale cost. He thought then, and thinks today, that he and
his partner and brother Richard did everything right to
withstand the normal merchandising revolution of the past 40
years brought by good roads, city malls and the early
discounters like K Mart.

    Back in 1982, James, 28, and Richard, 31, decided they
wanted their own business in a community where the McConkey
family had farmed and worked more than a century. They borrowed
money and bought out the Gamble hardware store, tore out
100-year-old wood shelves, spruced it up, offered long shopping
hours and personal service. For three years the McConkey
brothers prospered. Sometimes when the square was filled and
bustling, friends trading with friends, families greeting
families, James thought "it looked like an old postcard." This
was a life he cherished. Nobody got really rich. Their wealth
was in the closeness and vitality of the community. Then came
Wal-Mart.

    In January 1989, after another dismal Christmas, the
McConkeys gave up. So did four other merchants around the Albany
town square. For a while the McConkey store stood empty; then
the town bulldozed it with others to make way for a Place's
store, a regional general merchandiser that was already on the
Albany square. The old Place's is empty. James McConkey is now
teaching school and driving a school bus. His brother has a job
with a paper-products firm.

    When Sam Moore Walton died a week ago after a long battle
with cancer, he was eulogized -- and rightly so -- as a man who
had transformed American merchandising and perfected a hands-on
management that instilled a sense of team enthusiasm among the
380,000 employees he liked to refer to as "associates." In the
process, he became America's richest person, his family's
wealth estimated at $23 billion. But he also became the patron
saint of a down-home style of megawealth; eschewing the fancy
trappings of power, "Mr. Sam" drove an '88 Ford pickup truck and
hopped around the country to visit stores, take the pulse of
consumers and inspire his workers. His passion, his joy, was
fine-tuning his vast merchandising network by insisting on such
things as brighter smiles and cheerier "Good mornings" to
customers from store workers, as well as offering the latest
products gathered and stocked through the most sophisticated and
efficient inventory technology available.

    Wal-Mart merchandising, the brilliantly simple concept of
"everyday low price" retailing, has become such a pervasive
force (2,000 stores of various kinds, 160 built each year) that
it is redesigning the social structure of rural and small-town
America more than any other force besides nature. Wal-Mart is
beginning to nibble at the edges of large cities and giant
shopping malls, many of which are weakened by the general
economic malaise.

    To millions, the down-home Bentonville, Ark., genius was
a hero who brought decent merchandise at low prices to areas
scorned by more glitzy entrepreneurs. On Wall Street, Walton was
a billionaire god who made countless millionaires of others.
Last month President Bush awarded the Medal of Freedom, the
country's highest civil tribute, to the ailing Walton. "This is
not a visit about Sam Walton's wealth," said Bush. "It's about
leadership. It's about decency. As he became more and more
successful he never turned his back on his roots."

    But even as he was honored, some of Walton's roots were
wondering about just what he had wrought. Writer Tim Larimer
grew up in Salem, Ill. (pop. 7,800), which ended up in the
middle of a Wal-Mart nest. On visits home he watched the
storefronts go dark one by one, places where he had met and
laughed with friends as a kid. One Saturday afternoon he counted
four empty stores on one side of the business block and two on
the other. Two cars were parked downtown. The Wal-Mart on the
west edge of Salem was humming. Not long ago, Larimer wrote in
the Washington Post about driving east from St. Louis and rarely
being far from the sight of a Wal-Mart. He felt engulfed in a
new culture reaching from horizon to horizon. "If I had kept
driving on Highway 50, the same road that eventually runs
through Maryland to Easton, I would have passed more Wal-Marts,
in Illinois towns like Flora, Olney and Lawrenceville. Each its
own town, not so long ago; now they scarcely seem
distinguishable. All Wal-Mart towns now."

    Steve Bishop, a Church of Christ minister who grew up in
Hearne, Texas (pop. 5,400), and served a church there for seven
years, fired off an essay a couple of months ago to the Dallas
Morning News, declaring, "Wal-Mart killed Hearne, Texas -- twice
. . . The first death was the end of a downtown that held much
more than stores, it held memories, values and people who
stayed long enough to make a difference in our lives. Wal-Mart's
arrival ended all that. The second killing occurred in December
1990, when Wal-Mart closed its doors in Hearne. It closed
because it couldn't turn a profit. Wal-Mart leaves an empty
building as testimony to the '80s' greed, and it leaves a
downtown of vacated shops as testimony to our rush to save a
little money -- maybe not a very different kind of greed."

    Kenneth Stone, professor of economics at Iowa State
University, began five years ago to study the Wal-Mart
phenomenon in his state after he noted the commercial life of
many towns being hollowed out by the huge intruder. Few scholars
had paid any attention. Now Stone is in demand all over the
U.S., lecturing on the nature of Wal-Mart and how to deal with
it. Stone estimates that Wal-Mart's stores -- a combination of
general merchandise, groceries and wholesale clubs -- could, if
growth in the 1990s equals that of the 1980s, gross $200 billion
annually by the end of the decade. "It could be the biggest
corporation in the United States," says Stone, and that includes
Exxon and General Motors.

    Wal-Mart is already the largest retailer, smothering Sears
and K Mart. "The impact of a corporation of that size and that
involvement in the life of this country is immense," declares
Stone, who recently held meetings with the merchants of St.
James (pop. 4,300) and Madelia (pop. 2,100), Minn., two small
communities gasping in a web of Wal-Marts. He advised them, as
he has countless other small-town merchants, on how to deal with
the arrival of a Wal-Mart in their region. "I don't fight
Wal-Mart," Stone insists. "If you believe in the free-market
system as I do, then you cannot keep them out of your community.
Much of what I tell you will be to emulate them."

    Stone talks about finding special merchandising niches not
occupied by Wal-Mart, about improving service, extending store
hours. Within the growing network of frightened storekeepers,
the town of Viroqua, Wis., is held high as the David that
successfully fought Goliath with community promotion, searches
for new businesses and government help. In Sanford, N.C.,
Richard Lawrence took Stone's counsel and began to cruise the
Wal-Mart that opened in January, comparing prices and
merchandise in his store, Mann's Hardware, a town fixture since
1927. He became more competitive in gifts, paint and hardware
and reopened an industrial-supply line. "We felt the Wal-Mart
impact at first," says Lawrence. "But business is coming back.
With a little more time it should swing back to normal."

    Yet, for all the delicacy of Stone's presentations and the
litany of stores and communities that have survived Wal-Mart,
there is a brooding inevitability about the data in Stone's
studies. Small communities of static population sooner or later
lose business from their downtowns to Wal-Mart, which sinks its
roots at their edges. Surrounding communities with no Wal-Mart
are devastated. Independent stores in growing areas generally
rise with the tide even with Wal-Mart scooping up a big share.

    Some of this was surely inevitable in our moiling
capitalism; Wal-Mart, perhaps, has done no more than finish off
bad shopkeepers and lazy combines. Its bright, clinic-clean
stores are the boondocks miracle that Walton wrought.

    But few if any American enterprises, no matter how huge
and momentarily successful, have enjoyed uninterrupted bliss.
The betting in dozens of tiny stores around the country is that
Wal-Mart will reach its own plateau. Despite the superb
management team Walton left in place, his death will inevitably
mean that the soul of his corporation will change. Community
irritation at secretive and standoffish ways of Wal-Mart
managers, the "us" (Wal-Mart) against "them" (downtown
merchants) attitude, and the modest involvement in public
affairs and charities by store officers are building resentment.

    Then there is the matter of basic economics. James
McConkey can't scientifically prove it, but his hunch is that
people who drive 20 miles to a Wal-Mart, and so contribute to
the decline of their town, end up paying higher taxes, which is
a premium for the merchandise they get. Eventually, the pendulum
will swing, the marketplace will adjust. That is what American
capitalism is all about, as Mr. Sam knew as well as any merchant
of the modern age.