The Two Sides of the SAM WALTON Legacy

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.

CHART: NOT AVAILABLE

CREDIT: TIME Graphic by Joe Lertola

CAPTION: LOW PRICES, HIGH SALES