Sam Walton opened the first Walmart in Rogers, Arkansas, in 1962. Six decades later, Walmart is the largest company in the world by revenue, with more than 4,000 stores in the United States and well over 10,000 worldwide, and it is the largest private employer in America.
Animated maps of the company’s growth, popular online for years, show something striking. Walmart did not jump from city to city. It spread outward from northwest Arkansas like ink on paper, store by store, filling in rural and small-town America before moving into big metropolitan areas.
The logic of density
That pattern was a deliberate strategy. Walton built distribution centers and placed new stores within a day’s truck drive of them, then opened more stores nearby to share the same trucks and warehouses. Economist Thomas Holmes of the University of Minnesota studied this in a well-known 2011 paper and concluded that the savings from keeping stores close together were large enough to explain why Walmart grew in tight, contiguous rings, even at the cost of stores competing with each other.
Starting in small towns also mattered. Walmart could become the biggest store in a market with little competition, then use its buying power and logistics to keep prices low.
Winners and losers
Consumers gained: study after study has found that Walmart’s arrival lowers prices locally. The costs fell elsewhere. Many small independent retailers on downtown main streets could not compete, and critics have long argued about Walmart’s wages and its effect on local employment. The company has raised its starting pay several times in recent years.
The next map
Today the battle is online and on delivery speed, especially against Amazon. Walmart’s old advantage, a store within a short drive of most Americans, has turned into a new one: those stores double as warehouses for same-day delivery. The map Sam Walton drew in the 1960s is still paying off.
Sources: Walmart, Wikipedia; About Walmart, Walmart Inc.; Thomas J. Holmes, “The Diffusion of Wal-Mart and Economies of Density,” Econometrica (2011).
