Why you should care

The companies that brought to America “blue-light specials” and mass-market Missoni now face the biggest challenge to their existence in half a century. They could find some inspiration in their innovative origins.

In 1962, the Cold War nearly turned hot, with the Cuban Missile Crisis bringing the United States and the Soviet Union within a hair of nuclear war. On the other side of the world, the war in Vietnam got bloodier. Seattle unveiled its iconic Space Needle as part of the World’s Fair, and Wilt Chamberlain of the Philadelphia Warriors was mesmerizing basketball fans across the country, pouring in 100 points in one game, alone.

The same year, but with much less fanfare, 44-year-old Sam Walton opened his first Wal-Mart discount store in Rogers, Ark.

Exterior of red and white colored store front with sign WALTON'S on top in red

The First Walmart

Source RetailWeek

The Dayton Company’s very first Target store threw open its doors in May 1962 — two months before Wal-Mart and nearly 700 miles due north in Roseville, MN. And in nearby Garden City, Michigan, the S. S. Kresge Company unveiled the country’s first Kmart, with 17 more stores to follow before the year was out.

It wasn’t obvious at the time. But as the American South crackled with the tension of decades of segregation and college campuses began to see the first bubblings of student activism, the heartland was, in 1962, ground zero for its own much quieter revolution: the retail revolution.

And the impact, certainly from an economic and even a cultural standpoint, has been equally vast.

Today those companies account for more than $500 billion in annual sales worldwide and more than 2.5 million employees. But long before they were the corporate behemoths they are today, Wal-Mart, Kmart and Target were at the vanguard of a fundamental shift in the way Americans shop, following the transformation of U.S. society that came with the spread of cars, highways, suburbia and middle-class ambitions.

Now, some are predicting the end of an era for so-called “big box” retail thanks to the rise of e-commerce and the reemergence of urban living. So the question for these shopping outlets is whether they will be able to recapture the social zeitgeist the same way that launched them into American consciousness 50-odd years ago.

As Nelson Lichtenstein recounts in his 2010 book The Retail Revolution:

“Kmarts exploded across blue-collar America” in the 1960s, “providing the model for much of the discount revolution that subsequently swept the country.” The stores, Lichtenstein writes, ”were freestanding — much cheaper than paying rent to a shopping mall — surrounded by acres of parking.”

Another innovation: customers ”pushed their own shopping carts down the aisles, self-service style, still highly unusual for a store that sold no groceries.”

Those innovations would soon be mirrored by Target and Wal-Mart. The former, like Kmart, was created by a company with a long history in retail dating back to the turn of the century. George Dayton got his start in the department store business after moving to Minneapolis from New York, while Sebastian Kresge built up a five-and-dime empire that he launched in downtown Detroit.

Walton was more of an upstart, only getting into the retail game after World War II, when he operated a variety store in Newport, Ark. and then opened his own Walton’s 5 & 10 in nearby Bentonville. But like his competitors up North, by the early 1960s, Walton saw an opportunity in the discount goods market, already picking up speed as post-war consumerism took hold, and in Americans’ changing lifestyles.

Exterior of kmart store

Source Mike Kalasnik

And though he moved more slowly and deliberately in expanding his business, in the end it’s been the Wal-Mart empire that has come to dominate the industry. By 1980, the company reached $1 billion in sales and counted 276 stores. Last year, Wal-Mart reported sales more than 400 times that, from 11,000 stores in 22 countries.

The 21st century, however, has not been as kind to Wal-Mart and its ilk. Kmart declared bankruptcy in 2002 and was ultimately bought out by Sears Holding Co.; Target recently was the victim of the worst data breach in corporate history, shaking shopper and investor confidence; and Wal-Mart has earned itself a reputation as a big business bully, pushing out local mom and pop business and lowballing employee pay and benefits (one need only look at last year’s political warfare over Wal-Mart’s entrance into Washington, D.C. to get a sense of the sort of fierce local reactions the chain store now evokes).

The more existential challenge, however, is that shoppers are ditching their cars for the Web. As it has through its history, Wal-Mart has proven particularly attuned to the changing nature of retail and is pushing hard to make the necessary digital adjustments, ramping up its walmart.com offerings and services to try and compete with the likes of Amazon and others.

It’s hard to tell right now whether the industry is facing another “1962” kind of moment, but it’s certainly one that will determe whether Wal-Mart lives to see itself included in the next round of retail revolutionaries.

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