Sam Walton: Inventory Velocity

Sam Walton opened his first five and dime store in Bentonville, Arkansas in 1945. He had zero retail experience, but he understood something Eastern retailers had abandoned. Poor families wanted cheap goods, more than fancy displays. Walton's store was sparse, bare concrete floors, simple wooden shelves. He marked up inventory only 15%. Competitors marked up 45%. He made less per item, but turned inventory four times faster. At 45% markup, merchandise sat 60 days on shelves. At 15%, it cleared in 14 days. Money cycled back faster through purchasing. By year two, his tiny store generated more cash than competitors these stores three times its size.