David Rosenthal: evaluation

Transcript context

…But it's worth knowing all three of these are existing variety store chains that were used to making 33% on every single item they sold in their store. If you look at four horses—Woolco, Target, Kmart, which would come out of S.S. Kresge, and Walmart—you probably wouldn't have bet on Walmart to be the dominant one that wins in the discount wave. But they steamrolled the other three. Those other folks because they came out of existing companies weren't as willing to discount on as much. There may be some truth to that, but I think the story is actually a little more nuanced. I think especially Kmart, they were the gorilla and they were really well-run. I think the parent companies, especially Kresge, were willing to take losses and have lower margins in Kmart the way Walmart won and that is just an amazing story we're going to tell now because all of those others, the problem wasn't the mindset of margins. It was that they came out of these existing operations and they used the existing logistics backend and distribution backend for their stores. At first, that was by far the best. Within five years, by 1967-ish, Kmart had 250 stores all across the country doing $800 million in sales. The new Walmart concept, Walmart revenue was still only around $10 million at that point in time. They are like a gnat five years later. Kmart is like the darling of Wall Street. Because they're having to build everything from scratch. Go negotiate with every single manufacturer of every item that they sell, try and figure out how to warehouse it, figure out the logistics network for the very first time.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.