‘Vendorville’ Develops Quietly

“Firms supplying Wal-Mart Maintain Low Profile, Make Economic Impact”

 

As many as 125 major corporations that sell their products to Wal-Mart Stores Inc. of Bentonville have opened offices in Northwest Arkansas in recent years.

 

They include such corporate giants as Johnson & Johnson, Dow Chemical, Proctor & Gamble, Colgate-Palmolive, Fuji Film, Clorox, Gillette, Fruit of the Loom and Dial. And, the list is growing.

 

‘It’s all about communication,” says Dale Ingram, director of public relations for Wal-Mart. ‘The relationship needs that daily and regular contact.”

 

‘More than 100 of the companies have settled in Bentonville to be near what for most is their company’s largest single customer. Few advertise their presence and even fewer are willing to discuss their operations.

 

‘Everybody wants to protect their relationship with Wal-Mart,” says one vendor who asked not to be identified. ‘You don’t want to step on any toes or throw it in anybody’s face.”

 

Even the owners of the two largest office complexes in Bentonville, which are filled with the companies, declined to disclose who rents space there.

 

Beau Terre has more than 50 vendors in its 85,000 SF of office space and already has leased space to four more vendors in an additional 13,500-SF office building due for completion in October. Raintree Corporate Suites has about 45 vendors in 75,000 SF of office space near Wal-Mart’s home office on Walton Boulevard.

 

‘Most vendors have no desire for anyone to know they are here,” says Dana Washburn, office manager of Beau Terre.

 

Jim Simpson, a manager of Raintree, says his office park has a clause in the lease that prohibits him from disclosing his tenants. However, a few of the companies, such as Black & Decker and Wrangler, have signs in front of the building, he says.

 

Low profile, high impact

 

Despite the low profile, the companies are having a noticeable economic impact on the area, especially Bentonville. Besides the construction of office space to accommodate the influx, the executives staffing the offices are buying homes, shopping and eating in restaurants.

 

One of the first companies to recognize the benefit of being closer to Wal-Mart was the Proctor & Gamble Co. of Cincinnati. The company opened an office in Fayetteville in 1988 and currently is more than doubling the size of its facilities in the CMN Business Park with a new $5 million, 49,579-SF distribution center.

 

‘The old approach of trying to do business via phone and fax from two different cities just wasn’t going to get us there,” says Tom Muccio, vice president of customer business development. ‘We needed a new approach, one that would enable a lot of communication and facilitate a genuine effort to understand each other’s operations better. That’s why we’re here.

 

‘Sam Walton once made the point that if we thought of his stores as an extension of our company, then we’d do business together much differently. Sam was absolutely right,” Muccio says.

 

?Citing proprietary reasons, the company declined to disclose the number of employees who work in the company’s 21,000-SF distribution center or the annual volume of the company’s business with Wal-Mart.

 

Proctor & Gamble markets more than 300 brands to about 5 billion customers in 140 countries. The company has facilities in 70 countries and employs more than 100,000 worldwide. Last year, annual sales exceeded $35 billion.

 

-Dow Chemical Was Early Arrival

 

Another company to make an early move to the area was Dow Chemical Co. of Midland, Mich. In 1991, an executive with the company convinced the company to relocate him and his family from the regional office in Dallas, where he had been servicing the Wal-Mart account, to Bentonville.

 

‘There’s still stories about our salesman calling up and asking where is Bentonville,” says Phillip Boger, the team leader of the Dow Brands Inc. office in Bentonville.

 

From that single person, the office has grown to five people who work from a 2,800-SF office in Beau Terre. Being near Wal-Mart has been invaluable to company, he says. The company can better track and evaluate sales and make adjustments to meet market demands. It also makes it easier for the company to present new products to Wal-Mart buyers, he says.

 

‘Anybody who has to deal face-to-face with Wal-Mart is here,” he says.

 

Like most of the other companies who have offices in the area, Boger wouldn’t discuss the volume of business his company does with Wal-Mart. However, Wal-Mart is the company’s largest single client, he says.

 

The Clorox Co. of Oakland, Calif., did release information about the volume of business the company does with Wal-Mart. About 14 percent of the company’s total sales worldwide last year were to Wal-Mart, which makes it the company’s largest single account, says Fred Riker, a spokesman for the company.

‘Clorox opened its office in Bentonville in 1993 with two people. The next year, the company added two more people. Currently, the company employs 10 people and occupies 2,336 SF of office space in Bentonville.

 

‘It makes competitive business sense to have the ability to deal directly with them,” Riker says. ‘We felt there was a real need to be closer to such a major customer.”

 

The staff of the office consists of a logistics manager who coordinates orders, shipping and payment, a sales analyst who tracks consumer trends and ensures that the right products are in the right stores at the right prices, and a group of sales managers who work directly with Wal-Mart on merchandising the products, Riker says.

 

Fuji Film Buys Photo Labs

 

Fuji Photo Film Co. Ltd. of Tokyo opened a sales office in the Beau Terre office park in Bentonville in 1994. The office is staffed by three people and serves only Wal-Mart and its related Sam’s Club stores, says Tom Shay, director of corporate communications for the company’s United States operations.

 

A major factor in the company’s decision to open an office in Bentonville is the difficulty in traveling to and from the town.

 

‘It’s not the easiest place to get to from major metropolitan areas,” Shay says. ‘It’s easier to keep people there than travel in and out.”

 

Fuji is the world’s second largest and Japan’s largest producer of photo-sensitive materials. In 1995, the company had annual sales of $10.2 billion. Wal-Mart is the company’s single largest client for consumer products.

 

Last year, Fuji bought six photofinishing labs from Wal-Mart and now does all wholesale film developing for the company, Shay says. One of the labs is in Bentonville and employs more than 340 people.

 

Colgate Opened in 1991

 

Colgate-Palmolive Co. of New York, which had annual sales last year of $8.7 billion, opened its Bentonville office in 1991. The office employs 14 people who serve only Wal-Mart, which is the company’s largest account, says Jenny Riggs, product publicity assistant for the company’s corporate office in New York. The company sells more than 600 products through Wal-Mart, she says.

 

‘Our presence in Bentonville provides easy daily communication with Wal-Mart, the ability to meet face-to-face with buyers and a better understanding of the Wal-Mart culture,” she says.

 

Executives with The Dial Corp. of Phoenix share the opinion.

 

‘We can give better service by being in the same area,” says Darrell Niedzwiecki, team leader of the Bentonville office.

 

Niedzwiecki opened the office in April 1993. Since then, the office has grown from the original four sales people to a current staff of 11, he says. Although the sales people have been brought to Bentonville from all over the country, the company has assembled an administrative staff from the local labor force, he says.

 

Wal-Mart is the company’s largest single account, but Niedzwiecki declined to disclose volume.

 

Contact Benefits Wal-Mart, Vendors

 

The close contact between Wal-Mart and the vendor companies, or vendor/partners as Wal-Mart officials call them, is beneficial for Wal-Mart as well as for the companies, Ingram says.

 

‘One of the keys to our success is our relationships with our vendors,” Ingram says. ‘We learn a lot from our vendor/partners.”

 

Wal-Mart provides information to the vendors that helps the companies adjust their inventories in the stores to prevent shortages or overstocking, Ingram says. The sharing of information allows Wal-Mart and its vendors to identify trends and buying patterns that can vary by region of the country and season of the year. The result is a more efficient system of merchandising that benefits the customers as much as it benefits the companies, he says.

 

In April, Wal-Mart recognized 47 companies – among thousands worldwide – as vendor/partners of the year. Seven of the companies with offices in Bentonville were on the list.

 

‘We have a lot of valuable vendors who don’t have offices here,” Ingram says. ‘It is a business decision for them to decide if it is worth the expense of coming here.”

 

Most vendors do business with Wal-Mart by visiting Bentonville when they need to or having Wal-Mart buyers visit their companies, he says.

 

‘They find that adequate, and we find it adequate,” Ingram says.

 

Company Represents Vendors

 

The long-distance relationship has spawned a new industry in Bentonville. Tim Romines owns Executive Assistance, a company that represents out-of-state vendors to Wal-Mart buyers.

 

Romines, a former assistant manager for Wal-Mart, started the business five years ago and represents 35 companies. His business is growing by about five vendors a year, he says.

 

If a company has a sample of a product that it wants to present to a Wal-Mart buyer, the company sends it to Romines and he takes care of the rest. He also leases a 3,400-SF office building that he subleases to companies that only need the space for a day or two.

 

Despite the close relationship that Wal-Mart fosters with its vendor/partners, the company has a strict policy governing contact between its buyers and the companies. No Wal-Mart associate can accept gifts of any kind from any company, including companies that may only be considering doing business with Wal-Mart.

 

Accepting a gift, which includes tickets to entertainment events, special discounts with a company, paid trips or taking discontinued samples, is grounds for immediate dismissal, according to the written company policy. If a gift is received without warning, it becomes the property of Wal-Mart ‘and must not be used for the benefit of any particular associate,” the policy states.

 

 

Executives Adjust to Small Town

 

As the executives move in from all over the country, many of them from large cities, they have had to make drastic adjustments. Some have found the change easier than others.

 

‘We love it,” says David Smith, 35, national account manager for Fuji. ‘I’m here to stay.”

 

Smith, his wife, Daphne, and their two children moved to the area two years ago from Dallas. He had made business trips to the area from Dallas several times before moving here.

 

Smith says the adjustment was harder for his wife, who still returns to Dallas often to shop and visit family.

 

‘My wife went through a culture shock because of the lack of retail,” he says.

 

Smith says he walks his daughter to school every day and takes a turn as a crossing guard at Reagan Elementary every month – things he couldn’t do in Dallas.

 

Joe O’Connor, 34, the team leader for Clorox, has been in Bentonville for more than four years. He and his family moved from San Francisco. He says he likes the area but doesn’t intend to retire here.

 

‘I felt this was a great change for me and my family,” he says. ‘It’s wonderful, but ultimately, I want to get back to a major city.”

 

However, Bentonville offers him things he couldn’t find in the city. His commute to work has been cut from one hour to 10 minutes, his house is twice as big as he could afford in San Francisco, the public schools are better than those in the cities, and he has a boat – something he couldn’t have afforded in San Francisco.

 

Boger says moving to Northwest Arkansas from Dallas two years ago was ‘a tough move” but adds that Bentonville is similar to his hometown and he enjoys the small-town environment. He is on the board of directors for the Walton Arts Center in Fayetteville and participates in other community activities, such as sports and civic clubs, he says.