Wal-Mart Buys More Arkansas Products

In 1997, Wal-Mart Stores Inc. increased the amount of business it does with Arkansas vendors and suppliers by 56 percent over the previous year — from $2.8 billion to $4.38 billion. That figure is up from $1.6 billion in 1992.

The top five Wal-Mart vendors for 1997 — either based in Arkansas or with a manufacturing plant in the state — were Sanyo Manufacturing Corp., Frito-Lay Inc., Maybelline Co., Tyson Foods Inc. and James River Corp. The list is in order of amount of money spent, but Wal-Mart refuses to release specific figures pertaining to individual vendors.

According to economic impact statistics released by the company in late April, in fiscal year 1997 (ending Jan. 31, 1998) Wal-Mart had 32,119 employees in Arkansas, including part-timers and those at the home office in Bentonville. That compares with 30,000 statewide employees in 1996. Wal-Mart had 26,000 employees in Arkansas in 1992.

In 1997, Wal-Mart had 77 stores (including Supercenters), four Sam’s Clubs and seven distribution centers in Arkansas.

The company had 1,008 in-state suppliers and vendors in 1997. The number of vendors for previous years was apparently miscalculated, so no comparison could be made, a Wal-Mart spokesman says.

In 1997, Wal-Mart paid $41 million in state and local taxes and collected $171.4 million in sales taxes. By using sales-tax figures for computing, Wal-Mart generated about $2.8 billion in revenue from Arkansans in 1997.

Arkansas communities and charities received $4 million in 1997 thanks to community involvement by Wal-Mart. Arkansas Children’s Hospital in Little Rock was the primary benefactor, receiving $1.4 million from Wal-Mart that year. Wal-Mart spent $3.9 million on community involvement in Arkansas in 1996. Nationally, Wal-Mart invested $102 million in community involvement in 1997, compared with $81 million the previous year.

Bentonville has become known nationwide as “Vendorville” because about 150 major corporations that sell their products to Wal-Mart have quietly opened offices in and around the Benton County seat in recent years.

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

Every month, some 7,000 vendors, or salespeople, travel to Bentonville from other parts of the country to negotiate with Wal-Mart. The company, which has a strong “buy America” program, also tries to buy from Arkansas vendors.

“As a retailer, our business generates business,” says Daphne Davis, a spokeswoman for Wal-Mart. “We work with vendors and suppliers across the globe. Arkansas vendors, who supply everything from poultry to potpourri, play an important role in serving Wal-Mart customers.”

Sanyo/Wal-Mart deal

In the 1980s, the Mississippi River Delta of eastern Arkansas was losing jobs and teetering on economic disaster. Historically fueled by a plantation economy, much of the Delta’s labor force was displaced by farm mechanization in the 1960s and ’70s. Some companies took advantage of this inexpensive labor by building factories in the Delta, but out-migration and other economic problems had crippled the area by the 1980s.

Forrest City, a once-thriving community perched on the Delta’s Crowley’s Ridge, was hard hit in the mid-’80s. The city lost more than 2,000 manufacturing jobs, most of them in layoffs at Sanyo Manufacturing. Sanyo had opened there in 1977 making microwave ovens and television sets.

The Forrest City plant, which is owned by Sanyo Electric Co. of Osaka, Japan, stopped making microwaves in the mid-1980s. At about the same time, Sears Roebuck & Co., the plant’s primary television buyer, curtailed sales dramatically when it discontinued its Silvertone line, a private-brand label made by Sanyo.

As a result, Sanyo cut back employment from about 2,000 to 450, prompting a 1985 strike. At about the same time, General Industries Co. closed its Forrest City plant and laid off 800 workers. The Lower Mississippi Delta Commission studied 214 counties in eight states, and St. Francis County (where Forrest City is the county seat) had the highest unemployment rate, 25-27 percent.

“We went through a pretty trying time,” says Doyle Tyre, vice president of finance for Sanyo’s Forrest City plant.

Then-Gov. Bill Clinton stepped in and helped bring the different worlds of Arkansas together by initiating talks between Sanyo and Wal-Mart. The Arkansas Industrial Development Commission also assisted, and by November 1988, Sanyo shipped its first television set to Wal-Mart, Tyre says.

Sanyo has been making a steady comeback since then, with double-digit increases each year over the past three or four years in percentage of units being shipped to Wal-Mart, Tyre says. Now Sanyo is the largest Wal-Mart vendor in Arkansas.

Sanyo still employees about 450 people to manufacture television sets. About 200 others are employed by the company in ancillary manufacturing at Sanyo. Tyre says the cut in number of employees since the early ’80s was necessary for the plant to survive.

“A large amount of that reduction is just the nature of the business we’re in,” he says. “We have to be efficient or get out.”

Wal-Mart/Tyson connection

Hudson Foods Inc., which was acquired in January by Tyson Foods in a $1 billion deal, was the dominant provider of poultry products to Wal-Mart, bringing in $258 million in sales from the nation’s largest retailer in 1996, almost 2 percent of Hudson’s total sales.

Some analysts believe Hudson’s relationship with Wal-Mart may be the single largest benefit for Tyson Foods as a result of its buyout of Hudson. As Wal-Mart moves further into the grocery business with more Supercenters, sales of Tyson poultry products should increase.

“The Wal-Mart organization is a valued neighbor and an extremely valued Tyson customer,” says Ed Nicholson, a Tyson Foods spokesman. “They stock a variety of Tyson products both in the retail and club stores. We feel their growth has complemented ours quite well.”

The smell of success

Hanna’s Potpourri Specialties of Fayetteville landed a contract with Wal-Mart last year and, as a result, has tripled its output of scented candles.

Burt Hanna, who owns the company along with his wife, Donna, has more than doubled the number of employees, from 85 to 220, to handle the Wal-Mart orders. Hanna’s Potpourri has also spent $1.2 million-$1.5 million on plant improvements as a result of the Wal-Mart deal. Another $2 million in equipment will be purchased in 1998, he says.

“It’s more than I ever dreamed in the beginning,” Hanna says of the amount of business his company is doing. “The United States is so big, but I never dreamed we’d be selling this many candles.”

Hanna declined to give specific sales figures for Wal-Mart orders, saying only, “It’s important to us, that’s for sure.”

Hanna says he approached Wal-Mart about supplying the retail giant. Hanna was given specifics about the type of candle Wal-Mart wanted and the price Wal-Mart wanted to pay for it. After some researching and calculating, Hanna came up with an acceptable proposal. The deal was signed in May 1997, and Hanna’s Potpourri began shipping Radiant Accents candles to Wal-Mart last October.

The Wal-Mart contract has given Hanna’s workers more job security. Before the Wal-Mart deal, 60 percent of Hanna’s candle sales were in the fourth quarter of the year, as Christmas approached. With Wal-Mart as a buyer, Hanna can now sell candles steadily year-round.

Hanna — who also supplies candles and potpourri to Hobby Lobby, Michael’s Stores Inc., Fred’s Inc. and Venture Stores Inc. — says Wal-Mart has been accommodating and easy to work with.

“It’s really been kind of eye-opening,” he says. “It’s helped me see the big picture, what I need to focus on.”

Wal-Mart profits

Net sales for Wal-Mart for the year ended Jan. 31 were $117.9 billion, an increase of 12 percent over the prior fiscal year. About $7.5 billion of that total is from international sales. Net income for the fiscal year increased by 15 percent to a record $3.5 billion, or $1.56 per share, as compared with $3 billion, or $1.33 per share, for the prior fiscal year. Wal-Mart’s stock hit record highs twice in 1997, in July and November.

The 1997 figures place Wal-Mart in line to pass Exxon Corp. this year and become the third-largest corporation in the country behind General Motors Corp. and Ford Motor Co.

As of April, Wal-Mart had 1,917 Wal-Mart stores, 445 Supercenters, and 443 Sam’s Clubs in the United States. Internationally, the company operated units in Argentina (nine), Brazil (eight), Canada (144), Germany (21), Mexico (405) and Puerto Rico (14), and under a joint-venture agreement in China (three). Wal-Mart employs more than 720,000 associates in the U.S. and 105,000 internationally, and recently surpassed General Motors to become the largest employer in the country. The company also purchased Cifra S.A. de C.V., Mexico’s largest retailer, in 1997, a move that helped Cifra’s standing with analysts.

Wal-Mart plans to open about 50 discount stores, 120 Supercenters and 10 Sam’s Clubs in 1998. It is also making an effort to become the largest music retailer in the country and is offering a “virtual shopper” program that allows people in communities without a Wal-Mart to shop online.