Upscale Tastes Invade Wal-Mart's Hometown

Wal-Mart is not the only company cranking out wealth in northwest Arkansas. J.B. Hunt Transport Inc., the trucking company, and Tyson Foods Inc., both major employers, are based here. But neither has the global reach or supplier network of Wal-Mart. "Around here, Wal-Mart is the catalyst," said Bill W. Schwyhart, a partner at Pinnacle Group, which is developing a $200 million upscale shopping center near Wal-Mart's headquarters.

And by Wal-Mart, Schwyhart means its vendors.

In nondescript office parks that have cropped up across the region, the biggest names in consumer goods--Procter & Gamble, Gillette Co., Nestle and PepsiCo Inc.--are packed in cheek-by-jowl with tiny manufacturers such as Dolly Inc., a children's clothing firm, and cigar-maker Swisher International Inc.

No one knows the exact number of suppliers who have opened shop near Wal-Mart, but local officials put the number at 2,000, and predict the figure could eventually double.

The phenomenon began in 1989 after Procter & Gamble, Wal-Mart's largest supplier, opened a 10-person office in Fayetteville, Bentonville's neighbor to the south. Today, P&G's Wal-Mart staff has ballooned to 200.

There are now 20 office parks dedicated to Wal-Mart vendors. Disney, for example, shares a building with Vivendi-Universal, Welch Food Inc. and Sargento Foods Inc. Signs on the office doors read "Wal-Mart-support unit" or "Team Wal-Mart" and, inside, the walls are covered with photos of and quotes from Sam Walton, a tribute designed to catch the attention of visiting Wal-Mart executives more than the supplier's staff.

A long-running debate rages about whether Wal-Mart encourages its suppliers to operate in the area -- Wal-Mart says it takes no position on the issue -- but no one underestimates the importance of being in town. Suppliers who live and work near Wal-Mart's headquarters can schedule last-minute meetings with buyers, hand-deliver samples of their latest products at all hours and, most importantly, cultivate strong personal ties with company executives.

A decade ago, Wal-Mart's suppliers flew into town for a round of meetings with buyers and returned home to Cincinnati, Houston or Boston at the end of the day. Now suppliers and buyers live on the same street, attend the same churches and coach the same little league teams.

"Suppliers know that if they don't have a presence here, their competitors will," said Chuck Sharpe, whose company, C. Sharpe Real Estate Group, owns eight Bentonville office parks occupied by Wal-Mart vendors. "They can't afford that."

Once here, suppliers demand the life they left behind--and, if they cannot find it, they build it. Lou McCleese, a logistics expert for Johnson & Johnson's Wal-Mart office, plowed her savings into Fusion, the art gallery and supply store in downtown Bentonville.

When Phyllis Charette, the wife of a Johnson & Johnson executive, could not find the kind of upscale women's apparel store required to fill out her wardrobe, she started her own, calling it All About Her.

Across the street from Wal-Mart's headquarters, several out-of-town Jewish suppliers have converted a three-room office into a prayer space, available whenever they come through town. A basket of yarmulkes sits on a conference table and copies of the Old Testament line a bookcase.