IE 11 is not supported. For an optimal experience visit our site on another browser.

Wal-Mart helps spawn a modern company town

Call it the modern company town. As Wal-Mart has grown from its small-town roots to become the world’s largest retailer, more than 1,000 companies that do business with Wal-Mart have flocked to the area, opening offices intended just to serve one of their most powerful customers.
Wal-Mart Rehabilitates Its Image
A luxury SUV drives through new construction in one of Bentonville, Ark.'s ritzy developments in this March 16, 2005 file photo. Wal-Mart's hometown has seen a boom in construction as the discounter's suppliers have flocked there.Gilles Mingasson / Getty Images file

The sign at the small airport near here welcomes travelers to Northwest Arkansas, but it might as well say, “Welcome to Wal-Mart country.”

Elsewhere at the small but growing airport that serves Wal-Mart’s Arkansas headquarters, the evidence is more pronounced. A glass case features memorabilia about the world’s largest retailer and its folksy beginnings. Even the map from an airport car rental service is peppered with Wal-Mart’s signature smiley-face logo to indicate where the many nearby stores and corporate offices are located.

Perhaps most telling, while you still take a two-lane road past sleepy-looking farms to get to Wal-Mart’s Bentonville hub, along the way you’ll pass sprawling mini-mansions perched on those rolling hills. The upscale housing is the first of many signs that this pocket of Arkansas, which boasts about 420,000 residents, is not your ordinary rural outpost.

Call it the modern company town. As Wal-Mart Stores Inc. has grown from its small-town roots to become the world’s largest retailer, more than 1,000 companies that do business with it have flocked to the area, opening offices intended just to serve one of their most powerful customers. Because Wal-Mart is such an important client, the branch offices often are populated with the type of senior executives who demand amenities that commonplace in  larger metropolitan areas.

“The people who came here as suppliers, and who continue to come here as suppliers, are compensated extremely well for having that kind of responsibility,” said Rich Davis, vice president of economic development for the Bentonville/Bella Vista Chamber of Commerce.

Wal-Mart, too, has recruited workers from New York and other major cities in recent years, and these transplants welcome the upper-end amenities, locals say. Wal-Mart declined to comment for this story.

While the barebones discounter may be known for its no-frills offices and penny-pinching corporate culture, Wal-Mart’s suppliers, and perhaps the company's employees themselves, don’t necessarily extend such thrifty ways into their private lives.

Mini-mansions and ritzy malls
Real estate listings abound for sprawling homes featuring lavish pools and grounds, exercise rooms and gourmet kitchens.

Rogers, the small town next to Bentonville that was the site of Wal-Mart founder Sam Walton’s first discount store, is now home to a ritzy mall featuring higher-end retailers such as Coach and Nine West.

Other mainstays of nicer suburbs also have come here over the last few years. It’s easy to find a Starbucks in northwest Arkansas, and neighbors cheered the arrival of upscale chain eateries such as P.F. Chang’s China Bistro and Bonefish Grill.

Gary Dunn, a former Wal-Mart executive who now runs a consulting firm for suppliers, jokes that a few years ago, consumer products didn’t make it to Bentonville until two years after they could be found elsewhere in the country. Now, he can peruse high-tech gadgets at Sharper Image and enjoy fresh fish at a nice restaurant whenever he likes.

“Early on it was a challenge to get people to come to Bentonville,” he said, but now people are a lot more interested in locating there.

The four-county metropolitan area's population increased by about 20 percent between 2000 and 2006, to around 420,000 residents. Bentonville alone has seen its population swell by nearly 50 percent, from 19,730 in 2000 to 29,538 as of 2005.

Mark Kreymborg, who moved here eight years ago and is director of operations for American Greetings Corp.’s Wal-Mart team, said the region’s increasing traffic can sometimes be a drag. But overall, he feels lucky to live in “a small town with some big-town amenities to it.”

“A week rarely goes by without a new restaurant or a new hotel, and all that’s good,” he said.

Kreymborg laughs a bit at the increased cost of housing and the number of Starbucks he now sees in the once-rural landscape. But, he says, it’s a classic case of supply and demand.

“Any time you make money, the tendency is to want to spend it on nice things, whether you’re a Wal-Mart person or a vendor who moved down there,” Kreymborg said.

Northwest Arkansas also is getting other more sophisticated amenities. An elaborate art museum is in the works for Bentonville, and there are plans to bring minor-league baseball to nearby Springdale. A new, mostly privately funded library was recently completed. Golf is plentiful.

Northwest Arkansas Regional Airport, which opened about a decade ago at the urging of the Walton family and others, is expanding quickly to keep up with growing demand. Although there have been no official studies done, airport director Kelly Johnson said she could “very safely say” that at least 50 percent of travelers who pass through the airport are in some way affiliated with Wal-Mart and its vendors.

“It’s hard to imagine us having an interstate highway and an airport of that magnitude without a Wal-Mart. Those things just don’t make sense,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville, about 25 miles from Bentonville.

There are certainly plenty of other cities that are closely connected to a corporation, such as  Rochester, N.Y. (Eastman Kodak Co.) and Cincinnati (Procter & Gamble). But the Bentonville area is unusual in that it is so rural and so largely dependent on one company. (Although there are two other major corporations headquartered in the region, Tyson Foods Inc. and J.B. Hunt Transport Services Inc., Wal-Mart’s presence is most broadly felt.)

“What makes Bentonville or the northwest Arkansas (area) so unique is to find the largest (retailer) in the world in a city of this size. The other companies are in much bigger cities,” Deck said.

Area not immune to real estate woes
Although growth has been going on for some time now, construction sites still dot many roads, promising new banks, hotels and commercial space.

But the Bentonville area, like many parts of the country, has not been immune to the real estate downturn. Hampered by overbuilding, there’s a hefty vacancy rate for commercial space, and the residential market is sagging. That means it’s a buyer’s market for the next executive who comes to Bentonville looking for a McMansion. A typical listing of $400,000 to  $500,000 features a four-bedroom, four-bathroom house, ranging from 3,000 to 4,000 square feet and including amenities such as a pool, sauna or state-of-the-art kitchen.

The region’s job growth also is down from a peak of adding a whopping 600 jobs a month, although Deck said 350 to 400 jobs are still created monthly. Population growth also remains intense, with the area’s population expected to grow larger than the county that includes Little Rock within two decades.

Deck thinks some speculators overestimated demand for high-end housing in the region, but she doesn’t attribute the real-estate slump to Wal-Mart’s stagnant stock price or other woes. Wal-Mart recently said it would cut back on new store openings as part of a push to improve business at its existing stores.

“Certainly this region is incredibly dependent upon Wal-Mart, but I don’t think that we’re dependent upon Wal-Mart’s quarter-to-quarter financial success,” she said.

Some expect the next wave of growth to come from Wal-Mart’s international suppliers _ the manufacturers in China, India and elsewhere who are also increasingly seeing the benefit of being closer to Wal-Mart’s home office.

Dunn, who is focusing on that business through his firm, Global Supplier Development, said he’s already seeing more restaurants and stores featuring items geared toward international transplants. In another sign of the times, a local church congregation recently asked him if they should consider adding a Chinese minister to the staff.