September 21, 2005

Getting Into Wal-Mart

Via Ad Jab, we see how hard it can be for vendors to get on Wal-Mart's shelves:

Getting into Wal-Mart is an entrepreneur's equivalent of making it to Broadway. Even a short run on the shelves there can help transform an invention from niche product to household name. And while Wal-Mart certainly isn't the only retail path to commercial success, nor the right outlet for every product, for mass-market merchandise at a certain price point no other bricks-and-mortar retailer reaches so many shoppers. Today the company has 5,300 outlets world-wide, and gets more than 138 million customers a week.

But as with Broadway, there's more than enough talent to fill the stage. Last year about 10,000 new suppliers applied to become Wal-Mart vendors. Of those, only about 200, or 2%, were ultimately accepted. "We just don't have very many empty shelf spaces," says Excell La Fayette Jr., Wal-Mart's director of supplier development.

It takes 6 months to a year to become a new Wal-Mart supplier with a purchase order; is that a strength or a weakness for WM?

Posted by Kevin at 3:44 PM

August 19, 2005

Garth Brooks at Wal-Mart Only

Wal-Mart is now the monopoly supplier of Garth Brooks, except for the used market of course:

Garth Brooks has signed a multi-year, exclusive pact with Wal-Mart, making the retailer and its Sam's Clubs and Walmart.com outlets the only places where his music will be commercially available.

The deal with Brooks marks the first time an artist -- and certainly a superstar -- has aligned himself and his entire catalog with one chain. (A number of other retailers have started labels, but they were never exclusive to the retailer and most have shut down).

However, it will be a very strange form of monopoly, as I gather output wil not be restricted, and prices will actually be lower...

Posted by Kevin at 7:33 AM

April 11, 2005

Slotting Fees are NOT Efficient - Wal-Mart is

Over at T&B, I noted a study by two Yale professors that showed empirically that slotting fees yielded economically efficient results. This was popularized in Progressive Grocer, which then received very negative Wal-Mart related correspondence:

The Yale/Cornell Study could not be farther from reality.

[T]radition[al] grocery distribution companies such as Winn Dixie, Safeway, Kroger, etc. are losing ground and failing...

-- They have attempted to make money buying goods rather than selling goods...

I think that your organization would be wise to explore these issues with manufacturers that find it much more profitable to do business with Wal-Mart and avoid all of the above, which is putting even more pressure on the traditional grocers.

Ouch. Take that Fast Company.

Posted by Kevin at 10:33 AM

February 5, 2005

Levi Strauss Signature

Here's a puff piece about how Levi's has a 20 support team in Bentonville to service WM's needs.

BENTONVILLE -- "Levi Strauss Signature" proclaims the large sign on the even larger building on Southeast 5th Street in Bentonville. More telling, perhaps, are the words "Wal-Mart Support Team" underneath the title....

"Our whole purpose in being here is to be of service to Wal-Mart," said Kate Morrissey, director of sales for Levi in Bentonville. "We are the customer contact here."

That customer being Wal-Mart of Bentonville -- more specifically, its buyers. Morrissey and her staff meet with them weekly, she said, to sell orders of Levi's Signature jeans, a brand launched in October 2002 for mass retail chains such as Wal-Mart.

Although Levi sells its Signature jeans to other retailers, Wal-Mart was its first customer. The San Francisco-based Levi Strauss & Co. opened its Bentonville office in December 2002 in a 7,000-square-foot building that used to be a furniture warehouse. The only other offices in America that sell Levi's Signature jeans are in Chicago and Minneapolis, according to Morrissey.

Only Wal-Mart is served out of Levi's Bentonville office, which is headed by Ted Fox. Morrissey has been with Levi Strauss for 24 years and transferred to Bentonville from San Francisco. Office manager is Darcy Gay, who has been with the company for two years. She is originally from Little Rock but has worked in California.

"We have a good cross mix of people here," Morrissey said.

She and the rest of the staff deal in sales, operations and replenishment, she said. There is no reception area at the office. Instead, visitors check in by using a special phone set up in the lobby. Beyond glass doors is a large showroom where Levi Signature apparel is displayed on racks and shelves in the same layout as it is in a Wal-Mart store to give buyers a better visual for the products, Morrissey said.

"We're set up in this office similar to how they're set up," she said about Wal-Mart. "It's what I call a cross-functional team."

Note that the signature brand does NOT mean premium quality.

Posted by Kevin at 11:38 AM

December 10, 2004

BEKA won't sell to Big Boxes

beka blocks.JPGBusinesspundit links to a Businessweek article examining why the small business art supply and wooden toymaker BEKA refuses to sell to big box stores:

BEKA, a St. Paul (Minn.)-based independent toymaker specializing in wooden blocks and art supplies, is dealing with the same issues as its retailer customers -- and many of the same fears. With the increasing clout of big-box stores, BEKA President Jamie Kreisman says diversifying the product line and staying loyal to the specialty market are his key defenses....

Q: Have you ever considered selling to Wal-Mart or another big-box retailer?
A: For me personally, it would take changing the way we operate. The mid-tier market provided a large volume for some manufactures, and now they've turned to Wal-Mart now that the middle tier is disappearing.

Remember that the current wisdom is that supplying WM can destroy a company, like Vlasic.

Posted by Kevin at 12:47 PM

November 15, 2004

Mullins Textile Offer Rejected

Reader Chaim Karczag sends along a story about Mullins, SC: Chaim's synopsis:

This is the story of an old South textile town that approached Wal-Mart with a business deal. Wal-Mart reviewed the proposition and declined. Town leaders are predictably disappointed; Wal-Mart says that they couldn't justify it on the basis of their bottom line and
their customers' needs.
Former textile workers offered WM a chance to purchase shirts from an American made company, under a multi-year contract. They knew the shirts would cost more, but they were hoping that WM would invest in a "goodwill" benefit of keeping American manufacturing jobs. WM did not agree that a higher cost and consumer end-price was worth the goodwill:
FLORENCE � Wal-Mart has refused a partnership with a closed textile mill that former workers hoped would restore jobs in Mullins.... the company was not interested in signing a multiyear deal to buy clothing from the Anvil Knitwear plant.

Vice president Claire Watts indicated a five-year commitment was too long...

Wal-Mart spent a lot of time looking at the proposal but found the deal would mean higher prices for customers, spokeswoman Karen Burk said Thursday...

Supporters of the idea said Wal-Mart could create goodwill by the move. Wal-Mart has been in a courtroom battle with residents over its plans to locate a Supercenter in neighboring Florence County.

The town and Anvil�s proposal to Wal-Mart executives said their research showed South Carolina Wal-Mart shoppers would pay more for a T-shirt made in America. A shirt manufactured at Anvil in Mullins would cost about 75 cents more than a shirt made outside the United States, according to the research.

Wal-Mart �gave absolutely no credence to the validity of our �buy American� research,� Florence attorney Marguerite Willis said.

Wal-Mart spokeswoman Burk said the company regularly does business with domestic suppliers, but in this case, the company�s research indicated that customers would not be willing to pay more for products made in the United States.

�While most of our customers would probably agree with this philosophically, they just aren�t willing to pay more for domestically made merchandise,� she said.

Please pay attention to the bolded section

Posted by Kevin at 2:12 PM

November 11, 2004

How to Become a WM Supplier

Sterling Wright gives us the skinny on how to become a supplier to the largest retailer in the world. Points seven and eight are independently interesting:


(7) Always place your bid at the lowest cost possible. Wal-Mart always makes decisions based on cost. If you can save them money, you have there attention. Remember you can make more money on output.

(8) If you are a minority owned business don't pitch only on your minority status. Make sure that you have an expanded portfolio of products and services that save money and time at the end of the day. Or, they had better make them money. Make sure that you are international in scope. Remember you want to do business not only in the U.S., but in Latin American, Europe, and China. By being internationl, you can offer a strategic partnership. More importantly, Wal-Mart biggest parts are in Latin America and China. There is money to be made in both markets.

Posted by Kevin at 6:23 AM

July 14, 2004

George

Wal-Mart has not hit the clothing industry as hard as entrenched suppliers and retailers thought. Although meeting internal targets, Wal-Mart's internal line of clothing is not flying off of shelves.

Created by George Davies, the former owner of a successful chain of British apparel stores, George was part of the Asda supermarket chain in the U.K. that Wal-Mart acquired in 1999. The sleek but inexpensive clothes for women and men helped bring Asda back from the brink of insolvency in the early 1990s. As it expanded into accessories, undergarments and trendier styles, it grew to become the second-biggest selling apparel brand in the U.K., behind only Marks & Spencer. To make George a successful global brand, the company must adapt to a more demanding production cycle.

Acknowledging that looks really do matter, Wal-Mart is rolling out new apparel displays, with brighter lighting, wooden floors, and special signs designating each brand. Don't expect to see flashy TV ads for George or any of Wal-Mart's private-label apparel. Wal-Mart still spends less than 1 percent of sales on advertising, which rarely focuses on anything but price, compared with 3 percent for Target Corp.

Posted by Kevin at 12:54 PM

June 2, 2004

Retailer Scorecard

This retailer scorecard is supposed to give an indication of the level of sweatshop abuse by suppliers of major retailers. Which it does... sort of. But how would you feel if you received an F in school this semester for work you did 3 or 5 years ago?

In fact, WM receives an F for contracting with almost all the companies that have had at least one "labor abuse"--and that abuse does not have to be at factories producing goods that actually bought by WM.

I'm all for looking at the labor conditions of sweatshop workers, but this methodology stinks.

Posted by Kevin at 8:15 AM