That's how it all started. Wal-Mart Operators, Distributors, and Manufacturers from all parts of the country made the trek to Bentonville, Arkansas in April for the inaugural, two day Wal-Mart "Vendor Round-up". We opened the meeting with Other Income Director, David Graham, Other Income Manager, Britain White, and the entire Other Income staff leading the group, estimated at approximately 150 strong, in the Wal-Mart cheer. The cheer resembles the dance to YMCA but with different letters and no costumes. I'm not one to generally name names, but seeing Ken Anderson with Sega, doing the Wal-Mart cheer, early in the morning, was not a pretty sight.
In addition to the business conducted at the meeting, with the help of a silent auction with equipment donated by Wal-Mart equipment manufacturers, the two day event raised $72,000 for the Children's Miracle Network charity.
First, a little background for the those not familiar with the Wal-Mart ways of amusement vending. I describe it as they have an in-house Best Vending type structure. They have one department within Wal-Mart in Bentonville that deals exclusively with amusement vendors of cranes, video games, kiddie rides, and bulk vendors all over the country. They manage the vending for over 3,000 stores across the country. Wal-Mart's share of vending income for 1996 was substantial. If you live next door to a particular Wal-Mart store, and your brother is the manager, you still go through the Other Income Department before you do business with Wal-Mart in vending.
Wal-Mart Other Income has gotten some new blood in the last year. His name is Britain White. He works with David Graham, the Director of the Other Income department. Britain is a young, confident, aggressive, yet genuinely sensitive to the effects he has on vendors when making tough decisions. What I'm trying to say is that if you're not doing your job for Wal-Mart, you're gone, but he'll feel bad and takes no joy out of causing someone financial hardship. Make no question about it though, he is responsible to Wal-Mart shareholders and his goal is to increase Wal-Mart incomes. Some Operators have lost a great deal of Wal-Mart business this year, while others have been given new opportunities to expand their Wal-Mart relationship. The Other Income sales goal for 1997 is an aggressive double digit percentage increase for vending revenue, and they are on target through the first five months.
The method is very simple and one that all businesses that have amusement vendors should take note of. Most businesses insist on the newest and best equipment while insisting on 50% commission rates. Except in only a very few high income locations can an operator make any decent return by paying 50% commissions on new equipment. Wal-Mart recognized this and created a "Headliner" program where they select certain new games that they would like in their stores, and for this headliner program, proposed a reduced commission split, in the Operators favor. The video game headliner program consists of Cruis'n the World, Cruis'n USA, Daytona, Tekken 3, San Francisco Rush, and a number of late model video products, sixteen in all. They have a similar program for licensed kiddie rides. Their goal is to have a headliner video game, and licensed kiddie ride, in every store in the country in 1997. They've given the Operator's the tools, and is now asking them to perform. In a perfect world, Wal-Mart would like to have nothing but headliner games, at the reduced commission split, in every store, but they are not asking for that. They recognize that they are much better off getting a lower percentage from a new game rather than 50% of an older game. As the industry changes other companies need to take note of how lower percentages can mean more bottom line dollars. Wal-Mart solved the operators primary objection, commission splits, and then demands performance.
Another important part of Wal-Mart's new "R.I.S.E. (Rotation, Income, Service, Equipment) program, is rotation of games. Wal-Mart wants all video and kiddie rides constantly rotated in all stores. They want video rotated every three to six months and kiddie rides every three months at a minimum. As an Operator I find this the most challenging part of the new program.
There were a number of awards that were given out to Operators for outstanding performance by the Wal-Mart Other Income Department. They first place winners in each category were: Bulk Vendor, Folz Vending; Crane Vendor, Sugarloaf; Video Game Vendor, Sunshine Enterprise; Kiddie Ride Vendor, Dudley's Kiddie Amusements; Most Improved Vendor, Quality Amusement; and Overall Vendor of the year was K&K Sales.