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Is Walmart Getting Involved in a Job Opportunity Zone Near You??

By Carole Cohen

Real Estate Agent with Howard Hanna Cleveland City Office

February 19, 2007 09:56 PM

steel mill smoke stack Lo and Behold: WALMART announced that they are participating in Job Opportunity Zones in ten cities. How did I find this out? And what is it? Let me explain.

WALMART as we know, has been taking it on the chin by groups of citizens wherever they plan a store; some are thrilled but this inevitable group of people springs up and says, we don't want you, you will take away jobs from locals. Walmart is answering this objection with Job Opportunity Zones. One already exists on the west side of Chicago. Now nine more are planned:

Decatur Georgia, El Mirage Arizona, Landover Hills, Maryland, Portsmouth Virginia, Richmond California and Sanger California.

And Cleveland Ohio.

What does it mean to have a Job and Opportunity Zone? Walmart says they will aid in the growth of jobs and provide economic opportunities by giving money to local organizations. Walmart's website says Chambers of Commerce. That may be true in Cleveland or maybe the local Tremont West Development Corp. will get the monies. In any event, the money takes two forms:

1. grant money ($300,000 in Chicago) to aid minority and women owned business and small business owners.

2. provide local newspaper advertising for these businesses (over and above the grant money) and then they:

3. allow for advertising of these businesses in the local Walmart.

Wondered today what was happening with Walmart, Steelyard Commons and the City of Cleveland. First we heard that Walmart was the best thing since sliced bread for the greater Tremont Neighborhood in Cleveland. We saw Steelyard Commons taking shape with a Steel Museum, Walmart and a few other shops and supposedly tax monies directed to the completion of the tow path work. Then the honeymoon seemed to be over, brownfield remediation of the site of Steelyard Commons allowed for tax abatements and we saw some of that money disappear before it ever got here.

But Wait! WALMART has decided to forgo their portion of the tax abatement, and instead, invest in Tremont, the neighborhood Steelyard Commons borders. This all came from Walmart press releases February 19th. Maybe a Chicago Active Rainer can clue us in on the one existing Job Opportunity Zone on the West Side of Chicago. In any event, it sounds like Walmart is trying to come up with a happier resolution to the tax revenue/tax abatement issue in Cleveland's Steelyard Commons. Peace Out - 3C

UPDATE: Cleveland.com is finally featuring this story, and they have an audio podcast of Cleveland's Mayor Jackson discussing the significance of Walmart 'opting out' of their allowed ten year tax abatement.

Enjoy Big Yellow Taxi while you read this.

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Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Kevin, you do realize AR is a two way street so even though you are new, look at all the new info you provided all of us here. TY!

Feb 25, 2007 02:43 AM

Kevin Weilacher

Statewide Home Mortgage - Canton, OH

Carole,

Again, thanks... I do realize that AR is a two way street... When I found this site my first thought was "Cool, a new website to find thoughts and ideas to help expand my business and network with some new realtors"

I'm always on the hunt for new opportunities...

But, rest assured...if I see a topic that I have some info or thoughts on... I'll be sure to chime in..!! :-)

I'm glad to be here and welcomed to the community..

Oh, and one more thing....Mitchell... My wife owns one of those 10$ Rolex's that she bought when we visited her brother in NYC. She has had it for years and it works great... as a matter of fact, she bought two of them just in case one broke.. but the first one still ticks on... :-)

Feb 25, 2007 09:58 PM

Anonymous

Apella

Wow, I have just stumbled onto your blog and will be adding it to my blog links. I find this subject to be so inviting because I have studied business big and small and Wal-Mart closely. From what I can gather this is a hot and great topic. The topic has been around in the real estate news for a while and you may like to read up on the FDIC ruling as of this month. I wrote about it in a blog item titled What A Week please be my guest.

Empowerment Zones are a tricky subject no matter who or what may be involved with them.

In Wal-Marts defense I would first like to note that the chain was not only big enough and organized enough that they responded better then the Federal Government and FEMA in the Hurricane Katrina disaster. The response was so much better that major magazines hinted at the Federal Government studying Wal-Mart to improve on their own systems. The private sector showed once again how the Government needs to be ran like a business.

As far as the banking issue, Wal-Mart is interested in establishing a commercial bank sometimes called an industrial bank, which is the same as GE who backs the Lowe's credit card and also has a sub-prime mortgage operation that has had recent problems. GE is also owner of NBC and in an alliance with Microsoft.

The Home Depot also was applying for an industrial bank and both Home Depot and Wal-Mart has had the process but on hold by the FDIC ruling as of early this month. The reason is that these companies wish to start banks is so that they can own their own credit cards and save in the merchant fees charged to them by companies like Visa and Master Card ranking in the Billions. Target and Sears also have their own credit cards with Sears recently selling theirs. K-Mart and Sears merged a couple of years ago, which I think saved K-mart somewhat because of the Discover Card. Merchant fees are charged to both small and large business alike. Credit makes more money then products as GM showed with their GMAC.

The issue of small mom and pop companies being put out of business can be countered if the small business community works together such as farmers did to combat foreign subsidies twenty years ago, they formed coop's which are like mutual funds in a way, and a totally different subject. This concept is not all that far out of the mainstream. Last year when ABN Amro who is based out of the Netherlands was looking to buy into the Italian banking market, the smaller banks in Italy complained saying the same thing that they would be put out of business, the Italian government replied to their concerns stating that they should merge and work together if not in a coop. The problem in Italy is the same here, no one wanted to work together. Italy got lucky when ABN Amro started to have some internal problems and decided to focus on them selves instead of acquisitions, another long story.

I think where the real estate and lending industry has problems is first realtors do not want you to be able to buy a house with the scan of a bar-code off of the shelf, however you can from E-bay and the Big Lenders are looking at the credit card market to back the mortgage market, maybe even transfer the note, I do know that the FDIC is concerned with the amount of money that flows into the credit card industry by big retailers such as Wal-Mart and Home Depot.

If the country wants to move out to the service sector and its lower paying jobs then as a country we need to become a technological and educational based country and sell these goods to the up and coming third world. Blaming Wal-Mart only buys the rest of the global market like India time.

Thanks for the topic, I will follow your blog a lot closer, please keep up the great work!

Feb 28, 2007 06:38 PM

#51

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Apella, I thank you for your response, you have obviously done a lot of thinking surrounding this issue and I love it when people bring thoughtful information to the 'blogging table.'

I have not yet been able to find good (or any) information on Walmart and banking but I am looking. You referenced a blog post of yours and I would like to read it, can you provide the link here?

The only issue I take with you is about farmers. Farming has not rebounded, subsidies have not solved the problem, and the suicide rate among farmers has historically been higher than any other industry and I think that says volumes about how badly the situation has turned out in agriculture.

I so agree with you about education and technology. Cleveland is (finally) being aggressive and pro active about finding our technology niches and fostering continued growth in those niches. Thank you so much for your kind words and mostly your thoughtful analysis.

Mar 01, 2007 01:22 AM

Kevin Weilacher

Statewide Home Mortgage - Canton, OH

Carole,

You mentioned that you couldn't find any good info on Walmart and banking..

Here is a great article from Business Week..

Close Window

FEBRUARY 7, 2005 

NEWS: ANALYSIS & COMMENTARY

Wal-Mart: Your New Banker?

Wal-Mart can't be or own a full-fledged bank -- yet -- but its partnerships and in-store financial services are giving the industry jitters

Wal-Mart Stores Inc. (WMT ) didn't get to be the world's biggest retailer by giving up easily. So despite being twice thwarted by lawmakers in its efforts to buy a bank, it has quietly but tenaciously expanded its foothold in financial services. In its latest move, announced on Jan. 21, the retailing giant is introducing a no-fee Wal-Mart Discover credit card that offers 1% cash back, which it will launch with GE Consumer Finance (GE ) in March.

The retailing giant's relentless push into financial services is starting to send shivers through the banking industry. Few believe Wal-Mart will stop with basic services as it applies its low-price, high-volume formula to yet another business category. And while other companies, from Nordstrom (JWN ) to General Motors (GM ), have bank and thrift charters or hybrid Federal Deposit Insurance Corp.-insured industrial loan companies (ILCS) in tow, no one trips alarms like Wal-Mart. Many community bankers are convinced the behemoth won't rest until it has obtained full banking powers. "It's not a question of if Wal-Mart's going to be a bank, it's a question of when," says D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte.

Clearly, Wal-Mart is on the move. Over the past three years, the giant has steadily built alliances with financial-service providers, such as MoneyGram International (MGI ) and SunTrust Banks (STI ), enabling it to offer services such as bargain-priced money orders and wire transfers. It has bank branches operated by partners in nearly 1,000 of its massive supercenters. And it has stepped up the pace. SunTrust is experimenting with nearly 45 in-store bank branches co-branded as "Wal-Mart Money Center by SunTrust," with plans to expand to about 100 of them by early 2006.

Already, Wal-Mart customers are reaping the benefit. They can cash payroll checks for just $3, transfer money to Mexico for $9.46, and buy a money order for 46 cents. Some competitors charge twice as much. These are mostly high-margin, highly fragmented businesses in which the poor and immigrants are sometimes at the mercy of unscrupulous operators. "Traditionally, nonbank vendors of financial services have charged an arm and a leg," says David Robertson, publisher of The Nilson Report, a newsletter about credit and debit cards. Adds Gary Stibel of New England Consulting Group in Westport, Conn.: "Wal-Mart is giving people in lower-income brackets opportunities in financial services they never had before."

Financial services could open a rich new vein of profits for Wal-Mart as it seeks to remain a growth company. By one rival's estimate, the market for services that Wal-Mart already offers is worth about $5 billion a year in fees, leaving plenty of room for it to slash prices while making a profit. As it has with other goods, Wal-Mart will slowly "collapse the price umbrella," squeezing check cashers and wire-transfer leader Western Union Financial Services (FDC ), predicts Robert G. Markey Jr., consultant Bain & Co.'s director for financial services.

For the time being, though, the basic services it offers represent little more than a rounding error for the $287 billion goliath. Wal-Mart doesn't break out results for the unit, lumping them into the company's "other income," which totaled $2.1 billion in the first three quarters of the last fiscal year. That was up 31% but amounted to just 1% of total revenues. Still, there's huge potential for growth. Says banking consultant Bert Ely of Ely & Co. in Alexandria, Va.: "They're developing, in customers' minds, a link between Wal-Mart and going to the bank. That has powerful long-term implications."

PERFECT FIT FOR UNDERDOGS
Not all financial-service suppliers are willing to ride this tiger. Jane J. Thompson, president of Wal-Mart Financial Services, concedes that "some of the leaders in the industry don't want to hurt their margins and don't want to work with us." But MoneyGram, with a market share of around 1% in global money transfers, is a distant No. 2 to Western Union, which has 12%. For such players, Wal-Mart promises huge volumes of business through its 3,100 U.S. stores and more than 100 million customer visits a week. As the underdog, MoneyGram was already cost-conscious and focused on growth, not on protecting margins -- a perfect partner for Wal-Mart, says MoneyGram Vice-President Daniel J. O'Malley. And it can't hurt to learn how Wal-Mart does business, notes SunTrust Executive Vice-President Christopher T. Holmes, especially if Wal-Mart achieves full-fledged banking status.

Could Wal-Mart really become a bank? First it would have to take on current prohibitions on combining banking and commerce. The laws were designed to prevent a big player such as Wal-Mart from denying credit to competitors or shifting losses from its retail business to an insured bank. But many expect Wal-Mart to overcome those rules. Ronald K. Ence, vice-president of Independent Community Bankers of America, says Wal-Mart lobbied last year to expand the banklike powers of the ILCs. A bill that passed the House, but not the Senate, in 2004 would have allowed unlimited interstate banking, but only for those with at least 85% of their business in financial services.

Wal-Mart denies any such lobbying. It tried to buy a savings bank in Oklahoma in 1999, only to be blocked by the Gramm-Leach-Bliley Act, which overhauled federal banking law. And the California legislature halted Wal-Mart's plan in 2002 to buy a small ILC.

Yet if Wal-Mart were to gain full banking status, it would be able to offer everything from checking and savings accounts to mortgages, car loans, and even small-business loans at prices that rivals could be hard put to match, let alone beat. "There's no question, they want to have a nationwide financial-services network. If they do, there's no doubt in my mind they'll be able to do to community banks the same thing they've done to the local grocery store and the local hardware store and the local clothing store," says the community banker group's Ence.

Wal-Mart insists its financial plans don't depend on owning a bank or a thrift. "Our strategy is what you see," says Wal-Mart's Thompson, who was once executive vice-president of Sears, Roebuck & Co.'s (S ) credit business. The services Wal-Mart offers are aimed squarely at its core, lower-income customers and employees. Many are among the estimated 56 million American adults who don't have a bank account. "Helping the underserved customer gets right at what we like to be known for," says Thompson, who joined Wal-Mart in May, 2002. More important than the unit's profits, she says, is that these services bring customers into stores more often.

She seems to have learned from Sears's ill-fated effort in the 1980s to create a financial supermarket with its Allstate (ALL ) insurance, Dean Witter brokerage, and Coldwell Banker Real Estate units. Sears lost focus on its core business and found that many customers didn't want to buy mutual funds or insurance from the same place that sold them appliances. "My whole thing is about starting with the customer," says Thompson, who joined Sears in 1988 and took over its credit operation in 1993.

BEING SMART BY BEING WARY
Even though Wal-Mart may be following a gradual approach to avoid Sears' mistakes, it occasionally hints at bigger ambitions. On its Web site, Wal-Mart describes itself as "a trusted name in financial services." In stores, it's slapping its powerful brand on the money centers operating in them.

So far big rivals say Wal-Mart isn't hurting them. 7-Eleven (SE ), which offers check-cashing, money orders, and the like through 1,000 electronic store kiosks, says it's focused on convenience, not offering the lowest price. Likewise, Eric C. Norrington, a spokesman for Ace Cash Express Inc. (AACE ), the nation's biggest check-cashing chain, says Wal-Mart hasn't affected his company's pricing or growth. "Wal-Mart has validated the importance of this market segment. That's attention we welcome," he says.

But as toy retailers, grocers, and even jewelers have painfully discovered, complacency in the face of Wal-Mart can be suicidal. Given the giant's long interest in the financial arena, technological savvy, cheap capital, and instant national reach, small and midsize banks, in particular, are right to be paranoid. Even big ones should be wary. "The mistake would be to stick your head in the sand and try to convince yourself that Wal-Mart is not a factor," says Bain's Markey. For no matter what the obstacles, Wal-Mart seems determined to be a force in finance.

 By Wendy Zellner in Fayetteville, Ark.

Mar 01, 2007 03:53 AM

inactive AR account

Dayton, OH

This makes my blood run cold.

Mar 01, 2007 04:46 AM

Anonymous

Apella

Carlole,

I respect your point on farming, coming from a small farming community I follow that close.

Thank you for requesting the link, Table Talk With Apella is my blog the item is What A Week! where I mention the FDIC ruling. It is a little older post but the item refers to a Reuters report by John Poirier FDIC extends freeze on retailer's bank for 1 year. Was the first post in that blog hoster so no links -test mode- but if you refer to the title on Reuters it is still new enough where you should find it.

On the blog you will find links to real estate and business news sites and blogs! The newer post all have links to news.

Thanks again for asking - Please look for a link to your site with in the next day or so!

Mar 01, 2007 06:44 AM

#55

Lola Audu

Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI

Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Carole, Thank you for this extremely insightful post. We just wanted you to know that we have included this blog post in the Suggested Reading Guide for the 2nd Edition of Fraiche Aire RendezVous in Black & White. We're delighted that you are a part of our group!

Mar 01, 2007 12:16 PM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Kevin, ty, I read most of it, been a long day so I will come back and read it again tomorrow

Apella, I checked out your blog site earlier but ty now I have the link; I will visit that too;

Lola, TY VM

Theresa: yeah my blood is not happy either

Mar 01, 2007 12:54 PM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

I remember the Sears fiasco. I've read the above story three times; offering atm machines is one thing; I'm not sure I'm ready for more but no one asked me.

Mar 02, 2007 06:43 AM

Sharon Leigh

Sharon's Graphic Reality - Port Saint John, FL

(Graphic Reality) Got PhotoLogo? CandelLife@Gmail.

I admit to shopping at Walmart superstores but I still hold some resentment for them when their employees work full time hours and still qualify for government assistance even though they work a full time job for a living. While they plan these "zones" to benefit others, it would be nice to read of them paying their employees a decent living wage.

Mar 04, 2007 05:08 AM

Mark H. Roe

BeSure Home Inspection Service - Lancaster, OH

BeSure Home Inspection Service

Very Interesting information. I wonder if this will happen here in Lancaster, Ohio with what I have been told is going to be the largest WalMart super store ever built in Ohio? I guess it is a wait and see.

Mar 11, 2007 02:30 PM

Kevin Weilacher

Statewide Home Mortgage - Canton, OH

Looks like Wal-Mart is dropping it's bid to get into the baning biz.... Yay..!!

http://money.cnn.com/2007/03/16/news/companies/walmart/index.htm?cnn=yes

Mar 16, 2007 04:50 AM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Hi Kevin I just read the story and this is going to sound odd coming from me, but, it seems discriminatory if Target and other 'box' stores already have that type of banking designation. Im no fan of Walmart, so maybe a finanical person needs to tell me why it's a bad idea or not discriminatory.

Mar 16, 2007 09:59 AM

Elaine Reese, REALTOR® in central Ohio

Real Living HER, Powell Ohio - Powell, OH

Carole, just checking in because I just read about Walmart on Earthlink's news page. My take from that article was it was because they just didn't trust Walmart. The 'give an inch - take a mile' problem.

Mar 16, 2007 01:41 PM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Hi Elaine, I agree, it sounds like that to me too. I'm just wondering if it's a double standard. Don't get me wrong, I do not necessarily like Wal Mart all that much as we have all discussed here LOL

Mar 16, 2007 02:02 PM

Elaine Reese, REALTOR® in central Ohio

Real Living HER, Powell Ohio - Powell, OH

Target, Home Depot and Lowe's are "good citizens". When we worked with them (in my former life), they have much higher standards than what Walmart has. I think that's why it wouldn't be discriminatory. Walmart just has so-o-o much bad press due to their own actions. They would sell their soul to the devil to make a buck.

Mar 16, 2007 02:17 PM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

It's called, I guess, Making Your Bed and Then Laying In It? :-)

Mar 16, 2007 02:28 PM

Carole Cohen

Howard Hanna Cleveland City Office - Cleveland, OH

Realtor, ePRO

Pat Combs, President of the National Assn of Realtors® had an official comment on Walmart's withdrawal of it's efforts to increase it's banking umbrella. She talks about how mixing finance and commerce is a bad idea for our country. I can't help but say that even though Target and Lowe's may be 'better neighbors' (and I agree), it's still a double standard! I suspect Walmart would have had a strong case if they had continued in this effort, or, that Target and others with the increased banking items, might have lost theirs?

Mar 17, 2007 09:22 AM

Elaine Reese, REALTOR® in central Ohio

Real Living HER, Powell Ohio - Powell, OH

Did Target & Lowe's want to do the same thing as Walmart regarding the financing? I've never heard that the other two companies are wanting to do the same thing.

Mar 17, 2007 01:00 PM