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

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.

Posted by Carole Cohen Realtor®, ePRO on 02/20/2007 05:56 AM

Comments (68)

3c, steelyard commons, walmart, cleveland economic development, tremont, mayor frank jackson, tax abatement

This post has been included in Ohio Information Cuyahoga County, OH Information Cleveland, OH Information

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

FEB

2007

First I heard about this on my local NBC news at eleven channel. Then I went to Walmart's website. None of the other local blogs or papers have picked this up yet so it's hot off the press. See it pays to be a nightowl.

Sounds like Wal Mart is on a serious public relations campaign. Guess I'll check it out on google and see what's happening. Thanks for sharing this news.

I'm not ashamed to admit I love shopping at Walmart. When I encountered my very first Supercenter in Ft. Myers while on vacation I thought I'd died and gone to heaven. I am happy to see that they've started this. It's a win-win thing. Good job as usual Carole. =) Thanks.

I will be watching for more information on this story. I hope the women and minority groups don't come up with a product or service that Walmart already offers.

Walmart got kicked out of Brooklyn NY...

Big box stores don't do good here.

We've got a Super Wal-Mart in the making here. It was a regular Wal-Mart but about to be one of the super ones, and I can't wait till they're done and it's ready for re-opening. Speaking of that, I've got to stop by there later today - better get my list out!

Seriously, I do think Wal-Mart works very hard to be really good community supporters wherever their stores are, and in many places where they aren't.

Ann

Carole,

We have Walmarts galore in NH and as far as I can see they have added to the communities they are in. I also shop Walmart for certain things....I price shop and Walmart and BJ's are very popular.

The media's targeting of Walmart is just a continuation of the socialization of the county. If you believe anything other than that you shouldn't be in this business Real Estate for we're not here for the social good we're here to make money... bottom line. Just like Wally World....

Giving a retail chain tax abatements is corporate welfare. I doubt we will be getting a WalMart... They probably wouldn't or couldn't pay the high rent here.

YES. The Landover Hills location is the first "inside the beltway" Wal-Mart. They will be greatly welcomed. Underemployment is higher inside the beltway in Maryland than other areas. Unemployment for Prince George's County is 4%. But, the location of this Wal-Mart is in an area of higher unemployment and lower incomes. It is also a very densely populated area. So, it will ge good business for Wal-Mart too.

It will be welcomed.

TOTOH, there are a lot of union government employees in the area. It will be interesting to see how that plays out.

Does this really make up for the fort

I live in a small rural valley in southern California. Our original Walmart closed shop 1 1/2 years ago when the new Super WalMart opened. Now our sister city, San Jacinto is bracing for the 2nd Super WalMart in our Valley of about 100,000 residents. seems like a lot of Walmart for such a isolated and small area (we are over 10 miles to a freeway - which is unheard of in So Cal)

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
www.JohnOcchi,com

Diane: I haven't tried to google today; but if you use my Walmart link above you can get the rest of the story, as Paul Harvey used to say.

Maggie: I am not a Walmart shopper, but I am impressed with the fact that they are willing to forgo tax abatements here in Cleveland.

Jennifer: Your comment made me think about all types of items Walmart carries; and I'm smiling to think what they would be able to come up with (new business owners) that they do NOT carry lol. It will be interesting to see how the grant money gifts play out.

Ann: Walmart is so big anyway I cannot even imagine what a super walmart looks like lol.

Luke: was no one shopping there or was it what Mitchell said, operating costs too high?

Mitchell: I cannot even imagine a Walmart in Manhattan. Maybe buy out the first two floors of the Chrysler Building? :-)

Moni: One thing Walmart seems to do better than Kmart did: not opening too many stores close to each other.

Michael: There is an economic consequence everytime something majore occurs; the 'consequence' can be plus or it can be a minus. I think it's important to shed light on retail trends. Thanks for stopping by

Lenn: Thanks for the insight, it does seem like a good location and I have a feeling this Opportunity Zone idea is a PR strategy to thwart some of the other issues brought up like non union workers.

Teresa: Not to me but to many I believe it could lol

John: Now I am confused because as I mention above I always thought their strategy was to not locate two stores close to each other. That is very interesting. As is 'ten miles to a freeway' !

You know... This is a sore spot for me. My mother always wanted to own a health food store, and several years back, she put everything she had into a little Healthfood store in Portland Oregon, and as a new business owner and single Mom she struggled, but was begining to make it. All she needed was a little extra capital, and she would be going like gang busters.

She was qualified for a small business loan and a grant, but had it pulled right out from under her when the bank found out that a Wal Mart was moving in just a few blocks away. She did everything that she could to keep her store open, support her customers and stay strong against the Grand Opening of WalMart. Within a few months of the Grand Opening of WalMart, she had to close her store down. That was so devastating, and I have a hard time believing that WalMart could ever really support the "little man" when everything that they stand for and practice proves the opposite.

Maybe they are changing? Dunno...

The over-population of Wal-Mart is a big thing in central Ohio right now. We have a Wal-Mart in Delaware, and there is one in Marion, 10 miles up the road, and one in Lewis Center 6 miles to the south. And Wal-Mart has been trying to get a new location in Powell (which would be about 5 miles from Lewis Center) and southern Delaware (which would only be about 3 miles from their Lewis Center stores).

They have been turned down by boards throughout the area, however there was a quote in one of the local papers that Wal-Mart thinks they can have one ever 3 miles in Columbus and NOT be oversaturated.

Mariana, that story makes it very personal for you. I would not be surprised if there are not many more stories like it. One of the reasons I liked Jennifer's comment above about who would actually get grant money from Walmart. I guess time will tell as to the value of the Opportunity Zone program and I guess my gut reaction is, it's better than not having it. Thanks for adding another perspective.

Toby: every three miles! I guess that explains John O's scenario above as well, if it's true. Maybe my experience with them here is based more on urban areas not necessarily having the space for as many box stores, plus a denser population? Although I would bet your 100,000 people per store would hold up here as well.

I hate Wal-Mart. No matter what their PR people are saying now, their intent is to oversaturate the market with these huge, incredibly ugly stores. And look at the crime these stores bring...and the load to the roads and other infrastructure. Not to mention what happens when they want a NEW store in 5 years. An empty big box. Which is hard to fill.

But hey, anyone can change and I'll keep an eye on this story. Meanwhile I'll still fight them in my small town. We won temporarily, I don't know if it's going to stick.

I have a hard time criticizing a company who employs a million and a half people. That being said, I know it scares the heck out of small business owners. And that being said, MOST small businesses fail, with or without Walmart. I'm always fascinated to see a new business open in town but am amazed how poorly prepared most business owners are in terms of marketing, financing etc.

There was a documentary/movie called "The High Cost of Low Price" about the failure of a small business due to the arrival of Walmart. Turns out the business they highlighted was on the way out before Walmart arrived.

Mariana, shame on the folks who pulled the grant from your mom. They should have judged her on her own merits.

Leigh: Walmart engenders strong feelings no matter what, and it's hard to argue with what you say. The same can be said about the entire 'big box' phenomenon. First we had shops; then we had malls; when malls go under, it's a huge issue. Now big boxes have become the new 'resale' issue. I guess it's part of our history of retail, how to deal with these issues.

Linda: I'm going to have to search for that documentary and rent it. You as usual bring up good points. The Walmart issue is rarely black or white, although I am not a fan of them. I do like the tax money they bring in since they do exist, and I'm glad Cleveland is apparently going to get the benefit of that instead of ten years of tax abatement.

Carole,

I also think because NYC has higher minimum wage than the federal government Walmart could not pay employees poverty wages here.

Hey Mitchell, that could make a big difference. Do you think that played a part in the Brooklyn closure? The other thing about NY, many retailers already available? So Walmart 'one stop shopping' not as necessary? I also wonder if they had to increase their prices to make it less advantageous as an alternative shopping endeavor lol

They've been trying to get a flagship NYC store. They had locations none in Manhattan. I think each location ended up getting scrapped. They had a lot of opposition. I don't think they ever opened in Brooklyn, I think they tried to.

IMHO the only way they could ever open here is if they teamed up with Donald Trump. He always gets his projects built despite opposition.

Ok, I understand that they employ millions, and that many small businesses DO fail, regardless of WalMart. But WalMart does not offer the best pay, (at least here) compared to the potential of a successful business owner. Furthermore, WalMart makes the already difficult task of starting a small business even harder, by out pricing the heck out of everything. And... what about the job losses when they took their manufacturing "overseas" ...? Blah ... Blah ... Blah ... I may be talking out of my scope, and I really do not want to divert the point of this post, but these are things I do consider.

All that said, and all my bitterness aside, I really, really hope that the options that are mentioned here, in Carole's post, are truly genuine and not just a facade to make them "look" better, with no real, recognized benefits at the end of the day... If WalMart REALLY is going to do all this Job Opportunity Zone stuff, I hope they are being held accountable for the actual results.

Mitchell, I can't help but think that The Donald and Walmart would be very odd bedfellows indeed lol I do get your point about that comment.

Mariana you speak a lot of ideas that match my thinking. I guess the problem is, Walmart exists and how to make the best of it. To your point about their accountabiiity that is so on target. Cleveland unfortunately does not have the best track record in that area. I am hoping it will be different now. I'm thinking it should be possible to track who gets the grant money so that may help. The question is, will private citizens like myself have to be diligent tracking this accountability - I imagine enough of us are gun shy and will not wait to find out if the City does their job lol

Carole, I have to agree with all those that have commented in favor of Walmart. They seem to be a popular target for businesses that would not have made it any how. My wife shops at our Walmart all then time but still looks for the things that it does not carry at the local smalll businesses. Every business has its short comings, and unfortunately Walmart because of its size gets more of the critisisum than it really deserves.

I'm with Leigh - I dislike Walmart. In my corporate life, I saw first-hand how they squeeze manufacturers. Many manufacturers have had to move their production to China because of them. Read about Rubbermaid for a sad story after Newell bought them. When I moved back to OH from AZ, I was offered a nice Marketing job with Rubbermaid. Decided to not take it - didn't want to live in Wooster. A year later they were in trouble. Really glad I didn't take the job!

Like Toby said, if they can win their lawsuit in Powell and plead their case in Delaware, we could have 3 stores within 3-4 miles of each other, as a 4th store is left vacant. The crime reported in the local papers gives an indication of what they attract.

I vote with my dollars. I don't and won't shop there.

FEB

2007

George, thanks you know I always appreciate your thoughts. Jobs though, are only part of the picture and unfortunately a lot of the other 'stuff' can make them much less appealing. Which brings me to Elaine's comments. Thanks for bringing up the manufacturing issue. That has always been my big complaint with them as well. Since Cleveland and all of Ohio takes such pride in being home to a majority of top level manufacturers, the last thing we need is to close more down.

I have to add one thing. The developer of Steelyard Commons has also stated publicly that he will also forgo the tax abatements he is allowed due to the brown-field remediation. That means now Walmart and the Developer (who still owns undeveloped or yet to be purchased land) are on board. I may be naive, but this sounds like a big deal to me. Then a voice on my other shoulder wants me to be more cynical. For the moment I will take it at face value: it's much better than losing tax money to abatement.

Carole, Carole, Carole, you and your hot button posts! :-D I tried to ignore this one, but to no avail. IMO WalMart is a big stinky icky-poo thing. There I said it, and no one will ever change my mind. Hmpf. (foot is stamping).

Hi Theresa, Opinions - your opinion is most welcome here :-) lolol

And that's why we LOVE your blog so much!

Theresa, ty you are very kind! I love to have issues discussed and blog posts are great places for that.

FEB

2007

Wal-Mart is unfairly maligned because of their success. Everyone adopts a NIMBY attitude until it's shopping day. Well, everyone but me. I don't like WalMart because I'm just a snob.

Brian, there have been some very thoughtful answers here; including yours that you do not shop there lol. As a matter of fact neither do I. But NIMBY usually applies to constructive projects that people want, but they just want it somewhere else. I can argue that Walmart doesn't fit that category. I'm glad to see you area alive and well however!

Been occupied for a couple days, so just now jumping back in. For those that think it's all about putting mom & pop out of business, it's not. They tell the manufacturers what price they will pay for the product. So the manufacturer adjusts the product to reduce it's standard cost - they cheapen it. The packaging looks the same so the consumer thinks they're getting the same item. Wallie-World requires a different SKU# so consumers can't comparison shop. Since Wallie-World is such a huge retailer, their order volume can quickly become a very large part of the manufactuer's total sales.

Then when WW has the company by the b__ls, they squeeze harder on the pricing. When there's no more cost that the manufacturer can take out of the product to meet WW's demand, WW merely takes their volume to China manufacturers. This leaves a manufacturing facility with too much capacity, and likely too high loans when they bought the extra equipment to meet WW's demand, and very little remaining business to fill that capacity. They've no choice but to cut good manufacturing jobs and perhaps go out of business.

I saw a documentary on Rubbermaid (that I mentioned earlier), that when R'maid moved out of Wooster, they had an auction on their manufacturing equipment. Much of the equipment was bought by Chinese employers so they could produce the products for WW. The former R'maid employees were shown with tears in their eyes. Maybe they can get a job at WW for a fraction of the pay and benefits.

Sorry to hijack your post, Carole, but like Theresa, this is a hot button for me as well. I've been to Bentonville. Manufacturers come away bloody and beaten after WW's cattle call buyer's sessions! It's despicable.

Elaine, please, this is what this post is for, a serious discussion about very serious issues. I appreciate the depth of your conviction and knowledge into the manufacturing suppliers aspect as well. I saw that Rubbermaid documentary and it was (I think) one of the first chips in the armor of WalMart, am I correct? I think what bothered me the most was how they began their retail life touting American products. Now that certainly left them wide open for this documentary criticism.

FEB

2007

Carole, did you see the Jib-Jab movie that was done on Walmart? It would be funny if it weren't so true and so sad.

I don't know if Rubbermaid was the first - perhaps they have been the biggest - not sure. Many electronic manufacturers have shut down as well.

You should follow up this post with a post on Walmart wanting to get into banking business. Think about THAT if they do ... and if banks are allowed to get into real estate!

This is my first post here of hopefully many more to come... I'm not a huge Walmart fan and in thelast year or two have become even less since Walmart has been trying to create their own bank and also enter the mortgage business.

I'm a mortgage loan officer at a broker here in Canton and I can only think of what would happen if Walmart entered the mortgage business....what a sad day that would be..

One other thing, Walmart has had more discrimination, overtime and class action employees rights lawsuits than you can shake a stick at.. that's not a way for a large company (or any company for that matter) to do business is it..?

One last thing...I just browsed through everyones posts but I did not see this website mentioned...

http://walmartwatch.com/

They are a consumer group that is keeping tabs on all of Walmarts doings to keep the public aware of it.

Here is another good website to read

http://reclaimdemocracy.org/walmart/

FEB

2007

I'm a mortgage loan officer at a broker here in Canton and I can only think of what would happen if Walmart entered the mortgage business....what a sad day that would be..

One last thing...I just browsed through everyones posts but I did not see this website mentioned...

http://walmartwatch.com/

They are a consumer group that is keeping tabs on all of Walmarts doings to keep the public aware of it.

Here is another good website to read

http://reclaimdemocracy.org/walmart/

Wow. Elaine I had no idea the extent of the reach of WalMart. I didn't realize you are not buying the same product, and I never saw the domino effect beyond the moms and pops. I don't like them because of local issues, but also for very simple reasons: their typically filthy stores are a PITA to navigate through, and 75% of what they sell seems to be crap- which I thought was all in my head and now I know that is actually the case. Holy cow. And this is coming from someone who has no problem poking around flea markets, garage sales and thrift stores!

Kevin- Banking at WalMart!!!??? It's frightening.

Walmart has been on a direct journey now for years to become an all encompassing company...to offer everything...products, banking, food etc...all under the umbrella that is the best for consumers.. and they are doing much of this without regard to many of their own employees and driving so many smaller businesses out of business..

Walmart pushes ahead as if they can do no wrong...

Walmart in the news...

http://www.wakeupwalmart.com/news/

Theresa, I'm sure not all products are different - for instance, toys may not be different. But products that are or can be formulated or engineered, can be made different to take the cost out of the item. Don't forget this also applies to Sam's Club.

My recommendation from my past experience, is that if you want to do your part in helping maintain US manufacturers - and keep those higher paying jobs so the people can afford to buy houses - shop at Target, Lowes, Home Depot instead.

OMG a Walmart bank; that is one thing I never thought of. Thanks to Elaine and Kevin for telling me about this. Theresa, to me it's like shopping on 42nd Street in NYC and getting a 'gucci' watch lol. Only it isn't a Gucci watch. I'm definitely going to follow up on the banking idea. I'm not a super fan of any of the boxed stores (KMart became worse to navigate than Walmart Theresa, if that is even possible). But Target does seem like the best of the bunch. I still shop at local hardware stores whenever possible, but I know when I was having my roof replaced, I went to Lowe's because the volume price is so much better. The issue then for all of us is, yes Walmart provides jobs and taxes. But at what cost to quality, local competition and asthetics. Does that pretty much sum it up?

Kevin, I forgot to say, welcome to Active Rain and may you enjoy your new blogging career!

Here the link (I think) to the JibJab cartoon movie they developed about Walmart or as they call it - Big Box Mart. If the link doesn't work, go to JibJab.com and search for Big Box Mart. The clip says it all.

Elaine all I can do is :-)

FEB

2007

Carole,

Thanks for the welcome to Active Rain... there appears to be many interesting and helpful topics and posts on here.. I'm glad I found this place..!!

Carole,

You mean those Gucci's on 42nd street are not real? The Rolex's for $10. are real right?

Oh yeah, of course the watches are real Mitchell :-)

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

2007

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... :-)

MAR

2007

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!

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.

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.

This makes my blood run cold.

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!

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!

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

2007

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

2007

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

2007

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

2007

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

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.

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.

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

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.

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

MAR

2007

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?

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.

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