G A M E P L A N

Welcome or not, the retail

giant remakes the retail

dynamics wherever it goes, MARK CONDON

FlHTY MILES
from my office is
the small city of
Beaver Dam, Wis.
The drive up U.S.
I lighway 151 sum- General Electric Co., Ceneral Motors
His memories of Corp., Merrill
a rural life that's
fast disappearing.
The four-lane roadway rolls through
countryside showcasing family farms
and quaint, aging red barns.
Also visible from the highway is
the town's Wal-Mart Super Center.
Its parking lot rarely is empty. The
store is a symbol of small-town
change.
A little farther away is a 1.2 mii-
lion-square-foot Wal-Mart distribu-
tion center sitting on 400 acres of
land once covered by corn. Built
in 2004 with a $6 million taxpayer
subsidy, its construction was con-
troversial.
Little about Wal-Mart doesn't gen-
erate passion fi-om critics and sup-
porters alike. You don't become the
world's largest retailer without a little ing services in 45 states, supplement-
mud, a few rocks,
and an occasional
lawsuit thrown at
ytni.
Welcome or
not, Wal-Mart re-
niiikes the retail
dynamics wherev-
er it goes. Its im-
pact is local,
regional, national,
and even world-
wide in scope.
Last year Wal-
Mart created consternation among
the large drugstore chains when it
announced it would offer certain
prescription drugs for S4.
More relevant to credit unions is
Wal-Mart's entry into financial ser-
vices and its desire to establish an in- setts regulator pointedly noted the
dustrial loan corporation (ILC). An
ILC is an increasingly preferred
means for nonfinancials to get into protect otlier financial institutions
the business. Consumers can't open a against competition."
checking account at an ILC, but they Whether it's low-cost drugs or
can make deposits and obtain loans. low-cost financial services, Wal-
Target already has an ILC, as do Mart's "Always Low Prices" is more
than a slogan. It's a culture appealing
to millions of con-
Lynch, and 50 Wal-Mart already offers sumers. Wal-Mart
other major cor- shoppers easily rec-
porations, says check-cashing services ognize the direct
Forbes.com. and personal pock-
Wal-Mart's in 45 states. etbook value of the
business model is company's business
simple: Squeeze ail possible costs out model despite its many critics. And
of the supply chain, and otfer the don't think for a moment the only
lowest possible price to the con- people pushing shopping carts
sumer. Offset low margins by high through Wal-Mart's cluttered aisles
volume. The company relentlessly are those with thin wallets.
controls personnel and overhead ex- The financial services marketplace
penses. Wal-Mart claims its ILC will is one of constant change, consolida-
handle only its plastic card and elec- tion, commoditization, and competi-
tronic transactions so the company tion. Retaining and growing market
can reduce its third-party exchange share will require strategic transfor-
fees and provide greater value to its mation to differentiate you from the
customers. competition, and to generate a clear
That may or may not be true, but and understandable value for your
Wai-Mart already offers check-cash- members. Consider:
• How do your products and ser-
ing credit vices support members' lifestyles—
cards, check not just their life stages—as they
printing, cred- define them?
it reporting, • How effectively do you manage a
financial liter- well-integrated channel mix that de-
acy programs, livers service consistently across all
and remit- channels?
tance services. • What are the gaps in your capabil-
Massachusetts ities?
recently grant- What members value most, mat-
ed the com- ters most. This is true whether you're
pany check- competing with the small bank on
cashing au- Elm Street, ducking the swinging el-
thority over bows of large hanks, or hearing bull-
the objections of banks, check cash- dozers plow under another cornfield
ers, and credit unions. for retail giants like Wal-Mart. ®
True to form, Wal-Mart's 1% fee
with a maximum charge of $3 is well MARK CONDON is sniior vice president.
research and advisory senices, for the Credit
below what check cashers charge. In
Union National Association. Contact him at
granting the approval, the Massachu- 608-231-4078 or at iT)condon@cuna.com.
state's check-cashing law is designed
to protect consumers and "not to

20 C R E D I T U N I O N M A G A Z I N E • F t B R L i A R V 2 0 0 7 e u n a . o r g