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The Blended Walmart Business Model

As the largest retailer in the world and a profit driven company, Walmart is constantly on the lookout for growth opportunities. Faced with diminishing returns in its traditional retail business, the company is pursuing multiple paths to a profitable—and formidable—retail financial business.

Executive Summary

Chase. Community banks. Wells Fargo. Other credit unions. For years, the standard list of competitors has been static and well-understood. Get ready for a shakeup. Beyond online challengers like ING Direct or Ally Bank, lies perhaps the biggest competitive threat many credit unions have ever faced. It’s an organization with cavernous pockets, a tightly wound business model, and an appetite for growth. Walmart.

What is the research about?

Even without the bank charter it applied for in 2007, Walmart is a force to be reckoned with. Robert Manning, PhD, examines the myriad links in Walmart’s partnership-oriented strategy – prepaid debit cards, wire services, credit cards, and even small business loans. Match those services with the retailer’s aggressive growth in Mexico, where it does have a charter, and it becomes clear that Walmart isn’t just waiting around for warmer regulators. Individual credit unions cannot afford merely to check the rate pages of other local banks. They must also watch and respond to the products Walmart keeps rolling out—in the United States and in Mexico.

What are the credit union implications?

Dr. Manning calls for credit unions to respond with the value proposition that is still in their favor: a better deal. Despite Walmart’s low fees on many products, its credit cards are far more expensive than average and, as shown in its Mexico operations, the company usually pays far less on deposits. But even the best deals need an audience, so the second call is for a concerted marketing campaign—indeed, one that mirrors the successful campaign Walmart itself has waged in Mexico. There, the company’s initial regulatory and public relations victories have come from easy points scored by contrasting its prices and services with those of “greedy” banks