TALLAHASSEE, Fla. – For more than a year now, Shelley Hostetter, branch manager at Envision Credit Union, has become quite skilled at landing new loan and deposit business among the throngs of Wal-Mart shoppers at the retailer's popular new westside SuperCenter store. Donning her bright teal apron with the Envision logo – and working the aisles with Envision stickers for kids and account literature for moms she's also become a whiz at directing shoppers to the hairspray and the power tools. It turns out Hostetter is a member of an exclusive new club of CU employees across the U.S. who work out of Wal-Mart stores pedaling a positive CU message “in a high traffic zone” to an audience that ordinarily would not hear much about CUs. In some parts of the country, depending on local conditions and where Wal-Mart has made a market entry, the competition among banks and CUs to win the branch franchise, particularly in the new SuperCenter stores, has been spirited. Indeed, some CUs and banks have been lining up a year in advance of store openings making application with Wal-Mart in Bentonville, Ark., the retail headquarters, for leased space. “It certainly is a great opportunity that came to us,” declared Cindy Cottongim, marketing director at the $120 Chaco Credit Union in Hamilton, Ohio which May 18 opened one of the more high-tech Wal-Mart branches inside a SuperCenter store in nearby Oxford, home of Miami University. Chaco is calling the Oxford facility “a unique service center and a whole new concept for us” since routine debit, withdrawal and deposit transactions are handled on kiosks giving the five-member branch staff time to concentrate on loans and signing up new members. “Can you imagine what the traffic is like in a Wal-Mart SuperCenter as a way to get your name out there?” asked Cottongim. “It's pretty wonderful.” But, of course, there can be problems “in finding supply or vault space when you're in a 600 square-foot area,” concedes James Schultheiss, president and CEO of the 29,000 member Chaco, the original CU for Champion Paper Co. and which now holds a community charter. Blending in Means Knowing When to Back Off But management at the Oxford Wal-Mart, as they have elsewhere, have given CU staffs free rein to promote financial products over store loudspeakers at regular intervals as well as roam the aisles. “We really have a 500,000 square foot lobby,” declares Rich Young, branch manager at Oxford in describing the entire store as Chaco territory. But Young adds that “we know when not to bother somebody in the aisles who maybe averts their eyes and makes it clear they do not want the intrusion.” By most CU accounts, the business volume at Wal-Mart branches, whether at SuperCenters or the smaller facilities, with some opened as early as 2001, seem to be running well above expectations. Indeed, Landmark Credit Union in Milwaukee said all of its three Wal-Mart branches do well and its oldest store in south Milwaukee did 35,826 transactions in July, which is quite satisfactory considering the busiest Landmark offices handle 50,000-60,000 transactions. “We're even happy with our facility in Watertown which did 24,000 in July which is pretty good considering it's a very small community,” said Pat Ransom, vice president of marketing. At the same time, Landmark citing various factors including the limitations on space and a need to build free-standing facilities in areas with a high concentration of members, is calling off making further bids on SuperCenters in southeast Wisconsin and is even withdrawing from one Milwaukee store. Still, Tropical Financial CU in Miami – now with five Wal-Mart branches – said it figures its first two branches, the first opened in 2001, did $40 million in loans and $20 million in deposits. “These two are obviously fully profitable and continue to grow,” said Greg Blount, president and CEO of Tropical Financial, noting that three more were opened last year with two more on the drawing board. Tropical, like a number of other CUs, also maintains branches in other retail grocery or hardware chains. For its part, Wal-Mart in Arkansas keeps a close lid on how it deals with banks and CUs. “Their original thought was to have one large national bank do all the stores but that become impractical,” said one CU president, who asked not to be quoted in describing how CU executives deal “with the gorilla.” Wal-Mart later moved to a regional approach soliciting mostly large banks and some CUs and most recently, sources said, has insisted on CUs with community charters. It also has various rules on what CUs and banks can call their Wal-Mart branches, demanding the Wal-Mart name not appear without specific permission. For instance, Chaco in Ohio was told it must call its Oxford branch just that, not the Wal-Mart branch at Oxford. And then for CUs, there's that name “union” which according to one equipment vendor “was a hard issue for Wal-Mart management to swallow in awarding leases.” Nonetheless, there's little doubt that Wal-Mart, which now has become the No. 1 mega retailer, is eager for bidders for its many new SuperCenters going up in scores of communities despite vocal opposition often from union members. “We are actively seeking credit unions and banks for our supercenters, which feature general merchandise and grocery, and have space at the perimeter of the store for third-party retail operations,” said a formal Wal-Mart statement issued to Credit Union Times. In addition to CUs and banks, those retail outlets also include “restaurants, hair and nail salons, etc.” said the Wal-Mart release. “As of Aug. 4, we had 1,838 supercenters in the United States and our plan at the beginning of the year was to build 240-250 supercenters,” said a spokesman. “Most of that number would be accounted for in the 1,838 number, but more new stores will open during the remainder of the year.” There are 1,272 of the smaller “general merchandise” Wal-Mart stores and “some of these stores have room for credit unions or banks but most don't,” said the spokesman. Regardless, all “contact” inquiries about store facilities are to be routed through Lynn Ray, leasing manager in Bentonville, said the spokesman. In the Milwaukee market, Ron Kase, president and CEO of the $995 Landmark, acknowledged “there is lots of traffic,” but while his CU “had been invited to bid on other stores” in southern Wisconsin it is withdrawing for now from making further offers. It was also learned that Guaranty Bank, a regional institution with branches in Milwaukee and Madison, has apparently been awarded the leasing contract for new southeast Wisconsin stores. Many of the CUs and banks making Wal-Mart bids have contracts with International Banking Technologies of Atlanta to help build branches, assist in staff training as well as deal with Wal-Mart and on that score IBT said it currently has an “inventory” of 85 proposed Wal-Mart stores available for lease. Chris Smith, executive vice president of IBT, said that “of the more than 2,000 financial institution in-store branches IBT has designed and constructed in the past couple years, over 100 have been for credit-union clients” and of these “it has designed and built 11 branches” for CUs in Wal-Mart locations. CUs Must Pay For Access IBT officials noted that the cost for setting up Wal-Mart facilities is not cheap with Wal-Mart seeking an upfront $50,000 fee for an initial facility. “Some credit unions have simply decided that is too steep,” said Barry Sanders, IBT director of business development. Still, IBT, said Smith, does work closely with Wal-Mart management in finding bank/CU tenants. Wal-Mart “does come to us,” he said noting IBT keeps a current list of “available locations for next year.” Ray E. Cromer, Jr. president of Envision here, said his members “seem to love the extended hours available at a Wal-Mart” but agreed there are problems with a “very small space” but “we can use the whole store as our lobby.” Hostetter said store management has been quite cooperative with the CU in letting her staff strike up conversations with shoppers. “We go into the aisles and walk shoppers over to where the aerosol spray is and while we do that we might start talking about our financial products,” said Hostetter. For its in-store drawings and promotions, including a recent back-to-school event, Envision bought its supplies of backpacks, pens, notepads and pencils from Wal-Mart racks, said Hostetter. It also purchased a supply of stuffed animals for graduation giveaways. “And we're pleased that we've been able to sign up the cashiers and managers as new members,” said Hostetter. Blount of Tropical in Miramar, Fla. said “our partnership” with Wal-Mart seems to be working well as Tropical is making plans for two more stores “later on this year or in the first or second quarter.” Blount said he was unfamiliar with bank competition elsewhere “though I understand Fidelity Bank” is active in Palm Beach County with Wal-Mart. Like other CEOs, he said Tropical ensures that branch staff is well trained in operating in this kind of retail environment “so we don't drive people nuts” as staff approaches shoppers for business. As for dealing with Wal-Mart, Blount also agreed that Wal-Mart calls the shots. “It's either our way or the highway,” he concluded. [email protected]