If your industry winds up Wal-Mart's crosshairs, a frontal assault won't generally win, says a former insider. Here's why alternative approaches may help when talking on the empire
Bankers' hours" haven't existed in decades, especially (or community bankers for whom community service commitment ranks almost as highly as business involvement. Yet if Wal-Mart ever finds a crack that can be levered open to compete directly with banks, the hours of bankers who wish to compete will go off the scale.
So predicts Michael Bergdahl, formerly "director of people" at Wal-Mart headquarters in Bentonville, Ark., under "Mr. Sam," Sam Walton, himself.
Walton believed that headquarters staff should work at least as hard and as long as store staff. So headquarters employee hours for some began as early as 4:00 or 5:00 a.m., Monday through Saturday. (Walton usually arrived at 3:00 or 4:00 a.m.)
Bergdahl believes that Wal-Mart, thwarted so far in its attempts to get into banking, will eventually succeed. And bankers may not be readv for what will hit them.
"Bankers need to understand that when you go up against a company like Wal-Mart, one of the things they are going to do is outwork you. If you want to work your normal banking hours, that's not going to be a good strategy," says Bergdahl.
This is part of the general Wal-Mart approach when entering a new business. "They don't play by the rules that the game has traditionally been played by," says Bergdahl.
"A Wal-Mart bank will undercut them on everything it offers in financial services," says Bergdahl. "They'll want to have shockingly low prices and they'll work off extremely low margins."Already, the fees that Wal-Mart charges for money orders, money transfers, and check cashing hit industry lows.
Why Wal-Mart wants in
"I believe Wal-Mart has tremendous patience," says Bergdahl. "There's no reason they won't continue their efforts to get into banking."
Among the attractions:
Payment processing. Simply being a card-carrying member of the payments system could save the retail behemoth $5 billion annually in bank processing fees, Bergdahl estimates.
Traffic builder. One of the greatest values of banking services to Wal-Mart is the additional traffic they would deliver. Pulling a customer into a Wal-Mart, through banking, one extra day a week is a major victory for the retailer.
Financial profits. Bergdahl underscores that financial services would definitely not be a loss-leader. Wal-Mart earned its spurs in a business where thin margins are the norm. Wal-Mart would turn skinny margins into large dollars through sheer numbers of financial customers.
Unbanked to Wal-banked. "Sam Walton did everything he could for years to attract the unbanked to Wal-Mart stores," says Bergdahl. This included illegal immigrants, Bergdahl points out. Walton set up programs so illegals could cash their checks at Wal-Mart, and transfer some funds back home right there. And then they'd be standing there with a pocketful of cash.
Building an anti-Wal-Mart strategy
Bergdahl left Wal-Mart after Sam Walton died or cancer in 1992. Since his departure. Bergdahl has been involved in other companies, including two major turnarounds, and he found the Wal-Mart ways so helpful that he wrote two books about them: What I learned From Sam Walton: Ноw to Compete and Thrive in a Wal-Mart World (2004) and The Ten Rules of Sam Walton: Success Secrets for Remarkable Results (2006, both by John Wiley & Sons).
Much of his time today is devoted to speaking and consulting to various industries about how to beat Wal-Mart. Me boils his theory down to the word "POCKETS." As he writes in his bylined guest article posted on www.ababj.com, "for you to compete effectively you have to carve out a unique 'niche' or 'business pocket' in order to be successful.'
The POCKETS acronym stands for: Price; Operations; Culture; Key item promotion/product; Expense control; Talent; and Service. "These are the seven key result areas of Wal-Mart's strategy and tactics," Bergdahl writes.
Part of the online article is a tabular "sell-assessment inventory" built around the seven POCKETS points that banks can use to develop their own competitive strategy. These tables could help even if Wal-Mart never shows up in your market.
Some examples of the points:
Under "Price Strategy & Tactics"— "Our pricing strategy provides customers with no reason to 'shop' anywhere else for better rates";
Under "Operations Strategy & Tactics:—"An ongoing employee customer service and sales training program is in place and training completions are tracked";
Under "Key Item Promotion" — "Your bank's 'brand story' is clearly understood by your own employees."
For now, banks have a breather, giving them some time to prepare. But that may not last long. In his first book. What I Learned From Sam Walton, Bergdahl traces the ways that many pharmacies took on Wal-Mart, and thrived. Much of what they did, banks can do: leveraging customer relationships; finding products that meet local preferences and tastes, rather than the national, cookie-cutter approach taken by the megastorc; and stressing service over price—home delivery proved a big plus over Wal-Mart pricing, for example.
Above all, Bergdahl stresses that banks should get used to mystery shopping their competition now. When Wal-Mart attacks a local industry, that's what it does, he says, so banks new at the game need to start learning it fast.
Bankers' hours" haven't existed in decades, especially (or community bankers for whom community service commitment ranks almost as highly as business involvement. Yet if Wal-Mart ever finds a crack that can be levered open to compete directly with banks, the hours of bankers who wish to compete will go off the scale. 
