Bank on it

In-store banks bring in extra customers while adding a guaranteed dollar return per square foot.

Supermarket retailers are jumping on the banking bandwagon by partnering with financial institutions and leasing them in-store space to operate remote branches within the food shoppers' domain.

According to the Food Marketing Institute (FMI), in 1999, nearly 52 percent of all new stores built and 19 percent of stores that were remodeled included an in-store bank.

It's a trend that's paying dividends to both banks and grocers in the form of greater foot traffic and repeat business by customers who appreciate one-stop shopping convenience, easily accessible service and flexibility.

Today, in-store banks are providing a lot more than one or two ATM machines and check-cashing services. Shoppers expect full-service options, and that's what most remote branches are offering. A typical in-store bank department features multiple windows, booths and sit-down bays or offices staffed by a team of tellers who can process withdrawals and deposits, help customers apply for loans, open up checking, savings and CD accounts, issue bonds, and much more.

"We get all of the banks traffic," says Bill Russell, store manager at Cox New Market in Connersville, Ind., which houses a Union County National Bank branch in the front of the supermarket next to the customer service counter. "Because of its high visibility, convenient location within the store and extended bank hours, customers can easily get their banking done when they walk in and then stay to shop.

"And what's extra nice is that we do all of our actual store business banking with the branch, too, which saves us a lot of time and hassle."

FITTING IN?

The Union County National Bank area showcases a long, waist-high counter topped with dark brown, marble-patterned Formica. The counter is set below three Plexiglas teller windows built along one store wall awash in neutral peach and creme colors--blending in for a seamless look with the Cox store. "We tried to make it consistent in appearance to the look and feel of our other bank branches, while also trying to fit into the overall scheme of the supermarket," Says Amy Ripberger, branch manager for Cox's Union County National Bank in-store facility.

However, some in-store banks take a different approach and try to stand out from the surrounding store decor. For example, the Bank of Utah branch within a Winegar's Supermarket in Roy, Utah, sports a rich look via authentic cherry woods along its counters, walls and trim. The result is a much more distinguished look than the store's decor, which uses more basic surfaces and textures and neutral colors.

The average square footage of an in-store bank is roughly 458, based on FMI research. The Bank of Utah area takes up a whopping 800 square feet in its Winegar's location near the front of the store.

In addition to three teller counters, the branch also features two open office areas for general sit-down transactions, and one closed office for more private transactions.

"Put yourself in the shoes of the average consumer," says Archie Parker president of Parker's Thriftway in Middletown, Del., home of a WSFS (Wilmington Savings Fund Society) remote banking branch. "If you have a favorite supermarket, but the one across the street offers banking, fresh take-home foods, dry cleaning and a pharmacy, which one are you going to use regularly? The more services and departments your store offers, the more popular it's going to be with shoppers."

CROSS-MARKETING AND RENT

Another incentive: The retailer and bank can engage in cross-marketing and promotion of their coexisting businesses to reap mutually beneficial rewards at a fraction of the cost. Winegar's, for instance, advertises for the bank via bag staffers, and the Bank of Utah offers shopper incentives such as grocery bill coupons and discounts for opening up an account.

"It's less expensive for the bank to set up a remote location like the one in our store. They simply pay us a monthly lease," says Dee Winegar, owner/CEO of the Winegar's chain.

Most supermarkets charge in-store bank branches a flat monthly rate based on the square footage occupied. Other retailers negotiate different arrangements, such as Parker's Thriftway, which charges its in-store bank a lower monthly lease rate but requires the branch to pay a small percentage of the utility bills and common area maintenance fees.

BACK OF THE STORE

When WSFS approached Parker about leasing them floor space back in 1995, the store had only one open area available: a 400-square-foot space near the front of the store that had been designated for a future floral department. While the bank has been very satisfied with the location, Parker says that if he were building a new store today he would try to place a remote bank branch near the

back of the supermarket.

"Bank lines can cause congestion in the front of the store, especially on check-cashing days," Parker says. "Situating the bank in the back pulls shoppers into the aisles and promotes impulse buying, plus it cuts down on congestion."

The WSFS department boasts a "classy maple wood look--accentuated by a back wall covered with wood cabinets--that, expect for the bank's signature green-and-white signage, closely matches the look of my store," says Parker.

When it comes to security, in-store banks do not tend to staff armed guards. But extra security cameras and alarm systems separate from the supermarket are staples.

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