RICHMOND, Va. -- Customers of Ukrop's Super Markets here can add banking to their shopping lists when the retailer opens seven in-store branches tomorrow through a partnership with Memphis, Tenn.-based National Commerce Bancorporation.
The venture, which gives both companies equal ownership of the branches, marks the beginning of a 24-store bank rollout expected to be complete within three years.
Bank accounts will be linked to the retailer's frequent-shopper program, enabling customers to earn rewards based on account activity as well as money spent at the stores.
"In today's society, customers are shopping more frequently, so we are trying to bring additional services and solutions, that customers perform frequently under one roof," said James Ukrop, vice chairman and chief executive officer at Ukrop's.
The seven branches opening Nov. 4 will initiate the rollout of a new federal savings bank, First Market Bank, which will reside in most of the retailer's 26 store locations. Three more branches will open by December, followed by another eight banks in 1998.
"We hope to roll those out to stores at a rate of two banks per quarter, so by the third year of opening the branches, 24 Ukrop's stores will have a bank in-house," said William Reed Jr., vice chairman of National Commerce.
The full-service banks will offer traditional customer services including checking and savings accounts, certificates of deposit, mutual funds, loans and insurance. In addition, Ukrop's customers with First Market accounts can also do their banking via the Internet, automated teller machines or an automated telephone service, as well as at First Market branches.
In effort to promote the in-store banks, Ukrop's will use its customer-loyalty program to reward customers who both shop and do their personal banking through the retailer's stores.
The retailer will monitor its customers' banking and shopping relationships. "Customers will earn rewards based on the amount of dollars spent within Ukrop's stores and account balances kept at the in-store branches," said Cheryl Moore, vice president of marketing at First Market Bank.
Joint-ownership of First Market Bank by Ukrop's and National Commerce is the first of its kind in the country, according to Reed. Typically, banks only lease space within a supermarket.
"Acting as partners lets both companies bring more opportunities to the table than would be the case with leasing," said Ukrop. "We can do more with marketing synergies and we can build brand equity in both markets."
Both companies expect to see significant results as well. National Commerce's Reed, projects the bank will have $500 million in assets within five years.
''During our first year of business, we expect to gain 10,000 new customers," hesaid.
"We are going to provide a terrific financial service to our customers," he said. "Since we are entitled to 50% of the bank's profits, the biggest benefit we expect is for the bank to bring dollars to our bottom line. That will allow us to offset higher operating costs in other areas."
National Commerce has been operating in-store branches for 10 years. In addition, the $4.5 billion-asset financial institution has 95 of its 114 branches in supermarkets or Wal-Mart supercenters throughout Tennessee, North Carolina, Mississippi, Georgia and Virginia.