BRANCHING OUT 1994

MATT NANNERY

One-stop shopping continues to be a buzz phrase in the supermarket industry. And retailers increasingly are discovering that in-store banks can be the pivotal addition to the growing mix of departments and franchises within supermarkets.

Al Gray, senior vice president of administration at Ralphs Grocery Co., Compton, Calif., said in-store banks put spending money in shoppers' hands.

"It's a one-stop-shopping deal for our customers, and we are convinced the banks are a good deal for us," Gray said.

Chuck Rini, president of Riser Foods, Bedford Heights, Ohio, strongly agreed. Four Riser stores now house banks, and two more will open this spring. The first opened in January of last year.

"If customer service and one-stop shopping are the benchmarks for the '90s, then in-store banks are a plus for us," he said.

That kind of enthusiasm for making banks part of the one-stop-shopping philosophy is shared by the overwhelming majority of supermarkets who have leased prime retail space to banks.

"We see the in-store banks as a similar consumer convenience to the dry-cleaning service and Boston Chicken franchises

we offer," said Claire D'Amour, vice president of corporate affairs at Big Y Foods, Springfield, Mass.

Currently, only Big Y's Worcester, Mass., store houses a bank, but the retailer wants to make banks part of more stores. Like most supermarket banks, the Safety Fund National Bank operating in the Worcester Big Y is in the front of the store at the end of the row of registers.

Mike Copps, chairman of Copps Corp., Stevens Point, Wis., also is pleased with in-store bank branches. "It's creating a sense of shopper loyalty," he said. "Our shoppers are happy, the banks are happy and we're happy -- there are no negatives from our standpoint."

Nine of Copps' 17 stores currently house bank branches.

Most chains who have partnered with banks to install in-store branches are pushing the banks to open more branches as quickly as possible. Many chains are making the branches part of the plan for every new store and every remodel.

Oddly, it often is the retailers, not the banks, that are making the push. Supermarkets seem willing, if not eager, to hand visible up-front footage over to banks.

Stillwater, Minn.-based Cub Foods Stores has more than 50 bank branches operating in its stores and hopes to push that figure to 65 by year's end.

"A lot of banks aren't as quick as retailers to hop on this," said Ken Kroening, vice president of financial services at Cub. "The banks that are in it are the more aggressive of the group."

Ralphs also is going out of its way to accommodate banks. Currently, 26 bank branch offices operate in Ralphs stores. The retailer hopes the figure will top 31 by the end of the year.

"You bet we'll add more," Ralphs' Gray said. "We usually put banks in new stores and make them part of the remodeling plan, but we'll go in and reconfigure part of an existing store just for a bank."

Despite the reluctance of some banks to shed the trappings of a traditional bank for the chaotic supermarket environment, an increasing number are making the switch.

A good number of supermarkets have negotiated with banks on their own, but many supermarket officials credit third-party "matchmakers," like Norcross, Ga.-based International Banking Technologies and Memphis, Tenn.-based National Commerce Bank Services, with bringing the banks to the table.

"They talk the banks' language," Riser's Rini said.

But getting the banks to think and act like retailers is the real key to making supermarket bank branches successful. All supermarket banks are open evenings, usually until about 8 p.m., and on Saturdays. Most are even open on Sundays.

"If customers see the bank closed every time they shop, it's no good for the bank or for us," Big Y's D'Amour said. "The bankers have to think like retailers."

"Staying open on Sundays is a requirement for the banks in our stores," Cub's Kroening added.

Besides getting bankers to stray from traditional bankers' hours, both NCB and IBT are convincing them to trade in pinstriped suits for aprons.

"IBT is doing a pretty good job counseling the banks on the type of people they should hire to work in the supermarket banks," Kroening said. "People with retail sales experience are probably the best choice. Traditional tellers are used to people coming up to them. If you stuck traditional tellers in the stores, the first thing they'd do is go hide behind the counter."

Because the supermarket banks average only 600 square feet, a good portion of the encounters with customers occur in the aisles, Kroening said.

"The bank people may bag groceries and then ask the shopper's permission to drop a brochure about the bank's services in the bag," he explained.

Ralphs' Gray said that kind of involvement is necessary if the branch office is to work in the supermarket environment.

"Our banks only take up 340 square feet, but that doesn't matter because successful branches use the whole store as a bank," he said. "They get out in the aisles and sell their products and services."

Supermarket executives agreed that the bank personnel don't cross that fine line between presenting their services and annoying shoppers.

"IBT trains tellers on how to approach shoppers," Gray said. "And their people shop our stores to make sure the approach is correct.

"When their windows are slow, the bank tellers walk through the stores," Copps said. "They help customers find products and take the opportunity to tell them about the bank's services."

"It's a very soft sell. Shoppers aren't overwhelmed in the least," he added. "If a bank employee sees a mother with a crying baby, he won't bother her. They realize that the shoppers are our customers, and they respect that."

Despite all their pluses, the supermarket banks have done little to reduce the check-cashing burden at supermarkets, retailers said.

"It hasn't reduced the banking aspect of running a supermarket," Copps said. "We still have to keep just as much money on hand for check-cashing."

But Big Y's D'Amour is still hopeful the bank branches will relieve some of that burden.

"Our hope is that they can eliminate some of our bad-check problems," she said.

All things considered, supermarket operators say customer service remains the major reason for leasing space to banks. And what's good for the customer is often good for the store.

"There's no longer the big 'I have to get to the bank or I won't be able to cash my check till Monday' concern," Cub's Kroening said. "That helps us because it spreads out our traffic into the weekend."