SUpermarket Branch Strategy for Banks and Credit Unions
If they haven’t used one themselves, most everyone has seen one — an in-store bank or credit union office. Sometimes called “micro-branches” or simply “grocery store banks,” these branches are nonetheless equipped to handle most transactions and financial services, all with a reduced footprint and staff.
Some community banks and credit unions may have yet to dip a toe into the in-store market, and may be wondering: Is it worth it? Read on to find out why establishing a grocery store branch might be your next great strategic move.
What Is a Supermarket Bank or Credit Union?
Often, while doing their weekly grocery run, shoppers may see a small office of their local bank embedded near the front of the store. This is a supermarket bank or credit union, a satellite branch that occupies a small footprint but provides many of the same financial services as its traditional branch locations.
Typically no larger than several hundred square feet, branches placed near the checkout lines offer shoppers the ultimate convenience: Customers and members who are already on their weekly grocery store run can simply swing by their bank or credit union to cash a check on the way out. In this way, financial institutions (FIs) can improve the overall efficiency of their branch networks, meeting customer needs quickly and efficiently and increasing revenue.
Features of a Grocery Store Bank or Credit Union
Services, staffing, and design elements may vary from branch to branch, but many grocery store banks and credit unions share similar characteristics:
- A small footprint between 400 and 600 sq. ft.
- Contains the essentials, including an ATM and/or ITM (interactive teller machine), one or two tellers, and a financial consultant.
- Generally fewer employees than a larger, standalone branch.
- Expanded hours to reflect grocery store hours, including evenings and weekends.
Savvy supermarket branches may employ a “universal teller” who can handle multiple types of financial services, in addition to the standard check-cashing or account-checking. Having a teller with an expanded skill set means that in-store branches can cut down on their payroll expenses, since one person may be able to do the job of three specialists. This is also much more convenient for customers and members, who can accomplish more without waiting for a specific specialist to be available or on shift.
Why Build a Bank or Credit Union in a Grocery Store?
Depending on where you live, building a branch inside a grocery store may either seem unconventional or like a well-worn strategy. So why do it?
High foot traffic
No matter where they live, almost everyone goes to the supermarket. Even in rural areas, the local grocery store is still one of the busiest spots around — an average of 30 million people visit grocery stores in the U.S. Monday through Thursday. That means that a bank or credit union branch in a grocery store will see the same amount of people walk past their door, many of whom may be existing customers or members.
Ease of access
The average American consumer visits a grocery store roughly 1.6 times a week. That’s time during which they are unable to perform other tasks, such as filling their car with gas, going to the gym, or dropping their child off at daycare. But with access to an in-store FI branch, they may be able to complete financial errands at the supermarket! Providing a one-stop-shop for people’s most pressing errands means that many of them may plan a grocery shopping trip simply because they need to go to the bank. There are also some instances in which a grocery store branch is the only way an FI can serve a particular market, especially if they do not have any traditional branches in the surrounding neighborhood.
Relationship building
Customer service is and always will be at the heart of banking. Having an expanded presence in the community means that your FI will be able to attract and retain more customers — especially if there’s an employee onsite with excellent customer service skills. An in-store ATM can’t build relationships with customers, but an in-store teller can, while providing more robust services.
Opportunities for innovation
With the move en masse to digital banking, many consumers now prefer and expect their FIs to offer the latest in digital services. This includes remote services as well as in-store solutions, such as video banking, interactive teller machines, and touch-screen technology. With a lower overhead, in-store branches may be able to focus more of their budget toward implementing some of these 21st-century banking tools.
Cost savings
And speaking of budget — fewer employees and a smaller footprint means lower energy costs, decreased payroll, and a less expensive construction bill. The average supermarket branch costs 25-35% of the capital it takes to build a traditional branch, since it is typically only 15% of the size.
Cost Breakdown: Grocery Store Branch vs. Traditional Branch
Let’s put the differences between traditional and in-store branches into hard numbers.
| Traditional branch | In-store branch | |
| Avg. square footage | 3,000 sq. ft. | 500 sq. ft. |
| Avg. construction cost | $1.8M | $540,000 |
| Deposits | $79.7M | $21.5M |
| # of employees (full-time) | 5 – 8 | 3 – 5 |
| Payroll(based on a 40k annual salary) | $200,000 – $320,000 | $120,000 – $200,000 |
Sources: Bancography, Bancology, Volume 70, August 2019; The Financial Brand, March 2018
Of course, this data will vary from region to region, and depending on the specifics of each unique branch. COVID-19 may also have had an effect on this data.
Example Layouts for Your Grocery Store Bank
At this point, your wheels might be turning — what would your own grocery store branch look like? Take a look at some examples of successful in-store projects we’ve completed for our clients.
Grocery Store Bank and Credit Union Considerations
Before you commit to your in-store incarnation, there are some important things to consider:
- Area foot traffic: How many people come in and out of the store each day? Is the store in a busy shopping plaza, or in a retail “dead zone”?
- Store demographics: Who visits the store? Are there different types of crowds at different times of the day? If you’re in an area with a lot of 9 to 5 working professionals, your staff may be putting in long, vacant hours with a busy evening rush.
- Financial needs of the community: Do the locals require more transactional services, or more consultative? Is this an up-and-coming neighborhood filled with lots of new homebuyers seeking mortgages, or does it lean more toward the retired set who need to cash regular checks?
Just like community banks and credit unions, grocery stores large and small are competing with online retailers and contactless delivery services. As such, brick-and-mortar stores have had to embrace innovation themselves in order to keep pace. It pays to partner with a store that’s looking to the future of grocery shopping and implementing new services that keep people coming in — think real-time inventory data, nutrition consultations, or cooking classes.
Frank conversations with store management, as well as market research and analysis, will help you determine not only whether an in-store branch would be worth it, but if it would be profitable.
Here are some tips for ensuring your in-store branch succeeds:
DO
Organize the branch layout with plenty of open space for organic interactions.
DON’T
Crowd the space with furniture or self-serve technology.
DO
Employ only one or two financial “concierges” equipped with comprehensive training.
DON’T
Overstaff with employees who have limited skillsets.
DO
Balance the proportion of banking technology and onsite specialists.
DON’T
Automate every financial service or transaction.
DO
Leave room in your floor plan for storage and back-of-house business.
DON’T
Forget that employees still need a break room!
DO
Provide and encourage professional development during slow stretches.
DON’T
Launch your in-store branch until all employees are fully trained to be universal bankers.
In terms of the physical space, try to utilize natural light, lighter colors, and organic shapes whenever possible. Even with a small footprint, these design tactics give the perception of a larger space. Environmental graphics can liven up the walls and extend your branding in creative and engaging ways. Digital signage and video walls are low-profile messaging platforms that offer limitless opportunities for content customization — plus, they signal to your visitors that your institution is on the cutting edge.
How to Increase Sales in Your Supermarket Branch
In order to make your in-store branch as profitable as it could be, consider pivoting your offerings away from transactional and toward consultative services. Automate as many transactional processes you can (think ATMs and ITMs) and save your employees for complex, personalized financial support and sales. For every interaction, make sure that your employees are familiar with every available product and promotion, so they can recommend relevant packages depending on each visitor’s unique needs.
Also, since you have access to an existing customer pool, you don’t have to wait for customers or members to come to you. With management’s approval, use the entire store as your branch “lobby” by deploying pop-up demos, promotional campaign signage, and even branded giveaway swag available throughout the store.
When you’re ready to start planning your own grocery store bank or credit union, reach out to The Element Group. We’ve designed and installed many successful in-store branches, and we’re passionate about finding unique solutions to retail banking. Reach out to us today to discuss the possibilities.
FAQs about Supermarket Banks and Credit Unions
How are in-store branches different from traditional branches?
Besides having a much smaller footprint, in-store branches may have reduced staff, more automated services, and self-serve technology that allows employees to focus on consultative support and sales rather than transactional services.
Are in-store branches worth it?
Profitability depends on the store’s location, customer demographics, foot traffic, and more. FIs embedded in high-volume stores that see a wide range of customers can be extremely successful, especially if they offer services tailored to the needs of the local demographics. Banks and credit unions considering in-store branches should absolutely perform detailed market analysis to determine whether their presence will turn a profit.
How can I make my in-store branch more welcoming?
An open floor plan does wonders for space optimization, and gives both visitors and employees room to breathe and interact organically. Innovative and engaging technologies can pique customers’ or members’ interest, and dynamic signage can add motion to the space while communicating important information. Doing away with the traditional teller line in favor of conference “pods” can also dissolve any perceived stuffiness, a trend that many FIs are following as part of their 21st century transformations.
