Bankers Check Out Branch Opportunities in Grocery Stores


Like most 3-year-olds, Miles Pedersen tolerates bank teller lines about as well as he handles the grocery store checkout grind.

That’s why his mom usually blends banking and grocery shopping at a supermarket that incorporates a full-service Wells Fargo Bank branch.

“Having to take him out of the car seat twice can be a real pain,” Julie Pedersen said Thursday after she had bought two sacks of groceries and deposited a check at the Wells Fargo branch inside the Vons at the Marketplace shopping center in Laguna Niguel. “I think these grocery store bank offices are the wave of the future.”


Many bankers agree.

Wells Fargo & Co. plans to close hundreds of traditional branch offices once it completes the $11.6-billion merger with First Interstate Bancorp announced Wednesday. But San Francisco-based Wells says it will continue to add to the 350 locations it has inside California grocery stores, and it says that, post-merger, First Interstate customers in California will end up with more branch choices.

Indeed, Wells’ supermarket-branch approach is key to its effort to persuade First Interstate customers to stay with the merged bank rather than defect to rivals.

In an unrelated effort, Wells has also asked federal regulators for permission to open 175 supermarket offices in the Midwest through a thrift subsidiary.

Nationwide, banks and savings institutions have opened an estimated 6,000 in-store branches. Wells Fargo is the leader in California--with offices in Vons, Ralphs, Safeway, Albertsons and other supermarket chains--but other institutions are opening them as well. Union Bank, which opened its first grocery store office in 1989, has nearly 30 in-store locations and recently announced plans to add 24 more.

Banks like the small offices because they are cost-effective ways to generate new business and because they make it easier for customers to use the bank.

“Our basic goal is to provide as many points of convenient distribution for our customers as possible,” said Wells Fargo Bank Senior Vice President Margaret Kane. “It’s an incredibly simple concept.”

Grocery stores embrace bank branches because they add traffic to their stores--and because surveys show that consumers spend more on groceries if there are automated teller machines or branches inside the supermarket.

Grocery executives also see bank offices as important weapons in their war with large warehouse-style operators that lure customers with lower prices.

“Along with Starbucks coffee shops and travel agencies, banks are part of the consumer service puzzle,” said Paul Weitzel, a vice president with Willard Bishop Consulting, a Chicago supermarket consulting firm. “Grocery stores can’t compete with the warehouses on price, but they can distinguish themselves by adding more and more services.”

The more-is-better philosophy is evident inside the huge Vons in Laguna Niguel, where the Wells Fargo office is sandwiched between a photo-developing shop and a pharmacy. The store also has a restaurant, coffee shop and dry cleaner.

Some shoppers don’t feel comfortable buying Rice Chex and cashing paychecks at the same time. But Kane said the service is increasingly popular with affluent young consumers who typically don’t have enough time to shop and bank.

But there’s a noticeable learning curve for new customers, Kane said.

“Initially, people will think that the office is just an ATM and a teller line,” she said. “But we make an effort to tell them that we’re there for all their financial needs--for checking accounts, loans, investments . . . whatever your banking needs entail.”

Wells Fargo Branch Manager Michael Chiarelli does his part to bring in shoppers by using the public address system to broadcast advertisements about the bank’s services. The bank’s employees--all of whom are officers--also sit at a card table stocked with brochures and forms for a monthly prize drawing.

On a typical day, Chiarelli said, the office will accept deposits, open new accounts, sign customers up for credit cards and arrange personal loans and equity credit lines. And, as is the case with traditional bank branches, a majority of customers just head straight for the nearby ATM to handle their business.

Bank patrons say that other than the shopping carts that roll by, there’s little difference between in-store and traditional branch offices.

“I’ve opened three new accounts here because it saves me time and the hassle of going somewhere else,” said Tim Regan, who owns Westweave Carpet Mills in Santa Ana. “I can stop here on the way to or from work and pick up whatever I need from the grocery store.”

Ask patrons why they like the office and “time” is the ready answer.

“I’m in favor of anything that cuts back on the amount of time I have to spend moving my car from place to place and standing in different lines,” said Patricia Fields, who made a deposit and bought a sack of bananas on Thursday before rushing off to her son’s high school wrestling match.

“These offices aren’t for everyone,” she said. “But I think that anyone with a degree of sophistication will understand that this is a branch office of a bank. It’s no different than a regular bank office.”