Magazine article American Banker

Number of Grocery Branches Up 26% in Year

Magazine article American Banker

Number of Grocery Branches Up 26% in Year

Article excerpt

Last year saw a continuation of rapid growth in the number of supermarket branches in the United States, according to a study by International Banking Technologies.

The survey by the Norcross, Ga.-based firm -- whose marketing programs are in use at more than one-third of the supermarket branches in the U.S. -- said that the number of domestic branches located in supermarkets grew by more than 26% last year to 1,938.

The growth is slightly smaller than last year's but continues a four-year trend of annual growth over 25%.

According to figures from the Federal Deposit Insurance Corp., supermarket branches, which are scaled-down versions of regular branch offices, make up about 3% of all financial institution branches in the U.S.

"Looking out across the next couple of years, we don't see the growth leveling off," said John W. Garnett, executive vice president of the surveying firm, a subsidiary of First Financial Management Corp., based in Atlanta.

"With people increasingly using their phones and other remote means for banking, the supermarket is one of the few places that bankers are going to be able to get face to face with prospective customers."

Experts said one of the reasons for the proliferation of supermarket branches is their low startup costs.

According to Mr. Garnett, the average supermarket branch costs about $200,000 to build, only about 20% the cost of building a regular branch.

That's because supermarket branches, unlike most traditional branches, are typically built within an existing structure -- namely, the supermarket.

Nonetheless, bankers do not typically engage in supermarket banking to reduce costs.

In fact, a typical supermarket branch, despite employing only a handful of platform workers, usually costs about the same to operate as a traditional branch, because a supermarket branch remains open for long hours, often seven days a week. …

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