Despite ATMs, Safeway's Focus Is Still Food

By Weinstein, Michael | American Banker, January 27, 1984 | Go to article overview

Despite ATMs, Safeway's Focus Is Still Food


Weinstein, Michael, American Banker


NEW YORK -- Although financial institutions are nervous about competition from retailers, the world's largest supermarket chain says it is still interested strictly in the food business.

Safeway Stores Inc. expects in-store automated teller machines to help the firm sell merchandise, not financial services.

Safeway's decision to offer electronic banking services -- one of several new products -- reflects the changing shopping habits and demographics of the supermarket's customers.

"Safeway's mission is to be a leading retailer of food products," said Shaun P. Pond, Safeway's consumer financial services coordinator. "It's not a simple as red apples and green lettuce."

As part of is effort to diversify its product line, Safeway has installed ATMs in Texas, Oklahoma, California, and the Washington, D.C., area. Teller machines in stores have attracted the attention of other supermarkets, which, like Safeway, are changing their operations in the face of intensified competition.

But supermarket ATM programs, both in their goals and execution, vary from one firm to another. Safeway, as the industry leader, is closely watched by its competitors. And when it comes to ATMs, Safeway has pursued varying strategies in different parts of the country.

In the Washington area and Texas, where shared electronic banking networks have adequate market penetration, Safeway installed network-controlled ATMs in its stores, explained Mr. Pond in a telephone interview from the chain's Oakland, Calif., headquarters.

But Safeway installed ATMs without network lines in California, where there is no significant shared network, said Mr. Pond. The ATM operator is signing up financial institutions to provide cardholders for the terminals.

Safeway -- and retailers of all kinds -- want in-store terminals to be available to as many of their customers as possible. Since there is no network in California to provide a ready base of cards, Safeway took on the responsibility of signing up cardholders.

The California terminals are owned and operated by National Transaction Systems Inc., a data processing firm that also has an agreement to install ATMs in Safeway stores in Nevada, Arizona, and Hawaii.

Although none of the five big banks in California -- Bank of America, Crocker National Bank, First Interstate Bank of California, Security Pacific National Bank, and Wells Fargo Bank -- have joined Safeway's program, Mr. Pond is confident that "it will get the job done."

The program has signed up several smaller networks and individual institutions, including Citicorp and Merrill Lynch & Co.

In the three market areas, about 230 ATMs are operating in Safeway stores, Mr. Pond said.

"For us, an ATM is not a banking system, it's a product," Mr. Pond said. Safeway, like other supermarkets, has been expanding its product line in traditional and untraditional areas, and Mr. Pond sees the ATMs in stores as one of several new products.

For Safeway, ATMs are treated like some other, more traditional new products, such as bakeries in stores. "They [ATMs] rank with those as an accepted, proven product," Mr. Pond said. "ATMs are out of the pilot stage for us.

"We intend to have ATMs wherever we have stores," said Mr. Pond, noting that the firm is in discussions in several different areas. Safeway's 1,900 U.S. stores are located primarily west of the Mississippi River and around Washington, D.C., and Richmond, Va.

Safeway considers ATMs to be its most successful untraditional product, and the supermarket is developing other nonfinancial, untraditional offerings, Mr. Pond said. But he declined to elaborate, saying the information is competitive. Changes Reflect Society

Efforts by Safeway to expand its product line reflect changes in the industry and in society, Mr. …

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