Convenience factor behind spread of LV grocery store banking

Chris Jones

Wednesday, April 17, 2002 | 11:25 a.m.

Las Vegas-area grocery stores increasingly are attracting banks and credit unions as tenants in deals that are providing benefits for both parties -- and consumers too.

Nevada's four largest banks each lease space inside local grocery stores, often at the request of customers who want the easy access and extended hours that typically accompany in-store locations, bank executives say.

"(In-store branches) enable us to serve customers where they are and when they want to be served," said Sean French, community banking president for Nevada's largest bank, Wells Fargo.

Will Holford, a spokesman for Bank of America, added the majority of transactions at his company's in-store branches occur when traditional bank sites are closed.

"Our experience shows people go there after work or on the weekends," said Holford, whose bank operates six branches inside Southern Nevada stores and is scheduled to open a seventh later this year.

Reduced start-up costs compared to freestanding bank sites have also driven banks to partner with store operators, said Jeff Bargerhuff, marketing director for the state's No. 3 bank, Nevada State.

"Store branches just don't have that big capital expenditure to open up," said Bargerhuff, who added Nevada State typically spends about $300,000 to $350,000 to set up in a grocery store. He said freestanding branches typically cost about $1.2 million to open -- not including the price of land.

Nevada State introduced in-store banking to its Nevada customers with the May 1989 debut of a branch inside a Smith's Food & Drug Center at Maryland Parkway and Sahara Avenue. Today 34 of its 61 Nevada branches are located inside Smith's stores, which has an exclusive partnership with the bank and its parent company, Zions Bancorporation.

Other store operators have deals with multiple bank partners in Southern Nevada. Albertson's is home to branches of Bank of America, U.S. Bank and Wells Fargo as well as Silver State Schools Credit Union. Raley's hosts U.S. Bank and will add a Bank of America branch later this year, while Vons offers its customers access to both B of A and Wells Fargo branches. Wells Fargo operates 22 in-store branches in Southern Nevada, some of which helped the bank expand into developing areas faster than it would have on its own, French said.

"Supermarkets are usually the first (businesses) to move into a growth area so they do a great job of establishing where the need is," French said. "We've piggybacked on their research many times, which helped us get into a (neighborhood) market quickly."

Henry Hall, district manager for U.S. Bank in Nevada, said in-store branches can also help banks attract new business.

"We have a total of 12 branches inside (local) Albertson's and Raley's stores, and they'll have anywhere from 6,000 to 25,000 people walking through those stores each week," Hall said. "All of those people are potential bank customers."

U.S. Bank plans to open three branches inside Albertson's stores next year, Hall said.

Large banks aren't the only ones to find value in store partnerships, however.

Grocery store operators welcome banks because they give customers another reason to visit their stores, said Nicole Townsend, spokeswoman for Raley's, a California-based supermarket chain that operates 18 local stores.

"The banks provide for more of a one-stop shopping experience, and our customers have told us they like that added convenience," said Townsend, whose company houses seven bank branches in Southern Nevada.

Dave Groshong, market president for First National Bank of Nevada, said some 50,000 people per week pass by each of the four branches his community bank exclusively operates inside Southern Nevada Wal-Mart stores, a factor he credits for much of his organization's recent success.

In addition, Silver State Schools Credit Union -- whose membership is expected to approach 49,000 by the end of this year -- has also used in-store branches to meet the needs of its growing customer base.

Gilbert Niimi, a SSSCU vice president, said the credit union has opened five in-store branches since 2001 and is committed to open a sixth inside an Albertson's that is scheduled to be built sometime next year near Lake Mead Drive and Boulder Highway in Henderson.

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