Trimming the Branches (1/8)
Jan 8, 2009 12:46 PM, By Jennifer Popovec
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What’s In Store?
Some banks look to expand in-store networks.While a number of standalone bank branches are expected to be shuttered in the coming months as the banking industry works through the most recent round of acquisitions, retailers with bank branches in their stores can breathe a sigh of relief. Experts say in-store bank branches are safe from closures because these branches are inexpensive to operate and generate a lot of revenue.
“Consolidation is not going to limit banks’ interest because in-store branches bring in deposits and see a lot of traffic,” says to Bart Narter, a bank analyst with Celent, a Boston-based financial consultancy.
But, banks’ appetite for in-store branches will be curbed by a lack of new retail development and store openings, “After several years of robust growth, in-store branches have plateaued,” he notes, adding that much of the previous growth has occurred as existing grocery stores have been backfilled with in-store branches.
Today, in-store branch opportunities are limited to new grocery and discount stores like Wal-Mart, Narter says, and there are only so many that are opening. In fact, the slowdown in the residential housing sector means that even fewer in-store branches will open in the next few years since fewer grocery stores are under development. And the in-store bank branch concept doesn’t really work outside of grocery-oriented retailers, he adds.
The lack of new space has created a competition situation for banks, but Narter warns retailers against getting greedy with their lease terms. “Banks value their in-store branches, but they are not looking for any extra expenses right now,” he says. “If a retailer said it planned to double the bank’s rent, the bank would not be in the mood to hear that.” —J.P.
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