From wire transfers and check cashing to money order sales, bill paying and, increasingly, no-fee ATMs, financial services continue to add convenience for consumers and more in-store sales for retailers.
In fact, ATMs—especially those of the no fee variety—can help cement customer loyalty once that offering is established for a period of time.
“The essence of our objective is ‘relationshipping’ with our customers,” said Gus Olympidis, president and CEO of Family Express Corp., a 62-store chain based in Valparaiso, Ind., who explained what spurred its recent promotion: ‘Free ATMs. Free Air. Free Smiles.’ “The culture of the experience at Family Express revolves around the human connection. We promise friendliness and a genuine greeting. That is the ‘free smiles’ part.”
Family Express began providing free air this past February and the no-fee ATM in early March 2015. The purpose of the initiative, Olympidis said, is to further enhance its connection with patrons, providing three more reasons for potential customers to choose Family Express, especially since none of the chain’s competitors have followed suit.
“We want the consumer to rely on us,” Olympidis said. “Because of that, each store features two ATMs to ensure immediate access and some backup in the unlikely event of a breakdown.”
The chain also provides money orders, money transfers and a variety of gift cards. Olympidis believes financial services are an important category that is blurring with proposed mobile wallet technology.
“We are looking to add mobile gift cards (and) mobile Apple Pay,” Olympidis said. “In short, we want to be where our customers are, especially Millennials.”
Finally, what advice does Olympidis have for any c-store longing to be a viable financial services provider? “Be the first in your market to do it,” he said.
Weigel’s Stores Inc. in Powell, Tenn., which operates 63 Weigel’s Farm Store convenience outlets, got involved in the Cash Depot no-fee ATM program three years ago. According to President and Chief Operating Officer Ken McMullen, his interest in the program began because he heard about it from colleagues who were involved.
“We at one point said, ‘Why should our customers have to pay to get their own money? We can give something back to them,’ and so we decided we were going to have no-fee ATMs.” The decision came while the company was celebrating its 80th anniversary, he added. “It was a good way to kick it off.”
The program was rolled out across the company, and customers responded.
“What you get is customer appreciation, and you definitely get traffic,” McMullen said. “It’s hard to measure, and everybody can say ‘Well, how do you know?’ You do know because it’s the talk you hear about free ATMs. But, it’s an investment.”
Of, course that investment comes with the cost of marketing.
“You’ve got to spend a lot of money if you’re going to do this,” McMullen said. “You’ve got to have billboards, you’ve got to have signage; you’ve got tell people that you’ve got free ATMs.”
Indeed, he added, it can be a hard decision for a retailer to make. “They have to believe in it for it to work. You’ve got to give up some revenue and make the investment. In our case, we feel that what we did, service for our customers, certainly paid off. We just feel that customers appreciate shopping where they are getting something back.”
“We own and operate our ATMs,” said Tim Skovensky, president of California Retail Management (CRM) in Carmichael, Calif., which operates 36 Circle K, Shell, 76, Chevron ExtraMile and unbranded convenience stores in California and Hawaii. “We like owning, as opposed to having an outside company own, supply and pay us a commission due to the profitability.”
CRM is in the midst of testing the fee-free option at one site, Skovensky said.
“We want to see if that has any benefit, but it’s too early to say,” Skovensky said. Other than that, he continued, the chain has not explored further service options.
“We’ve not had much interest from our customers, so it’s not been high on our radar,” Skovensky said.
Despite that, Skovensky believes the potential is there based, at least in part, on what he sees at competitors’ stores. “I do see the extended services at Arco and 7-Eleven but don’t know the effectiveness of the program. I think there’s opportunity there, but as of today I’m not seeing lines at the ATMs like you do at, say, the Redbox kiosk.”
Integral to the potential success of many of the most widely-used financial services is a convenience store’s location, and hence the type of clientele that frequents it. Raymond Huff, president of HJB Convenience Corp. of Lakewood, Colo., which operates 20 Russell’s Convenience Stores, said that financial services haven’t played a significant role in the chain’s operations, due mainly to the local landscape.
“We are in high-rise office buildings, on the ground floor, so we have sophisticated users, usually highly-paid and educated, and they just don’t use those services,” Huff said. “We are not a standard convenience store.”
As a result, only three of Russell locations have ATMs, which carry a bank-imposed feed. As for other financial services commonly found in convenience stores, Huff added, “We tried them a while back, even utility payments.”
The lesson was clear: the demographics were wrong for the success of these financial services.
“That’s what we figured out—that our customer has a bank account, has credit cards, has all the services, and so they don’t need them from a convenience store,” Huff said.