Bank of America is expanding its nationwide network of supermarket branches at a time when some say the delivery channel has reached its peak.

The bank will add 40 supermarket locations next year to its present 635, said Fred West, senior vice president of its in-store banking program. Most will be in the high-growth markets of Florida, Texas, and California, Mr. West said. Some will be in North Carolina, South Carolina, and Missouri. Half of the new branches will be in Publix supermarkets in Florida. The $672 billion-asset bank already has 91 supermarket branches in the state.

"The in-store channel is an important part of Bank of America's distribution mix for customers," Mr. West said. "We think diversity of delivery is important to any large financial institution."

The bank's announcement came a month after the release of a national study by Atlanta-based Synergistics Research Corp. that concluded that supermarket branches have reached a mature growth stage after failing to become the sales centers many hoped they would. Though supermarket branches may adequately serve the transaction needs of younger, lower-income residents, fewer than one-tenth of the 1,000 consumers surveyed had ever opened an account, applied for a loan, or obtained another type of service at a supermarket branch, the study said.

Banks are now questioning the supermarket delivery model, said William H. McCracken, Synergistics' chief executive officer. "Results from this study reveal, at least from the consumer perspective, that supermarket branches are transaction facilities, not sales centers," Mr. McCracken said when the study was released.

Statistics from International Banking Technologies Inc., an Atlanta company that provides training and consultation to financial institutions setting up supermarket branches, show that supermarket branch openings are tapering off.

Following heady growth in 1995 and 1996, when the number of supermarket branches zoomed 52% and 35% respectively, the pace in 1997 and 1998 slowed to 10% and then 8%, according to International Banking Technologies. At yearend 1999 there were 7,700 supermarket branches, about 10% of the total number of bank branches.

Supermarket branches, however, may attract more profitable customers. A survey conducted last year by PSI Global, a Tampa research firm, found that people who use branches in supermarkets typically earn more than other bank customers and are more likely to make use of alternate banking channels such as ATMs, the telephone, and the Internet.

Households that use these branches contribute $120 more annually to a bank's profits than households that do not, the study found.

Mr. West said supermarket branches have proven successful for Bank of America, which opened its first in Arizona in 1972. The supermarket branches serve the same demographic spectrum as Bank of America's traditional branches, he said.

Though sales at supermarket branches are lower per unit than in traditional branches, they have been growing steadily for the past few years and "are enough to make sense for us and our customers," Mr. West said. The bottom line is being able to provide services for all of the bank's customers, including those who want the convenience and extended hours offered by supermarket branches.

"We see this as a piece of the whole puzzle," Mr. West said. "We don't need to attract 100% of our customers to every channel we have."

Bank of America is not alone in seeing value in supermarket branches. Last week, Zions First National Bank in Utah announced the opening of its 49th supermarket branch, to be located in an Albertson's grocery in Idaho.

The advent of additional delivery channels such as the Internet do not threaten the future of supermarket branches, said John W. Garnett, CEO of International Banking Technologies. Today's customers want choice and convenience, he said, and supermarket branches are just another way of providing it to them.

"The banks that have distribution networks that incorporate different types of branches and other electronic means of accessing financial services are going to be the winners in the battle for the marketplace," Mr. Garnett said.

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