I went with my wife to the grocery store yesterday, and when we made it to the checkout line, there was a large display selling financial products. I was a bit surprised to see a grocery store selling financial products. I assumed they were there from a third party and the store was paid a fee for setting up the display. But I was wrong. These products were sold by the store under their own brand.
Kroger has a finance site where they sell a multitude of financial products ranging from loans (credit cards, mortgages, HELOCs), to insurance (auto, home, life, renters, identity theft, specialty, and even pet insurance), and gift cards.
I took one of each of the brochures so I could read them more closely; don’t worry, I will recycle them when I am finished with them. After reading the details, it seems that most of the financial products (loans) are underwritten by divisions of Kroger, and most of the insurance is offered through a third party. My guess is that it is easier to get into lending than insurance.
Would you buy financial services through your grocery store?
Grocery stores are offering a wider variety of services nowadays. Many have banks and ATMs within their store, floral and balloon shops, pharmacies, bakeries, photo development, and specialty liquor and tobacco sections. They also offer seasonal items such as school supplies and Halloween costumes. Grocery stores are almost like mini Wal-Marts. Is moving into financial services a logical jump?
Personally, I want to shop around and buy my insurance based on the best deal. But my guess is that the busier (or lazier) people become, the more likely Kroger and other stores will make a lot of money through these types of offerings.
Reader Poll: Would you buy your financial services from a grocery store?
- No way! (50%, 63 Votes)
- Maybe. It depends on how it compares to my current company. (37%, 47 Votes)
- I do all my grocery shopping at the Kwik-E-Mart. (7%, 9 Votes)
- Yes. I’ll take a loaf of bread and some life insurance. (6%, 8 Votes)
Total Voters: 127 (poll has ended – thanks for participating!)
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{ 14 comments… read them below or add one }
I voted maybe… simply because if it were a good deal, then I might consider it. I wouldn’t buy just to buy from the company. It would have to out due my current providers.
I have to admit I am skeptical of it. Sort of how I feel about all the stuff they have in walmart right now: hair cuts, banking, eye doc, doctors, etc. For some reason it just makes me nervous.
In Canada, a major grocery chain has been offering financial services for several years now, very successfully. It’s called PC Financial.
They did not develop the products themselves. A major bank does that for them, and I guess they get paid a licensing fee or something.
But basically, they offer free banking, competitive loans and credit cards, etc. etc. They have an excellent reputation.
I’d use them, but I work for a bank and I get that stuff free or cheap anyway, so they’re no benefit to me changing. But if your needs are straightforward, why not?
Another point on insurance: you get what you pay for. I went with the low cost provider when I started it, and when I had to file a claim, they made my life miserable, didn’t cover 1/2 the stuff, and tripled my rates the next year.
The next insurance co was more expensive, but wow, when I needed them, they were there for me.
Insurance is too important to go cheap on. Check the reputation and track record for payment first. That’s what really matters.
Get your mortgage at the register. That’s awesome. I’m a regular Kroger shopper and I’ve never seen these. I’ll have to look out for this.
They are definitely looking for the lazy consumer…I seriously doubt they have competitive products.
Lise, You make some great comments. I’m not familiar with PC Financial, but I’ve only been to Niagra Falls, Canada, so my experience is a bit limited there!
If the product is good, I will consider it, because as you mention – insurance is too important to skimp on!
I don’t know the answer. I only just became aware of it, and was more amused than anything else. I have no idea if the stock is a worthy investment or not…
It sounds a lot like another way to make pennies off the dollar using the brand. For example, a store-branded VISA card in this case, a store-branded insurance.
Now I am curious about this, how much revenue does Kroger get from these products since it will be reported on their financial statement. I been learning how to read financial statement and where the revenue comes from. If Kroger makes 10 percent of their revenue from selling these OTC insurance, does that mean Kroger is a good investment?
It’s just like Ford and their Ford Credit division. Same game, different image.
I used to joke about someone with a business called “Joe’s Insurance and Pizza Delivery,” mostly because that’s what a lot of insurance guys need to do at night during the early years to get by. I guess it isn’t a joke anymore.
I gotta say, it would make me feel kinda weird, getting my salad, meat, mortgage, milk, eggs, butter, life insurance, and bread from the same place.
This has been around in the UK for a few years now, at least 3 major chains, Tescos, Sainsburys and Marks & Spencers offer savings, insurance and credit cards. They are actually pretty popular although I never used them. I know that Tesco’s insurance is through Aviva, so if the prices are good I wouldn’t have any problem using the services if I needed to.
I’d have to see the rates and how well established they were. I wouldn’t want a random start-up…but if they had merged with a respectable company or something, sure.
Hello Looby,
I still have a couple shirts from Marks & Spensers! (I lived near Cambridge from 2000-2003. I loved it!).
Store owned credit cards are common in the US, but grocery stores and department stores offering other financial services is not very common. I guess if they already offer credit cards, why not expand into mortgages?
Having worked in the life insurance industry now for a few years, I would not purchase life insurance from my grocery store. (I probably never would’ve done it even if I hadn’t worked in this industry). However, I think that the store is very clever to sell the products. People nowadays are looking for ease and a stressfree way to purchase products they need, especially products that are stereotyped as being stressful to purchase (as life insurance often is). Creating an easy way to access and purchase these types of products, with the right kind of marketing, could be quite profitable.
Wow its called one stop shopping
I used to work at a retail store where one of my responsibilities was to presell the store credit card to customers. I was told that the redit card business accounted for 20% of the store chains profits.
Businesses also like to have multiple streams of income, and who are we to blame them ?
It’s not a bad idea. If you think about it, most people have a “trusted” grocery store – some place they shop at every week. If someone with little knowledge is looking for financial products, then who to turn to but someone they trust?