Lessons for Retailers in Financial Services

Introduction

Low profit margins in groceries have incentivized retailers to expand their non-food allocation. The FS industry offers attractive cross selling opportunities as retailers can leverage their extensive customer information to yield advantages in the financial services domain. This report explores the strategies that are essential for successfully crossing into the financial services space.

Features and benefits

• Improve entry strategy through better understanding the advantages and disadvantages of affinity partnerships.
• Create an appropriate product range through understanding the need to build a reputation for excellence before expanding into new product arenas.
• Improve customer acquisition through an appreciation of the role of independent recognition and rewards schemes.

Highlights

Trust in personal banks has however remained robust throughout the downturn. Banks may have suffered as an industry collectively but many consumers have felt their relationships with their personal bank remain relatively unchanged. Few consumers lost money directly from bank collapses given the extensive government guarantees in place.

Affinity partnerships between retailers and FS providers have become commonplace in providing retailers an easier route into the financial services domain. This normally takes the form of 'white labeling', where retailers offer their partner's financial products repackaged bearing the supermarket brand.

Supermarkets and other popular retailers must ensure they have the reward systems in place to offer enough of an incentive for consumers to go through the hassle of moving their primary bank. The rewards present must be obvious and attractive, the majority of consumers will not take the time to move if the savings are only minor

Your key questions answered

• What are the barriers to entry for retailers looking at the FS sector?
• How has the recession changed consumers’ attitudes to their banks?
• What advantages do retailers have compared to other institutions in entering the FS market?
• What are the pitfalls to avoid on entering this competitive market?