CHICAGO -- Though gift cards, wireless prepaid, prepaid debit, as well as financial services like check cashing and bill payment have been a part of the convenience and petroleum retail landscape for several years, operators present at a CSP Roundtable on the unbanked population believe the industry is just waking up to these opportunities.
Sixteen retailers and eight suppliers participated in the CSP Fringe Banking & Unbanked Consumer Forum held in Chicago May 3-4, examining hot-button issues that included marketing strategies for the prepaid category [image-nocss] and the logistics of providing financial services in a c-store environment.
An estimated 28 million consumers operate without a bank account, while another 40 million have bank relationships, but use unbanked financial services for other reasons, according to Keith Brand, president of Tefisto Partners, Tempe, Ariz. Brand, who was a lead speaker at the meeting, said this second group, known as the underbanked, initiate transactions through nontraditional means, with c-stores becoming known for offering these transactions. The key question isare you satisfying their needs? They're in your stores. Can they transfer money? Can they load a prepaid debit card? Do you have all of these options? The answer is probably no.
Retailers present at the roundtable admitted that the prepaid category and financial services present unique challenges. Referring specifically to prepaid, Kent Raphael, vice president of merchandising for Village Pantry, Indianapolis, Ind., said simply, If you're looking for an easy way to do this program, walk away.
Approaching the prepaid category effectively means changing the way a retailer does business, Raphael said. It changes the way you work labor, the way you train, how you lay stores out, he said. It's a dramatic change.
Other retailers present agreed. Al McKay, vice president of retail marketing for Cumberland Farms Inc., a 650-store chain out of Canton, Mass., said one of the biggest ongoing hurdles is training. One of the problems is that you're teaching people new things, McKay said. I can understand. For us it means teaching [thousands of] people something new.
And for both the prepaid and financial services categories to work, employees are critical, according to Mike Skinner, vice president of sales and marketing for Coinstar, Bellevue, Wash. He said that certain communities have concerns around technology. Many consumers react with apprehension when they watch their $40 disappear into a machine in return for a nondescript piece of paper, Skinner said. In many instances, the relationship between the financial services kiosk, the clerk and the customer is of extreme importance.
What is helping retailers are supplier partners interested in taking the mystery out of these categories. For instance, Frank Squilla, senior vice president of sales for Atlanta-based InComm, said that as a provider, his company tries to make the transactions similar for cashiers, no matter what the product.
Suppliers can often help with marketing tips, too, according to Craig Peterson, group vice president for Safeway Inc., Oak Brook, Ill., which supplies gift cards. For example, Safeway's customer research shows that the biggest draws for gift or so-called shopping mall cards are brand, category and denomination. We know that, Peterson said. So we take that information and build it into our presentation.
Still, despite the availability of options and advice, retailers at the roundtable agreed that each business must address the challenges presented by these categories on its own, considering corporate goals, resources and mission. There's no easy answer, said Raphael of Village Pantry. There's no turnkey solution.
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