Money Mill

Supermarket Banks on Cash

Banking and bananas.  Source: Grümmer/Edeka
Banking and bananas.
  • Why it matters

    Why it matters

    Offering added services like banking is another way of getting more customers into stores.

  • Facts


    • Germans like to pay in cash, which is expensive for retailers because they have to carry the cost of transporting money to and from the bank.
    • In rural areas, Postbank sees grocery banks as a way of filling “blank spots” and connecting with customers in everyday life.
    • The supermarket manager invested €160,000, or about $202,000, in the new cash registers.
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It’s a scene played out hundreds of times daily in German cities like Frankfurt. Shortly before closing, customers dash to the Rewe supermarket to make a quick €20 ($25) purchase and, since they’re already there, withdraw €200 at the cash register at no extra charge.

The store’s cash-back offer makes it possible. But because the customer pays with a cash card, the retailer has to cover the €1.26 in card-usage fees. That’s a lot for the grocery business, which operates at margins of 3 to 4 percent. And that’s the reason why the supermarket chain requires a  maximum withdrawal of €200.

The service offered by Rewe spares the customer a trip to a cash machine, but it doesn’t do the retailer much good – and that’s exactly what Gerd Grümmer, the 54-year-old manager of an Edeka supermarket in Boostedt, north of Hamburg, wants to change. Grümmer is testing an entirely new way of circulating cash – one, he argues, that is convenient for customers and profitable for supermarkets.

Mr. Grümmer runs a modern business. Prices are shown on digital shelf labels. Empty bottles are transported on a conveyor belt in the storage area above the sales floor so no rattling can be heard in the store below. And sophisticated cash registers double as automatic tellers, which are constantly filled by customers.

Why so much fuss about cash? Because many Germans still prefer this form of payment.

Customers don’t hand over money to cashiers at cash registers to pay for their goods but feed the machines directly. Change goes into the funnel on the left, bills go into the sliding tray on the right. The machine counts the money and gives back change.

Shoppers who need cash can also use the equipment as automatic tellers, at no charge and with no withdrawal limit.

Why so much fuss about cash? Because many Germans still prefer this form of payment. But it’s an expensive habit for retailers because they have to carry the cost of transporting large amounts of money to and from banks.

“It makes more sense to keep the cash right here in the supermarket,” Mr. Grümmer said.

This requires coins and bills to be recycled on site, a process that poses some technical challenges. “The software of the cash register must coordinate with that of the bank,” Mr. Grümmer said. Because the cash registers must always be correct, money doesn’t pass through the hands of cashiers, but goes directly into the machines.

Postbank, the former financial arm of the German postal operator that is now fully owned by Deutsche Bank, is participating in the trial. The bank is already a partner of Shell, which is also testing the cash-recycling technology at its service stations.

“Customers find it practical to combine shopping and banking,” said Andreas Otto, the Postbank project manager responsible for the trial run, adding that withdrawals are by far the most-demanded service. Because the bank has one less automatic teller to fill, it passes part of the savings on to its partners. “It’s a win-win situation,” said he said.

Postbank is optimizing its software so customers can deposit money in an account or make withdrawals from a savings book.

Ulrich Binnebössel, of the grocery trade association Handelsverband Deutschland, said the new approach makes sense. “Offering additional services is one way of getting more customers into the store,” he said.

The Boostedt experiment has not been cheap for Postbank. “With this project, we are oriented entirely toward investing in our service interface,” said Mr. Otto.

Mr. Otto said the move to work with supermarkets and service stations was a way to fill “blank spots” in rural areas. The bank is speaking with other retailers about similar projects.


Laura De La Motte covers finance for Handelsblatt in Düsseldorf. To contact the author:


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