AUSTRALIAN SUPERMARKET CHAIN, BANK IN NEW BANKING VENTURE
Monday, July 12, 1999 2:44 AM EST
SYDNEY, Jul 12, 1999 (Asia Pulse via COMTEX) -- Supermarket chain
Woolworths Ltd (ASX:WOW) today said its new bank-while-you-shop
venture, Ezy Banking, would lead to a "significant increase" in sales
from busy customers looking for more convenient banking options.
Ezy Banking is the retailer's long-mooted alliance with the
Commonwealth Bank of Australia Ltd (ASX:CBA) to deliver an accessible,
in-store service for its customers.
Essentially, Ezy Banking involves Woolworths customers opening a new,
separate bank account which they could operate by phone, over the
Internet, at checkouts or at any store within the Woolworths group.
CBA would provide the banking services and manage the deposits.
"Woolworths Ezy Banking offers the convenience of being able to shop
and bank together with the added bonus of an attractive rewards program,
" Woolworths chief executive Roger Corbett said.
The joint service, first floated exactly 12 months ago, will begin
rollout later this year, with all 640 Woolworths and Big W stores to
have an Ezy Banking "kiosk" at the front of their stores within 12
The first kiosk, expected to be on the Gold Coast, could be operating
"within a couple of months", CBA managing director David Murray said.
Mr Corbett told journalists that Ezy Banking will have "a very positive
effect" on Woolworths and "will inevitably add to increased sales".
"We certainly anticipate there will be a significant increase in sales,
but we're not quantifying it at this time," Mr Corbett said.
But one retail analyst, who did not wish to be named, said Ezy Banking
seems to be a "pretty mundane loyalty offer" that is likely to have
only a marginal impact on Woolworths' trade.
"From my perspective it suggests they're coming from behind, ie,
they're in the catch-up game in terms of loyalty programs rather than
producing some new initiative," the analyst told AAP.
"I can't see anyone saying 'Let's go to Woolworths because they happen
to have a Commonwealth Bank (outlet there)'."
Mr Murray said the Commonwealth Bank would gain from its exposure to
the 12 million customers who visit Woolworths stores each week.
"We went onto this to get more customers," he said. "This is, for our
shareholders, a very easy way of extending our reach in 640 sites. The
alternative -- to build another 640 branches -- would not be possible."
Mr Murray also declined to quantify the returns that CBA expects from
"We've set some expectations for ourselves in the joint venture, but
our expectation is this will be equally attractive to Commonwealth Bank
customers and customers of other banks who deal with Woolworths.
Mr Corbett fended off questions about the cost of introducing the new
service, nor would he say whether those establishment costs were split
"We're not talking about those details. They're really private business
between Woolworths and the Commonwealth Bank."
Woolworths shares closed up five cents to $5.44, while Commonwealth
Bank shares have climbed 41 cents to $23.95.
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