Actionable Insights From APT's Retail Practice

BoA Sells 700+ Branches: What Should You Do?

September 19th, 2011 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on BoA Sells 700+ Branches: What Should You Do?)

The Wall Street Journal recently published an article discussing Bank of America’s announcement that it plans to cut $5 billion in expenses throughout 2012.  In addition to cutting a significant number of jobs, Bank of America will also sell over 700 branches and their attached assets.

Many large banks are beginning to look for ways to streamline their operations in an effort to deal with uncertain market conditions, increased regulation, and decreased or flat revenues. These banks may cut costs by reducing the number of branches, particularly as more customers are turning to online and mobile banking.  On the other hand, some banks may view this as an opportunity to grow their footprint and pick up valuable assets at reduced cost.

Banks looking to reduce branch count need to identify which specific branches to close or sell to minimize financial impact to the network. (more…)

Wal-Mart Brings Back Layaway

September 13th, 2011 | Posted by Guru Raj in Retail | Uncategorized - (Comments Off on Wal-Mart Brings Back Layaway)

This week, Wal-Mart announced that it is reinstating layaway for electronics and toys.  The popularity of layaway has waxed and waned over time but seems to be back in vogue.  Wal-Mart’s reinstatement reverses a decision to eliminate layaway in 2006 (with the exception of jewelry). In addition, several other large retailers now offer or continue to offer layaway (Sears, Kmart, Best Buy).

Given the weak recovery so far, reimplementing layaway is a smart idea.  Implemented correctly, layaway offers all the attractiveness of credit cards (i.e. enabling a consumer to purchase something they can’t afford) without the associated regulatory or emotional baggage now associated with credit.  Moreover, many retailers are finding that they are “over-spaced.”  With parts of large retail stores under-utilized, there is little downside to devoting some of that space to layaway.

However, as retailers think about employing this “re-discovered” tactic, there are two key questions to get right.



  • How should layaway be financially structured?  Currently, layaway programs follow a similar fee structure: 10-20% down, $5 up-front fee, plus a $10 cancellation fee if the purchase is not completed.  While these fees are far less than the finance charges associated with carrying a credit card balance, they may not seem cheap to the consumers that layaway is targeting.  Since layaway is a explicit attempt to entice customers to buy something “extra,” there should more innovation and thought around the fee structure.  Should retailers offer to refund the fees if the layaway reaches a certain threshold, e.g. put at least $100 on layaway and we’ll waive the fee?  Should fees be waived if customers purchase certain bundled products that have higher margin?  These are all crucial elements for retailers to test, refine, and implement in the most effective way.





  • How should layaway be messaged?  There are multiple way to spin the idea of layaway:  convenience (We’ll hold on to this product so you don’t have to.), flexibility (Don’t know what you really want for christmas?  Don’t worry, put more items on layaway while they’re in stock, and you can figure it out later.), credit (for those patrons who don’t qualify for additional credit cards), frugality (Layaway is a form of forced saving.), etc.  In these economic times, some patrons may need to use layaway for the first time.  The right message could ease a new customer into trying this product.



In general, we expect to see a resurgence in products and services, like layaway, that help consumers extend their buying power.  Testing variations in-market can help retailers find a solution that really works.

Make the Most of Innovation in Channel Development & Channel Integration

September 6th, 2011 | Posted by Will Weidman in Retail | Uncategorized - (Comments Off on Make the Most of Innovation in Channel Development & Channel Integration)

Banking Strategies recently published an article on the need for financial institutions to innovate, as we discussed in an earlier article. One area of focus mentioned in the Banking Strategies piece is channel integration and the development of growing channels, for instance online and mobile.   In this particular area, banks are making significant investments, but opportunities to better target channel investments going forward also exist.

The Banking Strategies article highlights the idea that increasing customer engagement across channels, particularly digital channels, “can contribute significantly to enhance the customer experience.”  This is a commonly heard theme, but few banks actually know how increased engagement affects key metrics like retention and number of accounts per customer.  Do customers actually become more likely to stay with the bank or open additional accounts? (more…)