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Grocery stores taking check use off shoppers' lists

In a cost-cutting move, Whole Foods may emulate Fresh & Easy in accepting
only cash and credit and debit cards at checkout.

By Jerry Hirsch

September 21, 2009

"Long before banks started locating branches inside supermarkets, grocery
stores acted as informal financial establishments, cashing payroll checks
and personal checks to provide ready cash for their customers. That's
starting to change.

Whole Foods Market Inc. is considering banning the use of personal checks at
its stores and this month stopped accepting checks at two stores in Los
Angeles County and one in Arizona as a test.

Fresh & Easy Neighborhood Market, the California division of British
retailing giant Tesco, won't take personal checks at any of the 70 stores it
operates in California.

"Supermarkets used to be a repository of checking, cashing payroll and
personal checks, but in an age of direct deposit and debit cards, that's not
something that is relevant to their customers anymore," said Mac Brand, a
Chicago food industry consultant.

The heads of these chains see check processing as a time-consuming and
expensive service at a time when the industry is looking to drive down
business costs, he said. But such a move carries risk.

"Every time you take something away, you run the risk of severing your
relationship with a customer," Brand said.

Such policies would irritate shopper Kerry Showalter of Newbury Park, he
said.

"Grocery stores are a dime a dozen. If the Albertsons where I shop stopped
accepting checks, I would just go to Vons," he said.

The computer industry sales executive said he uses checks to buy groceries
as method of keeping "a budget under control."

He said he's bothered by using debit and credit cards -- which he said are
not actual representations of money -- on perishables such as groceries. The
physical act of writing a check makes shoppers think more carefully about
their purchases, he said.

It would also be hard on many seniors, who have been slow to adopt the use
of debit cards, said Gail Hillebrand, a lawyer and financial services expert
for the nonprofit Consumers Union.

But a widespread move by the grocery industry to ban personal checks would
not upset other shoppers such as Sharon Fern of Placentia.

"I haven't written or carried a checkbook in many years," she said.
"Wouldn't bother me a bit." Debit cards are far more convenient, she said.

"The money comes right out of my account and saves a lot of time over
writing a check," Fern said.

Vons, Albertsons and Ralphs -- the stores most likely to have a bank branch
within their locations -- continue to accept checks.

They also cash payroll checks, although the chains typically charge a
service fee of about $1 to about 1% of the check, depending on the municipal
regulations of the city where the store is located.

Representatives of the chains said there were no plans to end the services,
and one supermarket industry executive questioned why, in an environment of
increasing competition for shoppers, a company would add a barrier to
potential sales.

Fresh & Easy, which started opening stores two years ago, has only
self-service checkout. It doesn't take checks or manufacturers' coupons.

"We keep our systems as simple as possible, keeping prices low for
customers. We do accept cash, credit and debit cards and also have an ATM in
store," said Brendan Wonnacott, a spokesman for the chain.

Bill Jordan, Whole Foods' regional vice president, said prohibiting personal
checks should improve service.

"Since most of our customers pay with cash, debit cards or credit cards, we
want them to be able to check out as quickly as possible. This pilot program
was put in place to see if personal check users would make the switch to
debit cards or another form of payment."

In little more than a week into the change, "the program is off to a great
start," he said.

So far only the stores in El Segundo, one in Los Angeles on 3rd Street near
Fairfax Avenue and a store in Tempe, Ariz., have stopped accepting checks.
The chain had already stopped cashing payroll checks.

Jordan said Whole Foods would evaluate consumer reaction before rolling out
the change to other stores.

A recent rise in bad checks also factors into the new policy, he said. "That
unfortunately makes it more difficult for the remaining customers who prefer
to pay this way. To help reduce fraud, we have a several-step personal check
approval process that can often inconvenience other customers in line,"
Jordan said.

The chain prefers cash, debit cards and credit cards because they can be
processed quickly and "come with added protections" that safeguard the
interests of the consumer and the retailer, Jordan said.

Many retailers prefer the type of debit cards that require the shopper to
punch in a personal identification number to complete the purchase. That's
because those have the best combination of low transaction fees and
security, said Adam Levitin, a law professor and consumer finance expert at
Georgetown University.

But probably the biggest advantage for grocery stores looking at stopping
accepting checks is the labor savings of taking and processing the checks,
he said.

Showalter, the Ventura County shopper and frequent check-writer, said he
understood the rationale but didn't like the policy.

"If I was a shareholder I would say yeah," Showalter said. "But I'm not a
shareholder, I'm a shopper."



Copyright © 2009, The Los Angeles Times