The recession decreased the availability of general-purpose consumer credit and many retailers energized their private label card programs to bolster credit sales. A change in market conditions and technology enhancements enable private label credit cards to regain their lost popularity.
Private label cards are the predecessor of general-purpose credit cards such as American Express, Discover, MasterCard and Visa. Merchants have commonly used store credit to promote sales since the mid 1900s. In the 1970s and early 1980s private label cards dominated the consumer credit market and consisted of two general groups – gas cards and store cards.
Conservative credit policies and intense regulatory scrutiny keep credit for general-purpose credit cards tight but retailers have an opportunity to generate sales and to attract and retain customers by leveraging and expanding the use of private label cards.
A growing number of large merchants including Wal-Mart, Target, Home Depot, Nordstrom and Zale recognize the opportunity to make what was old new again by updating their private label card programs. This represents a business opportunity for retailer business partners – companies that can support and provide risk management, business process and marketing skills to aid the merchants.
- Merchants chose cobranded cards in the 1990s as an alternative to private label cards and are now reconsidering that decision.
- Third party providers like Citibank and GE Money have renewed interest in retail partner alliances and new entrants like Capital One believe private label programs can increase their earnings.
- Enhanced merchant reward programs that are deployed through mobile phones and allow for redemption of merchandise at convenient shopping locations are improving the customer shopping experience.
Private label cards are making a comeback, learn who the market leaders are. Our webinar examines the renewed business interest in private label retail cards and the business opportunities for technology companies, third-party service providers, and credit card issuers.