Private Label Credit Cards in the U.S., 8th Edition

May 31, 2013
136 Pages - Pub ID: LA4932843
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With U.S. retail credit card portfolios on the mend, private label accounts growing again, and major new players emerging from a spate of deals, the market for private label credit cards has definitely gotten a second wind. Receivables and volume declines are now in the rear view mirror: Packaged Facts forecasts that 2012 total private label credit card loans outstanding of $108.6 billion will grow at six percent through 2015. Private Label Credit Cards in the U.S. provides market guidance on industry opportunities, with an emphasis on retail credit card program features and benefits analysis, retail card strategies and growth trends among bank and non-bank issuers, and trend spotting:
  • Assessment of leading private label credit cards from Target, Walmart, J.C. Penney, Sears, Macy’s, Nordstrom, The Gap, Home Depot, Lowe’s, Office Depot, Staples, Amazon and Best Buy—to gauge program differentiation and related features and benefits.
  • Relying on proprietary consumer research, analysis of which private label credit card features and benefits would most incentivize non-store card and store card users to sign up for a new private label credit card.
  • Analysis of U.S. private label card programs operated by North America’s leading financial institutions, including Alliance, Data Systems, GE Capital Retail Bank, Citi Retail Services, Capital One, TD Bank, Wells Fargo and JPMorgan Chase, including private label income, volume and receivables analysis; card introductions; and key retailer profiles.
  • In-depth profiles of the in-house retail card programs of Nordstrom, Cabela’s and Signet Jewelers, including private label income, volume and receivables analysis, and card introductions.
  • Analysis of branded credit card and store card (broken out into five categories) penetration, usage in past 30 days, and trending of monthly usage patterns for 2004-2012. Also featured is current demographic analysis for these metrics.
  • Receivables estimates for the U.S. private label credit card market for 2012, and receivables and volume forecasts for 2013-2015.
Executive Summary
Report Scope
Market size and forecast
Trends & opportunities
Private label retail card landscape
Target REDCard
Walmart Credit Card
jcp credit card
Sears Card
Macy’s Card
Nordstrom Retail Card
GapCard
Home Depot Consumer Credit Card
Lowe’s Consumer Credit Card
Office Depot Personal Credit Account
Staples Personal Account
Amazon.com Store Card
Reward Zone Credit Card
Private label bank issuers
Alliance Data Systems
GE Capital Retail Bank
Citi Retail Services
Capital One
TD Bank
Wells Fargo
JPMorgan Chase
Private label non-bank issuers
Nordstrom card program closing in on $9 billion and 40% of net company sales
Cabela’s: sky high FICO scores help credit card program contribute 10% to bottom line
Signet Jewelers gets half of sales from in-house financing
Private label credit card usage trends
Private label credit card usage motivators
Chapter 1: Overview
Major retailer benefits: usable data and customer loyalty
Major cardholder benefit: buying power
Healthy general purpose credit card volume growth
Table 1-1: U.S. General Purpose Card Purchase Volume, 2007–2012
Chapter 2: Market Size and Forecast
Total U.S. private label card loans outstanding
Graph 2-1: U.S. Private Label Credit Card Loans Outstanding: 2012
Receivables by issuer
Purchase volume by issuer
Table 2-1: Alliance Data Systems & Citi Retail Services Private Label Credit Card Loan Volume: 2012
Private label cards market forecast
Chapter 3: Trends & Opportunities
Summary analysis
Improving economy leads to improving card portfolios
But declining loans outstanding
Post-recession consumer usage rebound
Increased industry deal-making and interest
Cobrand conversion
Turning an expense into income
Increasing customer loyalty
Chapter 4: Private Label Retail Card Landscape
Summary analysis
Target REDCard
Walmart Credit Card
jcp credit card
Sears Card
Macy’s Card
Nordstrom Retail Card
GapCard
Home Depot Consumer Credit Card
Lowe’s Consumer Credit Card
Office Depot Personal Credit Account
Staples Personal Account
Amazon.com Store Card
Reward Zone Credit Card
Target REDCard
Everyday discounts emphasized
Table 4-1: Target REDCard Incentives, Rewards and Other Features
Differentiator
Walmart Credit Card
Table 4-2: Walmart Credit Card Incentives, Rewards and Other Features
Sign up incentives emphasized
A supplementary offering
jcp credit card
A rich mix of incentives and rewards
Table 4-3: JCP Credit Card Incentives, Rewards and Other Features
With a catch
Differentiator: strong incentive to spend now and return quickly
Sears Card
Table 4-4: Sears Card Incentives, Rewards and Other Features
Shop Your Way Rewards
Differentiator: Strong loyalty program association
Table 4-5: Sears Card Shop Your Way Rewards
Table 4-6: Sears Card VIP Tiers
Macy’s Card
Strong incentives
Table 4-7: Sears Card Incentives, Rewards and Other Features
Differentiator: Loaded upfront
Nordstrom Retail Card
Table 4-8: Nordstrom Retail Card Incentives, Rewards and Other Features
Table 4-9: Nordstrom Fashion Rewards: Tiers and Benefits
GapCard
Table 4-10: GapCard Retail Card Incentives, Rewards and Other Features
Solid signup and rewards mix
Spend $800 and get upgraded to Gap Silver
Home Depot Consumer Credit Card
A range of incentives
Table 4-11: Home Depot Consumer Credit Card Incentives, Rewards & Features
Differentiator: Variety to incentivize large purchases
Lowe’s Consumer Credit Card
No-interest financing at sign up
Table 4-12: Lowe’s Consumer Credit Card Incentives, Rewards & Features
Differentiator: card customization
Office Depot Personal Credit Account
Table 4-13: Office Depot Personal Account Incentives, Rewards & Features
The bait
Differentiation
Staples Personal Account
Table 4-14: Staples Personal Account Incentives, Rewards & Features
Key incentive
Differentiation
Amazon.com Store Card
Table 4-15: Amazon.com Store Card Incentives, Rewards & Features
A supplementary offering
Reward Zone Credit Card
Table 4-16: Best Buy Reward Zone Credit Card Incentives, Rewards & Features
Differentiation
Chapter 5: Private Label Bank Issuers
Summary analysis
Alliance Data Systems
GE Capital Retail Bank
Citi Retail Services
Capital One
TD Bank
Wells Fargo
JPMorgan Chase
Alliance Data Systems
Private Label Services and Credit
Competitive positioning
More than 30 million active accounts
Signings
Portfolio acquisitions
Sales growth
Key retailers
Table 5-1: Alliance Data Systems: Q1 2013 Private Label Credit Card Retailers
Limited Brands a key account
Figure 5-1: Alliance Data Systems Principal Receivables by Major Retailer & Retailer Category
New clients
Bon-Ton
Almost half of sales on private label card
Ascena Retail Group, Inc.
Express
J. Crew
Robust volume, receivables and account growth
Table 5-2: Alliance Data Systems Private Label Revenue, Volume, Receivables and Account Trends
And improving card portfolio health
Table 5-3: Alliance Data Systems Private Label Receivables Loan Health Trends: 2011 vs. 2012
A look inside Alliance Data’s subsidiary banks
Table 5-4: Alliance Data Systems’ Comenity Bank & Comenity Capital Bank Card Metrics: 2012
GE Capital Retail Bank
Private label powerhouse
Table 5-5: GE Capital Retail Bank Private Label, Co-brand & Affinity Partners: 2013
But transition to cobrand underway
Direct marketing and loyalty programs
Acquisitions and signings
Sales growth
Positive loan growth and account growth trends
Strong growth in loans outstanding and accounts
Table 5-6: GE Capital Retail Bank Loan & Account Trends
GE Capital Retail Bank income, credit card loans and credit card lines outstanding
Figure 5-7: GE Capital Retail Bank Income & Credit Card Line Analysis: 2012
Key retailers
Figure 5-2: GE Capital Retail Bank Retailer Credit Card Loans & Account Share: 2013
Table 5-8: GE Capital Retail Bank Retailer Credit Card Loan & Account Share: 2013
Trust portfolio analysis
Figure 5-3: GE Capital Retail Bank Credit Card Balance, Credit Limit, Account Age, Account Location & FICO
Analysis: 2013
Client analysis
Belk
Belk Rewards Card Loyalty Program
Fees received
Dillard’s
Fees received
J. C. Penney
Private label credit cards an income bright spot
Citi Retail Services
Table 5-9: Citi Retail Services Retail Private Label & Co-brand Partners: 2013
Acquisitions
Key retailers
Best Buy
Macy’s: Bounty approaches $1 billion
New launches
CITGO card appeals to fee-wary merchants
ExxonMobil Smart Card: Transitioning from cobrand to private label
Rewards taken down a notch
Premium version
Reaching a broader retailer audience
Brandsource retailer coalition taps independents
Volume, loans outstanding and account growth trends
Figure 5-4: Citi Retail Services 2008-2012 Retail Credit Card Loan Volume, Loans Outstanding & Accounts
Table 5-10: Citi Retail Services 2008-2012 Retail Credit Card Loan Volume, Loans Outstanding & Accounts
Capital One
Competitive positioning
Parsing through the HSBC portfolio and making selective decisions
More activity to come
Acquisitions and sales
HSBC acquisition
New retail accounts
Kohls
Neiman Marcus
Polaris
Saks
A tiered approach
2013 relaunch
The contract
Capital One private label sales growth
Expectations for continued HSBC portfolio run off and otherwise weak demand
TD Bank
Target acquisition brings 5 million accounts and $5.7 billion in receivables
Profit sharing agreement
A look underneath the Target portfolio’s hood
Cards a strong profit generator, contributing 10% to Target’s topline
But card revenue declines
Table 5-11: Target Corporation: 2010-2012 Retail & Credit Card Profit and Revenue Analysis Proprietary credit cards increase share of Target retail sales but Target debit catching on
Target credit card charge volume passes $11 billion—mostly at Target
Table 5-12: Target Corporation: 2010-2012 Retail Sales Attributable to Proprietary Credit & Debit Cards;
On- and Off-Premises Proprietary Credit Card Charge Volume Trends
Receivables in decline
FICO scoring reveals some good and some bad
Table 5-13: Target Corporation: 2010-2012 Credit Card Receivables FICO & Delinquency Trends
Zale
Heavily reliant on private label
Growing in U.S. with Citibank, but Canadian business goes to TD Bank
Fred Meyer Jewelers
Wells Fargo
Table 5-14: Wells Fargo Retail Private Label & Co-brand Partners: 2013
JPMorgan Chase
MILITARY STAR private label card
Chapter 6: Private Label Non-Bank Issuers
Summary analysis
Nordstrom card program closing in on $9 billion and 40% of net company sales
Cabela’s: sky high FICO scores help credit card program contribute 10% to bottom line
Signet Jewelers gets half of sales from in-house financing
In-House Programs: An Endangered Species
Nordstrom
Program metrics
Revenue growth trends
Rewards cost trends
A prime portfolio, with more prime borrowers
Saving on interchange
Private label receivables lag cobrand but are growing at higher rate
Card program charge volume nears $9 billion, with debit driving growth
Table 6-1: Nordstrom Credit Card Metrics Analysis
Nordstrom FSB income, loan and unused credit line analysis
Table 6-2: Nordstrom FSB Credit Card Interest & Noninterest Income, Loans Outstanding & Unused Credit
Card Lines: 2012
Cabela’s
Credit card program generates more than 10% of company revenue
A distinguished group of cardholders; a sterling portfolio
Table 6-3: Cabela’s Credit 2011 & 2012 Credit Card Metrics
Subsidiary World’s Foremost Bank income, loan and unused credit line analysis
Table 6-4: World’s Foremost Bank Credit Card Interest & Noninterest Income, Loans Outstanding & Unused
Credit Card Lines: 2012
Table 6-5: Signet Jewelers 2011, 2012 & 2013 Credit Program Metrics
Chapter 7: Private Label Credit Card Usage Trends
Summary analysis
Credit card usage trends: 2004-2012
After dropping during recession, credit card use stabilizes
Store card declines trump branded credit card declines; growth for both hard to come by
Graph 7-1: Credit Card, Branded Credit Card & Store Card Usage Penetration: 2004-2012
Private label card usage trends: 2004 to 2012
Usage penetration down 26%
Gasoline card usage declines the steepest
Graph 7-2: Store Card Usage Penetration, by Card Type: 2004-2012
Active store card usage declines—then dives in 2009—with little rebound
Compared to 2007, still underwater
Post-recession clothing/specialty store usage a bright spot
Table 7-1: Store Card (and Store Card Type) & Branded Credit Card Usage in Past 30 Days: 2004-2012
Higher-frequency monthly store card use a trouble spot
Table 7-2: Store Card (and Store Card Type) & Branded Credit Card Monthly Usage Frequency: 2004-2012 .
Demographic analysis
Almost twice as many women use private label credit cards
Dramatic differences by type of store card
Discrepancy widens among active users, except at Sears and J.C. Penney
Table 7-3: Store Card (& Store Card Type) & Branded Credit Card Usage & Usage in Past 30 Days, by Gender:
2012
Private label sweet spot: age 55+
Table 7-4: Store Card (& Store Card Type) & Branded Credit Card Usage & Usage in Past 30 Days, by Age: 2012
Private label credit card usage higher among whites and Asians
But black consumers are active Sears and gasoline card users
Table 7-5: Store Card (& Store Card Type) & Branded Credit Card Usage & Usage in Past 30 Days, by Race/Ethnicity: 2012
Employment status
Targeting homemakers
Table 7-6: Store Card (& Store Card Type) & Branded Credit Card Usage & Usage in Past 30 Days, by
Employment Status: 2012
HH income trends among active users suggest J.C. Penney strength
Table 7-7: Store Card (& Store Card Type) & Branded Credit Card Usage & Usage in Past 30 Days, by HH
Income: 2012
Chapter 8: Private Label Credit Card Usage Motivators
Summary analysis
Private label card signup influencers
Reward me & help me save money: Points & everyday discounts biggest draw
Non-cardholders entrenched against store cards?
But points and discounts sufficient bait for some
Interest rate teasers less relevant
Graph 8-1: Private Label Credit Card Usage Motivators: Users, Active Users, and Non-Users
Gender rules
Table 8-1: Private Label Credit Card Usage Motivators: Users, Active Users, and Non-Users, by Gender: 2013
Age
Table 8-2: Private Label Credit Card Usage Motivators: Users, Active Users, and Non-Users, by Age:2013
Income
Table 8-3: Private Label Credit Card Usage Motivators: Users, Active Users, and Non-Users, by HH Income:
Appendix
Methodology
Consumer survey methodology
Market size and forecast
Report table interpretation
Terms and definitions

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