Private Label Initiatives Drive New Competition in the Store Card Market

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Over the past five years, a major shift occurred in the ownership of the store card receivables. During this time, third-party private label companies acquired store card receivables from the retailers that managed their portfolios in-house. A research report from Mercator Advisory Group covers this strategic shift.

Over the past five years, a major shift occurred in the ownership of the store card receivables. During this time, third-party private label companies acquired store card receivables from the retailers that managed their portfolios in-house. While private label companies only managed the 39 percent share of the total in 1996, they increased their share of the market to 84 percent in 2003.

In addition to private label companies’ compelling case to retailers about their ability to market, service, and process store cards more efficiently, rising capital requirements due to the slowdown in the US economy and retailers’ shift in their strategy to focus back on the core business – retailing – have changed the way the market looks today.

The US private label companies continue to acquire store card portfolios. The competition is hotter than ever among the top three players. They also face strong competition from bank card and co-branded card issuers. As the gap between the value provided by the general purpose cards and that of store cards widens, it becomes more challenging for store card programs to compete with general purpose card programs.

Evren Bayri, Director for Mercator Advisory Group's Credit Advisory Service, comments “third-party private label companies are well-poised to overcome these challenges as they take control of the retail credit. They can act as independent sponsors, which can manage coalition card programs for retailers or develop other types of programs leveraging their scale and focus. Innovative products such as the GE Consumer Finance’s ‘dual card’ is a good example that signals the future direction for store credit products.”

This report provides:

1. The state of the US Store Card market,

2. An analysis of the market by receivables ownership,

3. A list of recent store card store card portfolio sales,

4. A discussion on the top four third-party private label companies,

5. A discussion on the new products trends in the store card industry.

The report contains 19 pages and 15 exhibits.

Members of Mercator Advisory Group have access to these reports as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits. Please visit us online at http://www.mercatoradvisorygroup.com

For more information call Mercator Advisory Group’s main line: 508-845-5400 or send email to info@mercatoradvisorygroup.com.

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Kirk Salo