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

Abstract

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.

Table of Contents

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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