ROCKVILLE, Md., June 19, 2019 /PRNewswire/ -- America's private label credit card purchase value grew at an average annual rate of 3% from 2016 to 2018, reaching $210 billion, according to Packaged Facts in the brand new market research study Private Label Credit Cards in the U.S., 11th Edition, now on sale. Synchrony Financial contributed almost half of this amount, followed by Citi Retail Services.
Looking ahead, private label credit card platforms continue to play an integral role in retailer loyalty programs, driven by retailers' need to push the loyalty and sales envelope as far as possible at a time when the retail industry is significantly challenged by pricing pressure, the commoditization of brands, and the omni-present influence of the Amazon effect and the tremendous competitive pressures it brings with it. The private label credit card industry will continue to benefit from the broader shift from paper-based to electronic payments, as well as shifts in consumer purchasing behavior toward the card-friendly realm of digital commerce and in-app payments.
However, growth challenges are also significant, including competition from installment loans, a practice that some private label players are seeking to join by complementing existing programs with installment loan options. The threat of increasing credit risk also looms, amidst an economic recovery many financial experts believe is now long in the tooth and evidence of upticks in private label portfolio delinquency and charge-off rates—nothing seismic, but enough to raise some eyebrows on Wall Street. Card issuers also know they must follow the consumer online—and win accounts to serve them there—as well as newer, less traditional private label industry verticals such as travel and entertainment.
Moves like this expose arguably the greatest threat to private label credit cards: co-branded credit cards. Private label credit card purchase value and loan receivables leader has long sought to grow the co-branded side of its business, a growth strategy it does not currently intend to change. But other issuers strongly identified by their private label programs, such as Alliance Data Systems, also appear to be pursing more co-branded card opportunities, and Packaged Facts' analysis suggests that its largest program by purchase value and loan receivables is a co-branded one (BJ's Wholesale Club). As a general observation, perhaps the strategy is a pre-emptive strike against recession, since co-branded credit cards are used across a general-purpose card network's points of sale and are therefore more practical when the consumers' chips are down, whereas historical evidence suggests private label cards run into more recession-driven challenges, in part because private label card holders are generally a riskier bunch than general-purpose card holders in the first place, and even more risky when the chips are down. Whether the strategy is intended to create a bit of recession cushioning or not, private label credit cards face significant competition from co-branded cards inside and outside of their own programs.
In the meantime, the industry continues to aggressively pivot to technology, honing data analytics capabilities to target client customers more precisely and effectively in the effort to turn that targeting into consumer purchasing behavior. This side of the private label card business—along with the ability to deliver digital sales and mobile engagement—has quickly become an intense competitive battleground among industry players. It is the key to maintaining (and perhaps growing) the industry's viability in a quickly changing world.
About the Report
Private Label Credit Cards in the U.S., 11th Edition, provides a wealth of insight on this growing market, with an emphasis on program features and benefits analysis, loyalty program integration, program- and issuer-specific market sizing, and digital applications. The analysis in the report:
Provides loans outstanding and purchase value estimates for the U.S. private label credit card market by issuer for 2016-2018, and a loans outstanding and purchase value forecast for 2019-2021, with forecast factors.
Presents additional assessment of more than 20 individual private label credit card programs, including loans outstanding and purchase value.
Assesses the industry shift to mobile and digital, including retailer mobile app usage and interest by feature and how mobile increasing fits into the loyalty and card strategies of major retailers.
Assesses consumer usage and active usage of private label credit cards segmented by retailer type, as well as monthly private label credit card spending and portion of balance paid.
Assesses the degree to which a variety of credit card credit card features and benefits would incentivize credit card users (private label and non-private label) users to sign up for a new private label credit card and would incentivize private label cardholders to them more often.
Assesses U.S. private label card programs operated by the industry's leading financial institutions, including Alliance Data Systems, Citi Retail Services, Capital One, Synchrony Financial Services, TD Bank and Wells Fargo, including private label card purchase value and loans outstanding by retailer.
Trends general-purpose credit card and store card usage penetration, usage in past 30 days, and monthly usage frequency during 2011-2017.
Assesses the impact store cards have on the type of payment used at the point of sale, receptivity to promotional marketing and tendency to act on that marketing.
Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased at our company website and are also available through MarketResearch.com.
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