Private-Label Credit Cards: A Tale of 2 Management Firms

By Strugatch, Warren | American Banker, February 4, 1986 | Go to article overview

Private-Label Credit Cards: A Tale of 2 Management Firms


Strugatch, Warren, American Banker


NEW YORK -- In the weeks before Halloween, Citicorp Retail Services began mailing out preapproved credit card applications to nearly a half-million customers of 66 C.R. Anthony Stores in the Southwest and as far north as Idaho. By the day after Halloween, sales clerks throughout the 284-store chain of junior department stores were ringing up the first proprietary credit card sales in C.R. Anthony's more than 70-year history.

Says Richard Kane, president of Citicorp Retail Services: "They basically didn't believe in credit."

Proprietary cards may be old hat to most retailers, but not to the C.R. Anthony Co., which had $416 million in sales in 1985. The company's stores have been accepting MasterCard, visa, and American Express for some time. But it was not until last year that Mr. Kane was able to convince Robert Anthony, president of the Oklahoma City-based company and grandson of the founder, that the store card makes good retailing sense. Now Citicorp Retail Services is handling the chain's credit card marketing, financing, operations, and credit management services.

About the same time that Mr. Anthony was signing on the dotted line with Citicorp Retail Services, the company Mr. Kane sees as his chief competitor -- the General Electric Credit Corp. -- was busy signing a similar contract with Barney's, a New York clothier. Both Citicorp Retail Services and General electric Credit say they handle more than $2 billion a year in consumer receivables, dominating a market in which their customers have long thought of their product as a necessary evil.

Traditionally, retialers have viewed credit as a nonprofitable cost of doing business -- in effect a costly service they had to provide to be competitive. Bank cards and travel and entertainment cards generally cost merchants about 3% or 4% of sales from those cards; proprietary cards are slightly more expensive. Yet retailers that hook up with Citicorp Retail Services or General Electric Credit are not hoping to cut those costs but rather to increase the effectiveness of credit.

"Credit is not usually one of the strengths that a retailer has," Mr. Kane says. "The talents that strong retailers usually have are, first, buying; second, merchandising; and third, store site selection. It isn't necessarily true that the people who do these three things superbly will also manage credit superbly."

Yet credit -- and particularly the private-label credit card -- is a subject of much retailer ambivalence. Numbers alone would seem to indicate that successful retailers are willing to accept what their credit managers tell them: Get proprietary cards into the hands of their customers, at whatever cost.

According to the National Retail Merchants Association, 99 of the top 100 department stores have proprietary credit card programs. Ten of the 99 have selected Citicorp Retail Services to manage their programs. Accordingly, the company -- a business division of Citicorp -- now claims it "has 100% of the [biggest] department stores which employ a third-party program."

Nevertheless, when department store credit executives gather -- as they do regularly at National Retail Merchant Association conferences -- the tone they take is typically defensive. They often seem to be convincing themselves that credit is worth the cost. According to Alan S. Hooker, divisional vice president for credit at John Wanamaker's in Philadelphia, "The principal is this: Retail proprietary cards cost a lot, perhaps more than other cards, but it may be worthwhile to pay a little more in expense to get a lot more in sales.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Private-Label Credit Cards: A Tale of 2 Management Firms
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.