GE Capital Retail Bank
Value of Credit
Share of Wallet
Case studies on how Retailer-Branded Credit Programs
affect sales, loyalty, attrition, and share of wallet.
Why Retailer-Branded Credit is critical to retail growth strategy.
Retail internal view 2
Sales and foot traffic
Case study on annualized sales
Case study on attrition
Case study on tender shift
Retail external view 5
Share of wallet
Opportunity to drive additional 7
retail sales with analytics
Elements of a successful credit program 8
In the U.S. retail market, retailers have found that in
a given year, on average, one in five shoppers will not
shop at their stores the following year (i.e., customer
attrition is nearly 22% per year). In an ever-challenging
retail environment, retailers of all sizes are constantly
competing to increase customer satisfaction and
engagement, gain wallet share, and grow incremental
sales. Retailers must provide increased value to
customers while maintaining profit margins.
The question of profitably satisfying customers
often comes down to:
1. Acquiring customer insights through data.
2. Building a unique customer experience across all
channels and touchpoints.
3. Developing tailored offers by leveraging customer
insights to attract and retain customers.
4. Leveraging a retail store card as an opportunity
to maximize loyalty.
Retailers that employ all four strategies have the
best chance of growing customer loyalty and
One approach that has proven effective at increasing
overall customer loyalty is investment in retail credit
card programs. Many case studies have found that
customers who acquire retail store credit cards shop
more often and spend more than customers who pay
with other methods. Retail credit cardholders stay
more engaged, resulting in higher customer lifetime
value and lower customer attrition. Additionally,
retailer card programs save retailers about 2% to 4%
in interchange fees on every transaction processed on
their store cards. This value alone can aid profitability.
Retail credit customers have:
• Higher lifetime value
• Lower annual attrition
• More frequent store visits
This paper examines the value of credit from
1. Retail internal view: Measures the distribution
of sales across payment tender types, analyzing
the percent of sales on credit to total retail
sales; provides an internal share of wallet and
2. Retail external view: Measures how much of
the competitive pie an individual retailer
captures vis-à-vis other competing retailers;
provides an external share of wallet and overall
“Do credit programs
lead to higher revenues
in terms of sales and
Retail internal view
GE Capital Study: Winter 2010 (data refreshed December 2011)
Sales and foot traffic:
In looking at the retailers’ holistic view of sales across all
payment tenders, case studies have shown that store
cardholders are more engaged. This is reflected in higher
average monthly sales and lower attrition rates. A 2011
study for a large regional department store showed
that store cardholders outspent non-cardholders by
an average of 29%. During the card acquisition period,
sales spiked from initial purchases. When those sales
are included, the average of 29% rises to 43%.
Figure 1: This chart compares two groups (test and
control) where both had identical pre-period purchase
behavior and only differ by customers who obtained a
store card and those who did not.
What is the primary driver of the continued
performance difference in the test group when
both test and control had similar spends in the
Available credit is one factor that led to the initial spike
in larger ticket purchases at the time the customers
acquired a store card, but note the continued separation
in the eight-month-post window between test and
The monthly spends show that, after the
acquisition spike, the remaining months’ separation is
primarily driven by an increase in foot traffic or average
trip frequency (ATF).
Store visits increase because store cards are typically
designed with compelling value propositions in the form
of exclusive cardholder benefits/discounts and point
programs that offer regular and accelerated points
accumulation. It is this increased foot traffic and the
increase in average ticket size that drive sales lift.
Figure 2b: The Average Ticket Value chart shows
that consumers typically return to the average ticket
amounts observed before the acquisition of a store
card. After the larger initial purchase, consumer
transactions fall back to an average basket size of $55.
However, store visits increase from 1.4 per month to 1.7
per month (nearly four extra trips per year2
). The higher
traffic continues through normal retail and seasonal
cycles. Thus store cards provide value to retailers in
Figure 1: Avg. sales/month per customers
Before Retail Card
After Retail Card
Figure 2a: Avg. trip frequency per month
Figure 2b: Avg. ticket value per month
1. Provide a mechanism for retailers to capture sales
on high-ticket special purchases.
2. Generate repeat store visits through increased
value-added card benefits.
3. Provide traceable sales that can capture loyalty
and behavioral data of customers.
4. Increase customer retention over the long term.
In addition, retailers with competitive value
propositions on a store card build incremental
brand affinity and win share from competitors
Higher profitability and
customer lifetime value
Case study on annualized sales:
Higher sales were demonstrated at three different
retailers by measuring customers who shopped with
other tenders in their first year before opening a store
card in their second year. A comparable “look-alike”
control group was selected that matched the test
group in terms of sales and store visits during the
one-year pre-period. Customers in the test group—new
cardholders—had retail spend that ranged from 39% to
86% higher than the comparable control groups. The
higher sales were not due to tender shift, but represent
higher retail sales at each retailer (conclusion based on
full tender data including cash). Not only did the new
cardholders spend more at these retailers, they were
also less likely to leave the retail brand, leading to higher
profitability and higher customer lifetime value.
Case study on attrition:3
A retail credit program drives greater initial
customer engagement in the retail brand. But
what are the longer term effects on attrition? Case
studies show a marked decrease in attrition rates
for store cardholders, who are, on average, 75%
less likely to stop shopping at each retailer.
Cardholder vs. non-cardholder attrition rates
Figure 4: This chart shows comparisons between store
cardholders and non-cardholders over a 12-month
window and across three retail segments: Online,
Specialty, and Department stores. Based on pre-period
purchasing levels, non-cardholders attrite at 28% on
average, whereas customers with store cards attrite
at 6.7%. In the short run, the study found attrition
accounts for a 25% drop in sales. More importantly,
in the long run, the lifetime value of customer attrition
demonstrates even higher losses in customers
Case study on tender shift:
When analyzing the lifetime value of customers,
a natural question arises
“How much of the
monthly sales increase
is really an exercise in
GE Capital Study: Attrition Lifetime Value Across Retail Segments, Summer 2011
Retailer A Retailer CRetailer B
Figure 3: Annualized retail sales
cardholder vs non-cardholder
Figure 4: Attrition rate
Retailer A Retailer CRetailer B
The hypothesis is that store cardholders do not spend
more at the retailer, but instead engage in a “transfer
game” where sales are shuffled from one tender (cash
or debit) to another (the store card itself).
The idea is readily disproved on two points. First, store
cardholders spend more on average after acquiring a
card, and there is a gain in their total wallet size. Second,
modern POS systems coupled with Multi-tender Loyalty
Cards (Frequent Shopper Cards) can capture total retail
sales at an individual or household level.
The store card spend is greater than pre-period spend
across all tenders combined
Examining household payment types on all transactions
demonstrates that spending for retail cardholders
diminishes by roughly 50% across the board for credit
and cash equivalents (including debit cards).4
Figure 5: This chart shows that store card
spending increases overall by 57%. In fact, the
store card spend is greater than pre-period
spend across all tenders combined.
Figure 6: This chart shows there is relatively flat
utilization across all tenders, except an 11% rise
in debit usage, and only a moderate 5% uptick
in year-over-year sales in the control group.
Providing significant economic value to retailers
From an internal perspective, the value of credit is
clearly demonstrated. Retailers gain from higher
incremental spend coupled with lower customer
attrition. Another financial benefit is the gain in
royalties and interchange savings. Store card issuers
typically offer a percentage of sales (“royalty”) back to
the retailer for all sales made on the store card. Retailers
gain royalties on sales and avoid interchange fees as
significant portions of in-store purchases (as much as
60% at some retailers) are processed through store
cards. The combination of royalties and interchange
savings can range from 3% to 5% of the store card
sales—that’s a significant economic value to retailers.
Figure 6: Year-over-year monthly non-cardholder
spend and tender shift
Figure 5: Year-over-year monthly cardholder
spend and tender shift
Credit Debit Store cardCash
GE Capital Study: Tender Shift Through the Lens of Multi-Tender Loyalty Program, Fall 2011
Retail external view
While most retailers can determine the distribution of
spend over different tenders for individual shoppers
using their internal data, they are also very interested
in knowing their customers’ spend at competitors.
Using third-party data, it is possible to analyze (on an
anonymous basis) the credit portion of the customer’s
Total credit wallet data can answer the
following key questions:
1. What is the retailer’s share of wallet versus key
2. Does the retailer have higher share of
wallet among store cardholders versus
3. How does the share and size of wallet change
when a customer opens a retail card?
4. What impact do retailers’ or competitors’
marketing programs have on share of wallet?
In three different studies, consumers who acquired a
store card (test) were compared with a similar group
of customers who did not acquire a card (control). A
clear lift in share of wallet is visible over a period of time
ranging from 16 to 23 months in the test group. Like the
internal example above, test and control populations
were matched on a 6-12 month pre-period, using trips,
spend, geographic distribution, and creditworthiness.
Once consumers were placed into test and control
groups, spending and trips were measured across all
credit cards in the shoppers’ wallets for the 11 months
after the card was issued for the primary retailer and its
self-identified competitive retail set.
• Have higher sustained lift in store
• Spend 39%-86% more
• After opening a store card, are 75% less likely
Higher trip frequency after opening a store card
Figure 7: The test group showed a similar pattern
of lift as observed in the internal example. Shoppers
with retail store cards had higher sustained lift.
This lift was driven by a higher trip frequency that
continued after consumers opened a store card. The
rise in Average Monthly Sales is contrasted against
the flat negative trend in Average Monthly Sales at
Note the slight negative trend observed in the control
group, which emphasizes the importance of a store
card program. The post-acquisition gap between test
and control represents roughly $16 per customer per
month ($192 annually) in favor of the test group. The
introduction of credit and increased spending power
appears to greatly benefit the retailer.
Figure 7: Avg. monthly sales at competitors
Share of wallet
In another case study, the annualized wallet size of
the control vs. test is $1,360 and $2,120 respectively.
Store cardholders outspent non-cardholders
by $760 or 56%. The control group at the retailer
accounted for 17% of all credit sales versus its
predefined competitors. However, for the cardholder
group, retailers benefited from an increase in total
wallet size and grew wallet share to 38%.5
All things being equal, we would expect the test group
portion of the retailer’s sales to remain steady and
maintain roughly the 17% share of wallet, as seen in
the control group.
However, in the test group, the retailer’s share increased
to 38%. That means roughly $136, or 17% of the $563
increase in spend is attributable to maintaining a base
share of 17% of the larger wallet, while the remaining
$427 comes from the competitors’ share.
As observed in the case studies (above and previous
page), the key driver is a higher number of store visits.
Consumers tend to have slightly greater ticket sizes
than during the pre-card acquisition time period, but
through credit availability and card-based events and
promotions, trip frequency rises.
Although one might attribute a retailer’s overall
marketing and promotions as a key driver of increased
sales, it is important to remember that both test
and control groups were selected from similar
geographies. So both test and control groups were
exposed to the same retail marketing offers and
advertising, right down to in-store promotions and
communications. However, cardholders received
additional offers and maintained greater awareness
through cardholder communications and card usage.
Shifting share: Composition of $563 sales increase
17% share of
Retailer shareCompetitor share
Share of wallet
Argus Information and Advisory Services and internal GE analysis: Share Of Wallet and Demographic Segments, Winter 2011
One of the primary benefits of having a retail card
program is the ability to capture a robust set of data on
your customers. While a Multi-tender Loyalty program
captures some of this data, some retailers have limited
success in tracking individual customer purchases and
preferences on most tenders, and the program can be
expensive to manage.
The store card becomes a traceable tender that allows
retailers to determine 1) how much customers spend;
2) how often and what time of the day or month they
shop; 3) what they buy; and 4) the promotions and
channels they are more likely to respond to. This allows
retailers to develop a data-driven strategy to optimize
their marketing dollars and increase ROI.
The full value of credit is not achieved without a
competitively designed and well-managed program.
Successful programs can have a significant financial
impact, but require organizational commitment. Next
we turn our attention to how retailers can establish
a world-class credit program, leading to incremental
sales, higher retailer brand loyalty, increased customer
satisfaction, and higher lifetime retention.
Developing a strong credit program:
• Associate training
• Store signage and online visibility
• Card promotions and offers
• Store/District accountability
• Best customer program
• Best value props on the card
Opportunity to drive
additional retail sales
other credit cards
check and cash
% of traceable sales by tender
Offering credit by itself can yield strong benefits, but
offering credit with a compelling value proposition
magnifies the impact. Successful programs focus on
engagement at both the customer and store level.
Signage is a key component to attracting customers
and building awareness of the program. Associates
need training and should ask each customer if they
want to open a store card, and be able to discuss
the benefits. Whether sales are primarily brick and
mortar or online, it is important to leverage online
branding and marketing methods. Prominent banner
ads and well-placed interstitials at checkout offer
opportunities to grow loyalty and incremental spend.
Best-in-class programs engage associates in offering
credit. New hires are coached in core values of the
program, including customer benefits, saving the retailer
interchange fees, and building brand loyalty. Associates
train with role playing to be certain they express card
benefits appropriately during all customer interactions.
Store and District managers need to play a strong role in
driving associate accountability and creating a credit-
based culture to promote a successful card program.
Additionally, repeated studies show that,
on average, store cardholders shopped
more frequently and spent 30% more than
Up to 50% of all retail transactions might be placed on
the store-branded card, saving the company roughly
2%-4% in third-party interchange fees, and often earn
retailers royalties over competing forms of payment.
Interchange fees are the network and banking transfer
fees between the financial institutions that underwrite
and process credit card transactions. Royalties or
participation fees are incentives that a retailer receives
from card issuers for processing store card transactions.
Best-in-class store card programs offer strong value
propositions on the store card. This is because the
retailer knows how the program drives customer
engagement, and increasing the store card share of
retail sales provides economic value back to the retailer.
A branded retail card is not merely a loyalty
program; it is the foundation of a successful
Rewarding customers with relevant and timely
offers that they deem valuable will increase overall
brand engagement and retention. Acquiring deep
customer insights through data mining is the key to the
development of a customer segmentation strategy. This
will allow a retailer to identify its most valuable customers
and, therefore, maximize return on investment in the most
productive segments. Tiered credit programs offer an
opportunity to differentiate how segments of customers
are treated based on reaching desired spending
thresholds. This allows retailers to create a unique
customer experience, adding to overall customer value
Elements of a successful
Well-managed, retailer-branded credit programs can
increase customer satisfaction, engagement, and
long-term retention. Retailers that utilize branded cards
combined with targeting techniques increase foot
traffic, drive incremental sales, and save on interchange
fees. By providing customers with strong value
propositions and a means of purchase, retailers can
decrease attrition, increase customer lifetime value,
and shift share from competitors.
Irving Turner, Mgr. Retail Marketing Analytics, GECRB,
David Liebskind, Retail Analytics Leader, GECRB,
Sanjay Sidhwani, VP Marketing Analytics, GECRB,
Dori Abel, Gautam Borooah, Muhammad Haider,
Rob A. Hengelbrok, Doug R. Hooper, Dilip John, Ann Lindsay,
Valerie Thomas, Jennifer Vinas, Nilesh Yagnik, Sarah Zupnick