Private Label Credit Cards in the U.S., 12th Edition

This report covers the U.S. market for private-label credit cards (PLCCs), including store cards, with an emphasis on retail credit card program features and benefits analysis, retail card strategies, and growth trends.

More specifically, the report:

Analyzes the impact of COVID-19 on the retail sector and the private-label credit card market.
Provides an analysis of large retailer strategies to innovate/stay above water during COVID-19's window of unprecedented stress on the retail economy.
Outlines the going-forward strategies of top private-label credit card issuers. Those issuers are Alliance Data Systems, Citi Retail Services, Capital One, Synchrony Financial Services, TD Bank, and Wells Fargo.
Conducts an in-depth analysis of seven private-label credit card programs from within the context of the retailer's loyalty program and its results. Program analysis of American Eagle, Forever 21, Kohl's, Macy's, Target, and Victoria's Secret are included. Each profile includes survey-based analysis of customer demographics.
Assesses consumer use of private-label credit cards segmented by retailer type, including the type of card they use most frequently, and which features and benefits would entice private-label credit cardholders to use this purchasing method more frequently.
Loans outstanding and purchase value estimates for the U.S. private-label credit card (PLCC) market are provided for 2019 and 2020, and loans outstanding and purchase value forecasts are provided for 2021-2022.

Report Methodology

The information contained in this report was obtained from primary and secondary research. Primary research included a February/March 2021 national consumer survey with a sample of 2,000 U.S. adults (age 18+), with the sample in aggregate being census representative on the primary demographic measures of age, gender, geographic region, race/ethnicity, and household income. The discussion of store card usage patterns and demographics also draws on Fall 2020 release MRI National Consumer Study data, with field dates through November 2020.

Market estimates draw on multiple sources, including:

company annual and quarterly filings
FDIC Reports of Condition and Income (also known as Call Report data)
credit card trusts (asset-backed securities backed by credit card loans held by financial institutions)
Federal Reserve data

Executive Summary

Scope of Report
Report Methodology
Context for Market Performance
Market Size and Growth
Table Receivables, Private-Label Credit Cards: Top Issuers, 2018-2020, with CAGR (in billions of dollars)
Table Purchase Volume, Private-Label Credit Cards: Top Issuers, 2018-2020, with CAGR (in billions of dollars)
Top Private-Label Credit Card Issuers
Alliance Data Systems
Capital One
Citi Retail Services
Synchrony Financial
TD Bank
Wells Fargo
Private Label Credit Card Consumer Trends
55% Have Private-Label Credit Cards
Store Card Usage and Demographics
Table Credit Card Usage Rates by Type: Have in Own Name vs. Used in Last 12 Months, 2020 (percent of adults)
Market Size and Growth
Market Background
First Credit Cards Were Retailer-Specific
Retailers Sell Credit Card Portfolios to Financial Services Firms
Major Retailer Benefits: Data and Loyalty
Major Cardholder Benefit: Buying Power
Market Performance
Context for Market Performance

Market Size and Growth

Table Receivables, Private-Label Credit Cards: Top Issuers, 2018-2020, with CAGR (in billions of dollars)
Table Purchase Volume, Private-Label Credit Cards: Top Issuers, 2018-2020, with CAGR (in billions of dollars)
Drivers of Retail and Private-Label Credit Card Performance
The COVID Economy
Store Sales Tanked, E-Commerce Surged
Amazon Stumbles Gave Big Box Retailers an Opportunity
Troubled Retailers Filed for Bankruptcy
Some Big Box Retailers Reimagined Their Businesses After the Great Recession
In 4Q 2020, Issuers Pulled in Available Credit
Broad Retail Adoption of BNPL Accelerated by Pandemic
Retailers' Loyalty Programs Increasingly Separate from PLCC Enrollment

Profiles of Top Private-Label Credit Card Issuers

The Top Issuers

Alliance Data Systems

Overview
Alliance Data Stresses Corporation-wide Changes to Address Market Realities
ADS in POS Installment Loan Business
Business Strategy
Table Alliance Data Systems Private-Label Credit Card Purchase Volume and Loan Receivables, 2018-2020 (in billions of dollars)
Operating Segments
Table Alliance Data Systems: Revenue and Revenue Share by Operating Segment, 2018-2020 (in billions of dollars)
Finance Charges Drive Revenue
Table Alliance Data Systems, Revenue and Revenue Share by Type, 2018-2020 (in millions of dollars)
Competitive Positioning
An Evolving Client Base
Key Positioning: Primary Marketing, Loyalty, and Payment Services Provider
Other Competitive Strategies
Private-Label Credit Card Partners
Table Alliance Data Systems Top Five Retail Partners, by Domestic Sales, 2019-2020 (in billions of dollars)
Williams-Sonoma
Other Partners

Capital One

Overview
Table Capital One Private-Label Credit Card Purchase Value and Loan Receivables, 2018-2020 (in billions of dollars)
Program Partners
Walmart
Kohl's
Neiman Marcus
Hudson's Bay Company

Citi Retail Services

Overview
Activity and Acquisitions
Top Four Retail Partners
Table Citi Retail Services Top Four Retail Partners by U.S. Sales, 2018-2020 (in billions of dollars)
Table Citi Retail Services Top Four Retail Partners by U.S. Sales, Private-Label Card Tender Share, and Purchase Value, 2018-2020 (in billions of dollars)
Other Partners

Synchrony Financial

Overview
Table Key Synchrony Financial and Performance Metrics, 2019 and 2020 (in dollars)
Retail Card Sales Platforms
Payment Solutions
CareCredit
Corporate Strategies for 2021 and Beyond
Table Synchrony Financial Private-Label Credit Card Purchase Value and Loan Receivables, 2019-2020 (in billions of dollars)
Table Synchrony Financial Purchase Volume and Average Active Accounts: By Operating Segment, 2018-2020 (in billions of dollars)
Loan, Interest, and Fee Growth
Table Synchrony Financial Interest and Fees on Loans, by Segment, 2018-2020 (in billions of dollars)
Growth Strategies
Table Key Synchrony Retail Card Program Participants as of December 31, 2020 (length of relationship in years)

TD Bank

Overview
Nordstrom
Target
Other Partners

Wells Fargo

Overview
Table Wells Fargo Services, Key Private-Label Card Metrics, 2018-2020
Six Turnkey PLCC Financing Solutions
Move to Sell, Decision to Retain Private-Label Card Segment

Profiles of Selected Private-Label Credit Card and Loyalty Programs

American Eagle

Overview
Aerie Brand
Key Business Priorities & Strategy
Loyalty Is Real Reward(ing)
The App for Real Rewards

Forever 21

Overview
Afterpay's BNPL Service at In-Store Checkout

Kohl's

Overview
Relying on Loyal Customers to Survive the Pandemic Year
Driving Sales through Targeted and Personalized Communications
The Kohl's App: Familiarity Breeds Familiarity. And Sales

Macy's

Overview
Kitchen Sink Marketing Strategy
Customer Base
Table The Macy's Customer: Key Demographics, Spring 2020
Media Network
Current Guidance
Rewards Program
Top Tier Customers Represent 30% of the Chain's Revenues
Retooled Rewards Program Includes Non-Card Using Shoppers
Macy Invests in Klarna, the Largest BNPL Provider
Macy's App Is Both Simple and Richly Featured
The Marketing Angle
After Closing Stores, Macy's Tries New Concepts to Backfill Markets

Neiman Marcus

Overview
InCircle Loyalty Program

Nordstrom

Overview
Table The Nordstrom Customer: Key Demographics, Spring 2020

Target

Overview
Investments in Human Capital and Distribution Made Target Pandemic Ready
Table The Target Customer: Key Demographics, Spring 2020
Target Circle Brings Non-RedCard Shoppers Into Marketing Engine

Victoria's Secret

Overview
From 2015 to Early 2020, Victoria's Secret Market Share Fell by Half
Chain Misses the Mark on Female Sexy, Comfort and Fit
Alliance Data Introduces Contactless Store Cards for Victoria's Secret and PINK
VS Uses Rapidly Escalating Rewards to Pursue Share of Wallet
The Marketing Angle: Reconciling VS and PINK

Private Label Card Usage Trends

Private Label Credit Cards in Context
72% Have Credit Cards
Table Overall Credit Card Customer Base: Have in Own Name vs. Used in Last 12 Months, 2020 (percent and number of adults)
55% Have Private-Label Credit Cards
Table Private-Label Credit Card Use by Type: Have vs. Use in Last 30 Days, 2021 (percent of adults)
Private-Label Card Psychographics
Table Selected Psychographics About Store Cards, 2021 (percent agreeing)
Store Card Usage
Table Credit Card Usage Rates by Type: Have in Own Name vs. Used in Last 12 Months, 2020 (percent of adults)
Table Credit Card Usage Rates by Type: Have in Own Name vs. Used in Last 12 Months, 2020 (number of adults in thousands)
Store Card User Demographics
Table Credit Card User Demographics: Credit Cards Overall, Not Co-Branded Store Cards, and Co-Branded Store Cards Demographic, 2020 (percent of cardholders using card in last 12 months)
Historically Trended Customer Base for Selected Private-Label Store Cards
Table Store Card Only (Not Co-Branded) Usage Trends: Dillard's, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: JC Penny, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Macy's, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Nordstrom, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Sears, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Target, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Walmart, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)
Table Store Card Only (Not Co-Branded) Usage Trends: Other, Fall 2010 - Fall 2020 (have in own name and used in last 12 months)