So if I was to take a look inside of your purse or wallet right now, what would I find? I’m willing to bet that you probably have either a Visa or a Mastercard credit card, perhaps an American Express credit card or even a Discover credit card. However, what else would be there? Would you have any store issued credit cards? Perhaps from Walmart, Macy’s, Home Depot, etc.? Well guess what, these store issued credit cards are in trouble and their product managers are scrambling to find ways to change their product development definition in order to save them.
What Happened To Store Issued Credit Cards?
The world is changing. What this means for store issued credit cards is that they are losing customers. The stores that issue the credit cards are starting to close their stores and more and more customers are starting to go shopping at online stores such as Amazon. The reason for the decrease in usage of these credit cards has a number of different sources. The first is of course the decline in mall retail locations for the stores that the credit cards are associated with. However, at the same time, other credit cards have started to offer their customers generous rewards. These rewards can include both cash back and points towards vacations.
The store issued credit cards are suffering from the same ills that are challenging the stores that issue them. Decreasing sales at the stores along with a slow nine year recovery of the U.S. economy have combined to create a hostile environment for the these credit cards. The people who invest in the firms that issue these types of credit cards don’t think that things are going to be turning around anytime soon. In fact, they think that these firms may be vulnerable if the economy was to once again go into a recession. What seems to be going on here is a combination of different things. Customers are starting to move more and more of their spending online. At the same time, these same customers are going out to physical stores less and less. When they do go to a store, they end up spending less using the store issued credit card in comparison to the general credit cards that can be used at more locations. None of this is going to look good on anyone’s product manager resume.
Store issued credit cards have another challenge that is facing them. More and more of the people who do have store issued credit cards are starting to fall behind on their payments. It used to be easy to get one of these cards because stores had loosened their underwriting standards and would pretty much give a store issued credit card to anyone who asked for one. Credit card missed payments tend to rise when stores are either closed or when a store closes altogether. Last year, bricks-and-mortar stores closed more than 4,000 stores in the first half of the year due to declining sales and profitability. Store credit cards are often given out to people who may not have high credit scores. One of the incentives that stores use to get people to keep making payments is that it allows them to continue to use the credit card at the store. However, when a retailer shuts down the store that is close to the home of the store issued credit card customer, the customer is less likely to use that credit card again and they will have less incentive to make payments on that card’s outstanding balance.
How Can Store Issued Credit Cards Be Saved?
The product managers who are in charge of store issued credit cards realize that they have a problem on their hands. In an effort to diversity, they have entered into lending programs with companies such as PayPal. Additionally, they are now allowing more online-only merchants to offer store issued credit cards. Product managers are trying to get their customers to make more use of their store issued credit cards. They are reminding their customers that they can use the credit cards on retailer’s websites even if the stores near them have been closed. Additionally many of the cards can now be used outside of just the retailer that issued them as well.
The companies that issue store issued credit cards are starting to target new retailers. Cards are now being issued for Amazon and Walmart. The card companies’ product managers are now starting to work with stores in order to mine the data that their cards have collected and send offers and other types of alerts to store apps which are on card members mobile phones when they are passing the store. This is all part of a plan to get those card members to walk into the store.
In order to get more people to sign up for store issued credit cards, the sign up process has been evaluated and ways to streamline it are being implemented. One of the innovative ways that they have gone about doing this is by allowing customers to send a text message requesting a store issued credit card while they are shopping. This prevents them from having to wait at a counter to get their credit card. The result of programs like this is that customers have been shown to spend up to 20% more on their first card purchases.
What All Of This Means For You
Everyone generally carries one or more credit cards with them. These credit cards can range from the large “use anywhere” credit cards that can be difficult for people with low credit scores to get to store issued credit cards that can be much easier for people to get. Product managers are going to have to look at their product manager job description and make some decisions about what they are going to do to save their store issued credit cards.
Store issued credit cards have come under fire from multiple directions. The first is that more and more stores have been closing locations. Additionally, general purpose credit cards have started to offer cash back rewards and points towards taking a vacation. What seems to be happening is that customers are moving more and more of their spending online, going out to stores less frequently, and spending less on store issued credit cards when they do. Another challenge that is facing the store issued credit card product managers is that their customers are starting to fall behind on their payments. As stores close and people stop using their cards, they are less inclined to make payments on those cards. Product managers are trying to diversity their cards. They are reminding customers that they can be used when shopping online at the retailer’s website. Additionally, the companies that issue store issued credit cards are targeting new retailers like Amazon and Walmart. They are also using new technology to communicate with customer’s mobile phones when they are close to a store. Card issuers are also making it easier to sign up for a new store issued credit card by just sending a text message.
Store issued credit cards are a big business. They serve a portion of the market that might not otherwise be able to get or use a credit card. They are probably not going away. However, their product managers need to find ways to keep their market growing. Partnering with today’s newest retailers and becoming innovative in how they get people to sign up for store issued credit cards are gong to be key to their long term success. If these product managers can get more people interested in their cards, then people will continue to use them.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: What steps can product managers take to get people to continue to make payments on their store issued credit cards even after a store has been closed in their area?
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What We’ll Be Talking About Next Time
Quick question for you: when was the last time that you were in a Barnes & Noble bookstore? When I tried to answer this question, I had to think about it for awhile. I think that the last time I actually entered one of their stores was around Christmas when I had whittled my list down to the last few people who are always hard to shop for. Since then, I haven’t been back. The Barnes & Noble product managers know that I have not been back – that’s a problem for them. Clearly they need to make some changes in order to get people like me to both visit their stores more often and, of course, buy more stuff!