Many Consumers Aren’t Using Store Card Benefits

Store cards, also known as retail cards or private-label cards, are credit cards issued by specific retailers or stores.

These cards are designed to be used exclusively at the issuing store or a group of affiliated stores. By offering discounts, special promotions and exclusive offers on specific products, store cards encourage customer loyalty and increase sales. In parallel, rewards programs linked to store cards offer cardholders special benefits such as cash back, points or discounts on future purchases.

In times of persistent inflation and high economic uncertainty like the present, consumers rationalize their spending and seek purchasing options that can lead to savings at the end of the month. One of the strategies might be leveraging the benefits of their store cards as much as possible.

However, PYMNTS Intelligence found that although more than half of card users own a store card, only 12% have used store cards to pay for their purchases in the last 30 days. In addition, 87% of them are interested in using a card-linked offer tied to specific products, while only 2 out of 5 have used card-linked offers in the last 12 months, suggesting that store cards are being underused by consumers. Lack of familiarity is the main reason why store card owners have not used card-linked offers in the past.

These are some of the insights found in “Leveraging Item-Level Receipt Data: How Personalized Card-Linked Offers Drive Store Card Usage,” a PYMNTS Intelligence and Banyan collaboration.

Merchants could increase consumers’ use of store cards by offering additional benefits. According to the study, rewards (with 50% of respondents), discounts, bundle offers and coupons (with a similar share of 50%), and free shipping (with 44%) are the top benefits that card users would most like to receive from store cards as part of a card-linked, product-specific offer program.

What is notorious about these results is that despite the current moments of economic uncertainty and eroding of purchasing power, consumers value direct discounts as much as rewards. They also prefer to get points and miles as part of a loyalty program (in 42% of cases), rather than exclusive offers (at 34%) or free gifts (at 29%).

In today’s competitive retail landscape, store cards and loyalty programs play a crucial role in attracting and retaining customers on longer terms. The contrast between the number of store card owners and the use of these offers illustrates that there are still opportunities for store card providers to increase engagement. By carefully designing and managing these programs, businesses can differentiate themselves from competitors and build a loyal customer base.