Thursday, June 08, 2006

No I Don't Want To Save Ten Percent Today

"No retailer makes more money on this pitch ["Would you like to save 10% today?"] and juices it for more marketing insight than Target Stores," says Ad Age. Minnesota-based Target is the only retailer to make the list of the ten biggest credit card issuers (the others are all straight credit cards like American Express and Chase).

Apparently the trend is moving away from retailer-issued cards -- Sears and Federated Department Stores have both sold their credit card operations. And still, Target is doing amazingly well. The nearest retailer, Nordstrom, is in 27th place.

Target is keeping its credit card operations because it uses the data it collects from users to market to them. And the credit cards make money. Ad Age:
"Not only is Target benefiting on the marketing side, it's making a nice profit along the way. Through its Target National Bank division, Target is quite literally minting money, charging up to 23.74% interest on balances from 16 million customers totaling $5.6 billion."
So Target runs its own bank. Home Depot and Walmart want to do it too, says Ad Age.

The average household incomes of Target cardholders helps -- it's $59,000. For Nordstrom it's $92,572 and for Walmart, it's $46,679.

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