Credit Kmart with launch of PL card - private label credit card

Discount Store News, April 1, 1996

TROY, MICH. - Kmart plans to build merchandising and marketing muscle with the launch of its private label credit card.

Introduced to 11 test markets March 22, Kmart has positioned itself to get closer to its customers by collecting a computer database of information on them that can be forver mined. With the new program, Kmart will be better able to mold customer-specific marketing campaigns, sales promotions and mailings, and in the process get closer to and become more knowledgeable abouts its customers. The chain would eventually move into catalog retailing with mailing lists culled from its annually growing database.

"Our new Kmart Credit Card is another step toward increased customer loyalty and improved convenience," said Kmart chairman, president and ceo Floyd Hall. "The incentive programs [available on the card] will offer customers even greater value from the Kmart shopping experience, and in turn, their enhanced purchasing power will drive incremental sales volume for Kmart.

Kmart's move into the private label credit card arena will not occur all at once. The launch started last month in 160 traditional Kmart discount stores and six Super Kmart Centers in just 11 test markets. The test is scheduled to run for 90 days and a full-scale nationwide rollout is scheduled for August.

Although only a test, the card will be accepted at all Kmart stores.

Only two aspects of the credit card launch are firmly set: the look of the card (a black background with the bold red Kmart logo in the center and the Super logo in the top right corner) a no annual fee, Beneficial National Bank USA, a unit of Beneficial Corp., is extending the credit. Other card benefits will be determined after the test.

Kmart is testing various incentives on a market by market basis during the test phase, said spokewoman Mary Lorencz. These incentives include earning points toward purchases, much the way other cards have done.

The incentive program is called Kmart Rewards. It allows customers to receive up to 6% of their annual purchases in the form of "Reward Dollars" for reaching predefined annual spending thresholds. The markets where this program is available include Rochester and Buffalo, N.Y., Minneapolis and St. Louis.

After the test, Kmart will determine what kind of program to roll out nationwide.

In addition to Buffalo and Rochester, N.Y., Minneapolis and St. Louis, the test markets include Columbus; Houston; Tampa, Fla.; Denver; Sacramento, Calif.; Seattle; and Phoenix.

Marketing in the test markets will focus mostly on preapproved direct mail offers, in-store promotions and take-one applications at checkout. Each test market will solicit customers differently. For example, in Seattle, "Take One Applications" will be available at checkout requiring customers to complete the application and mail it postage paid to BNB USA. Customers will receive their credit card and a 10%-of-next-purchase coupon within 10 to 14 days, if they are approved.

In Phoenix, in-store greeters provide customers with an application for instant credit and issue temporary cards with a 10% discount coupon. The permanent card will follow in seven to 10 days.

The credit application quoted a variable annual percentage rate of 20.40% (as of Feb. 26, 1996). The program assesses a $15 fee for late payments; minimum finance charge is 50 cents.