Global Retailer Payment, Gift and Loyalty Cards Report prospectus July 2014 1
Prospectus contents Page What is the research? What is the rationale? What methodology has been used? How do retailers surveyed break down? Which countries have been researched? Which specific retailing groups have been researched What is the report structure? What are the key features of the research? How can the research be used? How can the Partner BASE be used? Who can use the research? What are some of the key findings? What is the cost and format? What other reports are available? How can the research be purchased? 3 4-6 7 8-9 10 11 12 13 14 15 16 17-20 21 22 23 2
What is the research? Global Retailer Payment, Gift and Loyalty Cards is a report, based on a survey of over 6,000 prominent retail brands in 60 countries, about the provision of co-branded and private-label payment cards, gift cards and loyalty cards by major retailers worldwide. Retailer participation in coalition loyalty schemes is also considered. In total, the research identifies close to 2,000 retailer payment cards, over 2,000 closed-loop gift cards, and over 3,500 proprietary retailer loyalty programs and coalition loyalty schemes, thereby providing a definitive global analysis of retailer co-branded, loyalty and private label programs Moreover, the Partner BASE database that accompanies the report details each of the many initiatives for retailer credit, deferred debit, debit and open-loop rechargeable prepaid cards traced by Fin accord, specifying the operating models used by retailers, the payment networks to which the cards are affiliated and the identity of the ultimate card issuers in each case. 3
What is the rationale? A number of factors, some of which are specific to co-branded and private-label or store cards and some to retailing, provide the rationale for the development of this report. With reference to cobranded and private-label or store cards, in particular, the following assertions can be made: - the credit, deferred debit and prepaid card markets of many countries are continuing to grow and retailers can take advantage of this through co-branded or store card programs; - the experience of card issuers is that the profitability of successful co-branded card schemes, including retailer programs, usually exceeds that of standard credit cards; - indeed, in terms of the outright number of schemes worldwide and, probably, as measured by the pure number of cards issued, retailing is the most important co-branding arena for card issuers; - once private-label store cards have built up a substantial customer base, these can be converted into general purpose, international payment cards; - the customer information gathered from co-branded or store cards can be used to cross-sell banking, insurance and other services. 4
What is the rationale? (continued) In addition, proprietary and coalition loyalty schemes that amass a significant number of members can eventually be converted into cards with a payment function, thereby providing justification for their inclusion in this publication. Indeed, coalition loyalty programs can be particularly important in terms of the number of members that they accumulate and the number of active programs worldwide is continuing to increase each year. These encompass a variety of initiatives including bank-owned schemes, online programs and propositions oriented primarily to travel rewards. Furthermore, dynamics in the retailing market itself also give rise to increasing rationale both for cobranded and private-label or store card programs and a comprehensive global study on the subject. Key developments in the retailing sector include: - increasing usage of payment cards, generally, as a payment mechanism in preference to cash, cheques and other traditional alternatives, thereby encouraging retailers to develop their own cards in order to capture a share of the payments market; - retailer consolidation in both more and less developed markets which helps to produce national champions with the branding, muscle and general profile needed to succeed in the payment card sector in these countries; 5
What is the rationale? (continued) - retailer growth in the less developed markets as an increasing proportion of consumers allocate their expenditure to formal retailing concepts as opposed to informal street markets and the like; - a mature environment for retailing in the more developed markets which signifies that retailers need to investigate new means of achieving revenue growth which can include financial services, in general, and co-branded or store cards, in particular; - increasing internationalisation which potentially paves the way for cross-border alliances between retailers and mainstream card issuers as epitomised, for example, by the link between Carrefour and BNP Paribas Personal Finance. 6
What methodology has been used? The main research input into this study is Finaccord s on-going investigation of the involvement in financial services, in general, and payment cards and loyalty schemes, in particular, of over 6,000 major retailing brands across 60 countries worldwide. In the specific context of this report, the aim of the investigation is to gather top level data concerning the development of co-branded, loyalty and private-label card programs by the organisations in question, the operating models that they use and the card issuers with which they work in this context. Naturally, given that there are literally millions of smaller retailers in total in the territories reviewed, the majority with just a single outlet, Fin accord has sought to focus on the very largest entities that are likely to be of most strategic interest to organisations involved in the payment card and loyalty scheme sectors and wider financial services markets. Indeed, the major retailers break down by category and by country as illustrated in the graphics overleaf. 7
How do retailers surveyed break down? (1) Sporting goods, 4.0% Fuel, 6.3% Specialty, 6.7% Books and media, 3.4% Fashion, 20.1% Health and beauty, 7.6% Department store / variety, 9.0% Offline only, 45.0% Supermarket / hypermarket, 16.0% Mixed, 41.4% DIY / furniture / home, 11.1% BY TYPE Consumer electronics, 15.8% Online only, 13.6% BY DISTRIBUTION MODEL 8
How do retailers surveyed break down? (2) Australasia, 4.2% Latin America, 10.8% South Africa, 2.9% Asia, 19.7% North America, 11.0% Eastern and South-Eastern Europe, 12.3% Northern and Central Europe, 19.4% BY REGION Southern and Western Europe, 19.7% 9
Which countries have been researched? Broken down across eight global regions, countries researched in this study are as follows: Asia China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam; Australasia Australia, New Zealand; Eastern and South-Eastern Europe Bosnia-Herzegovina, Bulgaria, Croatia, Georgia, Greece, Romania, Russia, Serbia, Slovenia, Turkey and Ukraine; Latin America Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Paraguay, Peru and Uruguay; North America Canada, US; Northern and Central Europe Austria, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Latvia, Lithuania, Norway, Poland, Slovakia, Sweden and Switzerland; South Africa South Africa; Southern and Western Europe Belgium, France, Ireland, Italy, Netherlands, Portugal, Spain and UK. 10
Which specific retailing groups have been researched? Among the major retailing groups included in the research are: 3 Suisse's AEON Hold Alde Alabama Alliance Boots Amazon AS Watson Aachen Bertelsmann Best Buy Best Denki Bossing International Brilliance Group Canadian Tire Carrefour Casino Cencosud Chedraui Coles Group Conforama Coop Norden Dairy Farm International Dansk Supermarked Dixons Retail E. Leclerc EDEKA El Corte Inglés Empresas Ripley Eroski Euronics Expert International ExxonMobil Falabella FamilyMart Famsa Far Eastern Group GOME Groupe Galeries Lafayette Grupo Deib Otoch Grupo Elektra Grupo Exito Grupo Inditex Grupo Pão de Açúcar Harald Nyborg Harvey Norman Home Retail Group House of Fraser Hudson's Bay Company ICA IFH Peru IKANO Isetan Mitsukoshi Jardines Kering Kesko Kroger Leroy Merlin Lotte Louis Delhaize Macy s Mango Marks & Spencer Maus Frères Mercator Metro Group Migros Modelo Continente Office Depot Olímpica OTTO Overwaitea President Chain Store Rakuten Reitan Reliance Industries Resurs Group REWE Royal Dutch Shell Rustan Group Sears Sedmoi Continent Seven & I SOK Soriana Staples Stockmann Svyaznoy Tata Retail Tchibo Tengelmann Tesco The North West Company Viveks Walmart Warehouse Group Wesfarmers Group Weston Woolworths (Australia) Yamada Denki 11
What is the report structure? 0. Executive Summary: providing a concise evaluation of the principal findings of the report. 1. Introduction: offering rationale, description of methodology and other related notes. 2. Global Overview: a worldwide overview of the activity of major retail brands in co-branded and private-label payment cards, gift cards, proprietary loyalty programs and coalition loyalty schemes. As well as a comparative analysis of operating models used in the area of payment cards, this section also analyses the extent to which retailer cards are affiliated to American Express, JCB, MasterCard, Visa, UnionPay and other payment brands in each country. 3. Argentina: an in-depth analysis of the market for retailer payment, gift and loyalty cards in Argentina. Key partnerships between major Argentine retail chains and card issuers are identified and commented upon for both co-branded and private-label cards while detailed commentary is also provided for both proprietary retailer loyalty programs and coalition loyalty schemes. 4-62: chapters for all other countries are structured along similar lines to that for Argentina. 63. Appendix: this final section provides a comprehensive listing of retailers operating through captive or joint venture card issuers with over 130 such entities identified in total. 12
What are the key features of the research? Key features of this report include: definitive coverage of the involvement in co-branded, loyalty and private-label card schemes of over 6,000 major retail brands in 60 countries worldwide; focus on close to 2,000 schemes for retailer credit, deferred debit, debit and prepaid cards: which card issuers and networks are strong in which countries and with which retailers do they collaborate? comprehensive listing of retailers using captive or joint venture card issuing divisions or subsidiaries for their co-branded or store card schemes; identification of over 2,000 proprietary retailer loyalty programs including the split by country according to whether they run in parallel to a payment card or remain unaccompanied by such a card; identification of important coalition loyalty schemes with which major retail chains have affiliated including Maximiles, Nectar, PAYBACK, Upromise and Webmiles. 13
How can the research be used? You may be able to use this report and the Partner BASE that accompanies it in one or more of the following ways: gain rapid access to a unique source of intelligence covering virtually all significant retail brands across an extremely wide range of geographies worldwide; monitor the activity of key national and international competitors in the retailer payment card sector including the many subsidiaries of BNP Paribas and Citigroup; evaluate the potential for acquiring the existing cardholder portfolios of retail groups by purchasing equity stakes in captive card issuing entities or taking over internally-managed schemes; understand the potential in each country for converting existing proprietary retailer loyalty cards into fully-fledged payment cards; learn more about the growing number of coalition loyalty programs around the world including the payment cards that have been launched as a result of their popularity. 14
How can the Partner BASE be used? Filter by type of retailer Select country Identify card networks Retailer Type Country Product type Product Operating model Partner(s) Network offered? HangTen Fashion Taiwan Credit card Yes External partner CTBC Bank Visa Hankyu Department store / variety Japan Credit card Yes External partner Sumitomo Mitsui Visa Hannahs Fashion New Zealand Credit card No Hanshin Department store / variety Japan Credit card Yes Captive partner Persona American Express, JCB, PiTaPa, Visa Hanshin Dispensing Pharmacy Health and beauty Japan Credit card No Hanssem DIY / furniture / home South Korea Credit card Yes External partner Lotte Card MasterCard, Visa Look up specific retailers Filter by type of card Choose operating model Identify card issuers Finaccord Ltd., 2014 Web: www.finaccord.com. E-mail: info@finaccord.com 15
Who can use the research? 1. Payment card companies: this study is an up-to-date and comprehensive source of information about co-branded and private-label / store cards in 60 countries and represents an indispensable guide to over 1,700 retail brands that operate payment card programs; 2. Banks and insurance companies: retailer payment card schemes can form an effective basis either for developing broader retailer banking and consumer finance operations or for marketing a range of insurance products to large and well-defined groups of consumers; 3. Retailers: payment, gift and loyalty card programs represent an important activity for numerous retail brands around the world but what types of card do they offer and with which partner organisations do they collaborate for co-branded and private-label / store cards? 4. Loyalty management companies: the research offers a thorough guide to a global total of over 2,000 proprietary retailer loyalty schemes and coalition loyalty programs; 5. Management consultancies: are you either assisting a retailer with the development of a payment card scheme or advising a card issuer with respect to partnership opportunities with major retail brands? This research will help you to evaluate the options in retailer co-branded, loyalty and privatelabel programs, saving time and effort on researching the subject yourself. 16
What are some of the key findings? 1. The operating models used for retailer payment cards vary from region to region around the world Asia Australasia Eastern and South-Eastern Europe Latin America North America Northern and Central Europe South Africa Southern and Western Europe External partner Multiple external partners Captive partner JV partner Internal Other Total 0% 20% 40% 60% 80% 100% % split of operating models used for retailer payment cards Source: Fin accord Partner BASE 17
What are some of the key findings? (cont.) 2. Worldwide, private-label card schemes still account for the major of retailer payment card programs, whether measured in unweighted or weighted terms UnionPay, 2.1% American Express, 2.4% JCB, 3.6% other, 11.0% other, 15.9% Private, 33.9% UnionPay, 2.2% American Express, 4.1% Private, 29.5% MasterCard, 22.9% JCB, 5.0% Visa, 24.1% MasterCard, 20.5% Visa, 23.0% UNWEIGHTED SHARE OF PARTNERSHIPS WEIGHTED SHARE OF PARTNERSHIPS Source: Fin accord PartnerBASE 18
What are some of the key findings? (cont.) 3. A majority of major retail brands in China provide or are involved in a loyalty program with rates of activity of 70% or more across all retailer categories Books and media Department store / variety DIY / furniture / home Fashion Fuel Health and beauty Specialty Sporting goods Supermarket / hypermarket Online only Offline only Mixed 100.0% 88.5% 88.9% 70.0% 78.0% 83.3% 84.4% 85.7% 100.0% 86.3% 91.7% 74.3% 87.6% 0% 20% 40% 60% 80% 100% % provision rate by category of retailer Source: Fin accord PartnerBASE 19
What are some of the key findings? (cont.) 4. Key findings from the executive summary include: of the payment card programs in evidence, 53.2% are based around the use of single external card issuers, with a further 6.7% using multiple external partners and 14.8% captive card-issuing entities, while 18.9% are reportedly managed by the retailers themselves, without support from a separate partner, either external or captive; across all retailer payment card schemes identified worldwide, Visa is used as an associated payment network brand slightly more frequently than MasterCard although, by number of programs, private-label schemes continue to outnumber both by quite a wide margin; with regards to loyalty programs, also included in Finaccord's research due to their importance as a platform for marketing payment cards, 55.7% of retail brands researched are involved in either a proprietary or coalition loyalty scheme, or in both; when segmented by region, retailer involvement in loyalty programs is most prevalent in Asia, where 66.7% of retail brands surveyed participate in one or more loyalty schemes, followed by Eastern and South-Eastern Europe (63.9%) and North America (61.2%). 20
What is the cost and format? Global Retailer Payment, Gift and Loyalty Cards is available as a standard PDF document. The Partner BASE that accompanies it at no further charge is in format. Costs for this research set and selected other comparable, international titles are as follows: Global Retailer Payment, Gift and Loyalty Cards GBP 3,495 Global Retailer Consumer Finance and Banking GBP 2,495 Global Retailer Insurance and Assistance GBP 2,495 Global Retailer Online Payment Acceptance GBP 3,495 Retailer Consumer Finance and Banking in the Asia-Pacific Region GBP 995 Retailer Consumer Finance and Banking in Europe GBP 1,295 Retailer Consumer Finance and Banking in North and Latin America GBP 995 Retailer Insurance and Assistance in the Asia-Pacific Region GBP 995 Retailer Insurance and Assistance in Europe GBP 1,295 Retailer Insurance and Assistance in North and Latin America GBP 995 Retailer Online Payment Acceptance in the Asia-Pacific Region GBP 1,295 Retailer Online Payment Acceptance in Europe GBP 1,995 Retailer Online Payment Acceptance in North and Latin America GBP 1,295 Retailer Payment, Gift and Loyalty Cards in the Asia-Pacific Region GBP 1,295 Retailer Payment, Gift and Loyalty Cards in Europe GBP 1,995 Retailer Payment, Gift and Loyalty Cards in North and Latin America GBP 1,295 * For UK-based clients, VAT at the prevailing rate will be added to the basic price. Costs quoted are for a single site user licence only. For a corporate user licence, please see the final slide for further details. Invoices can be paid in EUR or USD, at the prevailing exchange rate, if preferred. For acquisition of multiple reports, please contact Fin accord - discounts may be available. 21
What other reports are available? A variety of country-specific reports and associated Partner BASE datasets about retailer payments, banking, insurance and assistance are also available from Fin accord, as listed below. These are based in part upon the same research programs as the multi-country titles but focus instead on particular countries. Retailer Payments, Banking, Insurance and Assistance in... Australia GBP 795 France GBP 795 Malaysia GBP 795 South Korea GBP 795 Brazil GBP 795 Germany GBP 795 Mexico GBP 795 Spain GBP 795 Canada GBP 795 India GBP 795 Poland GBP 795 Turkey GBP 795 Chile GBP 795 Italy GBP 795 Russia GBP 795 UK GBP 795 China GBP 795 Japan GBP 795 South Africa GBP 795 USA GBP 795 * The same notes apply here as on the previous page 22
How can the research be purchased? Simple. Just go to the relevant area of the Fin accord web site available at www.finaccord.com/order_global_rfsr.htm and fill in the online order form, clearly indicating: report required type of corporate user licence, if required * billing name address and e-mail address purchase order number, if applicable Please allow up to one working day for the delivery of electronic copy by e-mail. * For the corporate user licence please choose one of the following options: 1. One office, one country: no supplement over and above basic cost of reports ordered 2. Multiple offices, one country: additional 20% over and above basic cost of reports ordered 3. Multiple offices, two to ten countries: additional 50% over and above basic cost of reports ordered 4. Global (unlimited offices in unlimited countries): additional 100% over and above basic cost of reports ordered VAT at the prevailing rate will be added to the price of any corporate user licence acquired by UK-based buyers. 23