It seems both retailers and shoppers are moving away from traditional credit cards at checkout in favor of store cards that offer loyalty perks or financing options. Particularly among younger demographics, 52% of Generation Z and 60% of millennials are interested in options beyond a traditional credit card to finance large purchases.
Vyze, a cloud-based Fin-Tech for retailers, released its third annual Ipsos Retail Credit Survey, which found that 78% of shoppers are now aware of retailers’ financing options, up from 51% just two years ago. Plus, store cards boost consumer loyalty, as 40% of shoppers more likely to purchase at that retailer again.
In fact, 6 out of 10 U.S. adults have a store card in their wallets, with 30% having two or more. And when it comes time to finance a big purchase, consumers want options. Forty percent want to use credit cards, 17% want monthly payment plans, 13% want store cards, 4% want layaway and 2% want the option to lease to own.
It seems Amazon’s store card is the most popular, ranking No. 1 among 32% of respondents, followed by Target at 32% and Macys at 24%. Specifically looking at millennials, Amazon ranks No. 1 among 48%; Target, 44%; and Costco, 29%. In general, millennials are 60% more likely to shop with a retailer if they have a store credit card.
All consumers want options for financing, and the vote is split as about 43% want to apply for financing online and 44% want to apply in store. And so far, millennials show the most interest in applying via mobile, 16%, versus 1% of shoppers over the age of 55.
Doug Filak, CMO of Vyze, did say that the fact that more than half of consumers have never applied for credit was surprising, as he was not expecting that number to be so high.
“But it does represent a tremendous opportunity for retailers to entice these shoppers with different credit options and offers,” Filak told FierceRetail.
Also surprising was the penetration that Amazon has with their store cards. It seems their recent promotion behind store cards, with 5% back for Amazon Prime members, is paying off.
Filak says that there are definitely some important takeaways for retailers when it comes to the future of card use.
“Our data shows that shoppers have very different needs and wants when it comes to financing, and these vary widely depending upon age group and demographic. Today, most retailers take a ‘one size fits all’ approach to financing, which is typically to offer a store card at checkout. The data shows very clearly that retailers should consider offering multiple credit options to shoppers, particularly millennial shoppers who overwhelmingly rejected traditional credit cards,” he told FierceRetail.
The other big takeaway is that retail financing is moving online and an omnichannel strategy is a must-have.
“Today, retailers are primarily pushing retail credit offers in the store. However, our survey shows that people want to apply equally online and in the store—and as younger shoppers come of age, the online piece will grow—including mobile,” he added.