Econ 101

Groceries and a Credit Card

// July 30th, 2009 // credit cards

More and more banks are having problems, unprecedented bail- outs; executive compensations that are exorbitant have all combined to make High Street bankers less than ideal places.  They have lost the loyalty they once had without question.  Because of this, major grocery chains are looking into the possibility of offering financial services to increase their revenues.

Tesco and Sainsbury’s are at the top of the list to make this type of transition into the financial foray.  They already have their own loyalty cards, so why would it be a stretch to think that they could issue credit cards instant decision for their already steadfast customers?  When a customer shops with them they already get some type of reward so this will take it one step further.

These businesses can truly be a place for one stop shopping.  A home mortgage, insurance and a credit card all in one trusted place is what they are suggesting to their clientele.  There are statistics that show that since they have a relationship with the store they are more likely to pay off the credit card.  This makes any unpaid debt on the credit card less of a risk.

Tesco already has a credit card that has proven successful.  Customers have an incentive to pay their bills.   The cost to implement these financial services isn’t as pricey either.  They already have a huge customer base to tap into.  When a customer applies for a credit card or loan the store already has quite a good history on the people.

This keeps the marketing costs down and significantly lowers the risk.  This seems to be a formula for success.  As more and more stores ponder this idea it remains to be seen if it will actually take hold.  If it does, customers will get much more than groceries when they shop at the store.