CHICAGO -- To help promote its first co-branded credit card, the Independent Grocers Alliance here will distribute store-specific coupon packs next month to customers applying for the card, currently available through approximately 800 IGA stores.
The packages, which will be available at all U.S. IGA stores promoting the co-branded credit card, "will be offered to customers as they complete an application for the 'IGA Hometown Proud' Novus card," said Duane Martin, vice president of retail at the IGA. "The coupons will be distributed nationally, though the discounts will be store-specific."
IGA's Novus card was launched Aug. 29. "This card adds value to the IGA system, while allowing us to monitor where our customers are using the card and what they are purchasing with it," said Larry Willis, president and chief operating officer of the IGA.
According to Willis, as customers use the credit card, either in IGA supermarkets or at any of 2 million merchants who accept Novus, customer information is collected by Novus and relayed to the IGA.
"We can see what regions the cards are used in, the demographics of the customers and the card penetration in different regions," said Martin. "These factors will help us better understand and fulfill the shopping needs of the IGA consumer."
As customers charge purchases to the card, they accumulate two points for every dollar spent at IGA supermarkets and one point for every dollar spent outside the IGA. Upon accruing 2,500 points, customers are rewarded with a $25 gift certificate redeemable at IGA supermarkets. Customers can earn as much as $500 worth of certificates per year.
Though Willis did not specify a time frame, he said the IGA intends to use the co-branded card for targeted marketing campaigns.
"Besides printing the IGA logo on the card as a constant advertisement, we plan to attract additional customer loyalty by issuing coupons in monthly statements," Willis said. He added, "By providing different manufacturer coupons in statements, we can target mailings to our customers and promote new items, while reducing the costs usually associated with mailing incentives."
Although there are no solid plans in place, the IGA is also investigating how individual IGA retailers can connect the credit card to a frequent-shopper program.
"Each independent IGA retailer can use the card to handle the marketing niche for each market they are in," Willis explained. "Retailers can use their marketing dollars to promote specific incentives and discounts only available through card transactions. This could help our retailers build their own image of value to their customers."
While its ultimate goal is to have all 2,200 U.S. IGA stores issuing the credit card, the IGA is taking the rollout one step at a time.
"We want to see how many cards are issued after six months and then start learning more about our customers based on our collected purchase-behavior information," said Willis. "We want to see exactly who is using the card.
"You hear all the time about chains that roll out co-branded cards, but don't accomplish what they originally hoped," he added. "We want to be careful and patient during our rollout to make sure the program works for all our stores and customers."
Novus Services, a subsidiary of Morgan Stanley/Dean Witter Discover & Co., Riverwood, Ill., is serving as both the card issuer and the financial institution, according to Martin. Mellon Bank Corp., Pittsburgh, acts as the transaction switch. The IGA believes partnering with Novus provided a better fit than other, larger credit card companies.
"Since Novus is not as deep into co-branded cards as the other players we are an important customer to them," Willis explained. "We both want this to work and they understand that we have made a big investment into this project for its success."
The IGA is offering an introductory annual percentage rate of 8.9% until April 1998. At that time the APR will increase to a fixed rate of 9.9% plus the prime rate, according to Martin. There is no annual fee connected to the card.