TOPS DEALING OUT ITS OWN CO-BRANDED CARD

CHRIS O'LEARY

BUFFALO, N.Y. -- Tops Markets here is joining a select but growing group of supermarket retailers by introducing its own co-branded credit card.

Launched this month at all 62 Tops Friendly Markets stores, the card entitles customers to begin receiving a 2% rebate once they've accumulated $250 in purchases on the card, with an annual rebate limit of $500.

The retailer is offering the co-branded card with Visa USA, San Francisco, and M&T Bank, a subsidiary of the First Empire State Co., both based here.

To promote the card, the chain will soon launch a multimedia blitz of television, radio, newspaper and billboard ads, as well as direct mailings and in-store promotional displays, according to a source familiar with the program. Tops management declined to be interviewed for this story.

The Tops co-branded card has no annual fee for its first year, an introductory fixed rate of 8.9% and a 25-day grace period.

In a statement, Michael Donoghue, executive vice president of operations at Tops Markets, said, "This is just another way we provide extra service and value to our customers."

Other retailers who have launched co-branded cards include Penn Traffic, Syracuse, N.Y.; Kroger Co., Cincinnati, and Hy-Vee Food Stores, Chariton, Iowa, all of whom partnered with MasterCard International, New York; and Thriftway Food & Drug, Cincinnati, which launched a program with Visa.

Co-branded cards are growing in supermarkets today because shoppers are receptive. "These programs understand what customers want," said Christine

LaFortune, associate creative director for Heinrich Marketing, Denver.

LaFortune said co-branded cards entice consumer use with rebates while allowing retailers to build customer loyalty through monthly statements and continued promotions.

"It's the 'minibillboard' effect," she said. "Every time customers pull the card out of their wallets, the store is advertised."

Even if a co-branded card is used at a competitor's store, the sponsoring retailer still benefits.

"What about the fear that Penn Traffic customers will use their card at competing markets?" LaFortune said. "Well, big rewards do draw customer loyalty, but if a customer chooses to use the card elsewhere, Penn Traffic still benefits from an annual fee and revolving balances on its co-branded card."