Retailer Financial Services in Southern and Western Europe : Market Research Report

Retailer Financial Services in Southern and Western Europe

Published: Nov. 1, 2009 - 170 Pages

0.0 EXECUTIVE SUMMARY: The research is based on a survey of 1,230 major retail brands across eight countries; Almost a third of major retail brands in the region operate their own payment card scheme…; … with high penetration among fuel retailers largely due to widespread provision of fuel cards; Over a half of retailer payment card initiatives are classifiable as private label programs; Three banking groups are ultimately behind over one third of retailer card initiatives identified; Proprietary retailer loyalty programs are most common in Portugal, Spain and France…; … although retailer participation in coalition loyalty schemes is most widespread in the UK; The impact of the ‘credit crunch’ may have been positive for classic point-of-sale finance; Five retailing groups are identifiable as the region’s most advanced competitors in retailer banking..; The UK hosts the highest number of initiatives in retailer distribution of personal lines insurance… ..; … and is also characterized by the greatest diversity in operating models used to this end; Consumer research in Germany and the UK offers encouragement for retailers in other nations; Several factors are likely to drive the future development of retailer financial services…; … including points specific to consumers, financial institutions and the retail brands themselves
1.0 INTRODUCTION: Rationale; Retailer financial services can be broken down between ‘traditional’ and ‘non-traditional’ services; Retailers can take advantage of changes in consumer finance and payment card markets; Consolidation among conventional banks provides justification for the entry of retailer banks; The evolution of the retailing market itself is also favourable to the integration of financial services; Methodology; Finaccord’s research covers 1,230 major retail brands across Southern and Western Europe; Product definitions; Coverage of payment cards includes credit, deferred debit, debit and rechargeable pre-paid cards ...; Proprietary and coalition loyalty programs are present in a variety of different formats; The involvement of retail chains in the distribution of consumer credit is also considered…; … as is their activity as distributors of mainstream consumer insurance products; Finaccord
2.0 REGIONAL OVERVIEW: Introduction; Retailer payment cards; Retailers in Portugal, Spain and France are most likely to have their own payment card; Over two thirds of department store chains surveyed offer their own co-branded or store card; Most fuel retailers in the region continue to focus on offering traditional fuel cards only; Other than in Ireland, retailer payment cards are primarily credit or deferred debit products; Card issuing joint ventures are present in five of the eight countries investigated; Over a half of the region’s retailer payment cards are effectively private label products; Retailer cards badged with the Visa brand are especially widespread in four countries; Initiatives due solely to issuers controlled by three groups account for over one third of schemes; Proprietary retailer loyalty programs; In relative terms, proprietary loyalty programs are least widespread in the UK and Ireland; Exactly a half of the supermarket chains surveyed possess their own loyalty program; More than a third of all proprietary loyalty programs identified are linked to a payment card; Coalition loyalty programs; Retailer involvement in coalition loyalty schemes is most advanced in France, Spain and the UK… ...; … with speciality brands and retailers of books, music and videos also keen on the concept; Consumer finance / personal loans; Classic point-of-sale finance is offered by over a third of retail brands surveyed in France and Italy; Retailers of electronic products are most likely to make consumer loans available; France, Italy and Spain host both joint venture and captive consumer finance models; Banking products; Five retail brands are identifiable as the most advanced competitors in retailer banking; Captives and joint ventures; Captive retailer finance arms can be of significant interest to mainstream banking institutions; Insurance; Retail brands are active in promoting insurance in all eight countries in the region; Initiatives in travel insurance and pet insurance make up around one quarter of the total; A majority of activity is concentrated in the supermarket and department store retail categories; The most diverse range of operating models for retailers selling insurance is apparent in the UK; International remittance services; There are around 24.31 million international migrants in Southern and Western Europe…; … generating international remittance outflows worth in excess of US$50 billion…; … with the value of outflows per international migrant highest in the Netherlands; The evidence of consumer research in Germany and the UK; Supermarkets and other retailers are influential in Germany for certain financial products…; … most notably personal loans / consumer finance and credit cards…; … although there is little evidence to suggest that consumers will use them to buy insurance; In contrast, retail brands are significant for various types of insurance in the UK…; … with their distribution share apparently highest for pet insurance
3.0 BELGIUM: Introduction; Retailer payment cards; Colruyt and Okay are unusual in offering cards that carry a debit rather than credit functionality; The majority of retailer payment cards in Belgium are classifiable as private label products; Proprietary retailer loyalty programs; Over a third of major retail brands in Belgium possess a proprietary loyalty program; Coalition loyalty programs; Delhaize Group’s Carte-plus ties in a variety of other consumer-facing organizations; Consumer finance / personal loans; Cetelem, Santander and Citibank are the most frequently used providers of consumer finance; Banking products; Insurance; Carrefour and Inter Partner Assistance collaborate for the sale of travel assistance policies; International remittance services
4.0 FRANCE: Introduction; Retailer payment cards; Cards with a credit or deferred debit function dominate the retailer card landscape in France; Joint venture issuers continue to play a significant role in the French retailer card market; In spite of the change in rules concerning co-branded cards, private label cards remain dominant .; Franfinance heads the list in terms of its outright number of exclusive retailer card relationships; The Aurore card alone possesses around nine million customers in France; Banque Accord claimed in excess of six million customers worldwide by the middle of 2009; BNP Paribas Personal Finance manages around 12 million active customers worldwide…; … with its S2P joint venture with Carrefour among its most important initiatives in France; Finaref possesses payment cards in circulation in France in the region of 6.5 million; For Franfinance, the introduction of co-branding has thrown up new partnership opportunities; The web-based sales of LaSer have been rising exponentially; Proprietary retailer loyalty programs; A majority of proprietary loyalty programs are linked to a card with no payment function; Coalition loyalty programs; Over 10% of retail brands surveyed are affiliated either to Maximiles or S’Miles; Maximiles possesses around 5.55 million members across four European countries…; … and believes that its proposition is characterized by several unique attributes; However, it found it harder to achieve revenue growth during the first six months of 2009; Consumer finance / personal loans; Cetelem lays claim to the highest number of exclusive relationships with major French retailers; Banking products; Involvement in the broader banking market is limited to the provision of money market funds; Insurance; Several major retail chains in France offer mainstream lines of insurance to their customers…; … with Carrefour likely to have established the largest portfolio of policyholders; International remittance services
5.0 IRELAND: Introduction; Retailer payment cards; Rechargeable pre-paid cards are more widespread than credit or deferred debit cards; Few retailer card schemes in Ireland are linked either to MasterCard or Visa; Proprietary retailer loyalty programs; Proprietary loyalty programs have been established by comparatively few Irish retail chains; Coalition loyalty programs; Consumer finance / personal loans; Ireland’s troubled economy reduces competition for deals with retailers for consumer finance; Banking products; Insurance; Tesco collaborates with subsidiaries of Aviva for both motor insurance and life insurance; International remittance services
6.0 ITALY: Introduction; Retailer payment cards; Retailer payment cards in Italy are oriented heavily towards credit and deferred debit formulae; Several retailers offer payment cards in both private label and either MasterCard or Visa versions; Agos, Fiditalia and Findomestic are the leading non-captive issuers of retailer payment cards… .; … with two of these three firms having experienced important changes in ownership structure; Other non-captive issuers of retailer cards in Italy possess just one major relationship each; Proprietary retailer loyalty programs; The vast majority of retailers operating a loyalty card have not launched a parallel payment card; Coalition loyalty programs; Maximiles was launched in December 2007 as Italy’s first online multi-partner scheme; Consumer finance / personal loans; Consel’s strength among online retailers makes it a valid challenger to Agos and Findomestic…; … with most other providers of consumer finance limited to a single, major retailer relationship; Banking products; Insurance; Retailer provision of insurance in Italy is limited to special offers for loyalty card customers; International remittance services
7.0 NETHERLANDS: Introduction; Retailer payment cards; Dutch retailers are the least likely in the region to have launched their own payment cards; Through Laser Cards and PrimeLine, LaSer enjoys a dominant position in the retailer card sector; Proprietary retailer loyalty programs; Loyalty cards with no payment function make up a half of all proprietary loyalty programs identified ...; Coalition loyalty programs; Several major retail brands are affiliated to the Dutch version of Air Miles; Consumer finance / personal loans; Santander Consumer Finance is the closest challenger to PrimeLine for point-of-sale finance; Banking products; Two health and beauty chains belonging to AS Watson have launched savings accounts; Insurance; Three Dutch retailers are using their brands to promote insurance products; International remittance services
8.0 PORTUGAL: Introduction; Retailer payment cards; Portugal’s retailers are the region’s most enthusiastic in launching their own payment cards; Almost a half of Portuguese retailer payment cards are available only as private label products ..; As many as 11 external card issuers compete in Portugal’s retailer payment card market; As part of a wider international initiative, Credifin has been integrated within Cetelem; Proprietary retailer loyalty programs; Over a half of major retail brands in Portugal have introduced a proprietary loyalty program; Coalition loyalty programs; Consumer finance / personal loans; The market for point-of-sale finance offered through retailers is a great deal more concentrated ..; Banking products; Insurance; Four major retail brands in Portugal are being leveraged to promote insurance products; International remittance services
9.0 SPAIN: Introduction; Retailer payment cards; Credit and deferred debit cards are dominant in the Spanish retailer card market; Financiera El Corte Inglés had issued in excess of ten million store cards by the end of 2008; Retailer cards carrying the Visa marque are more widespread than those linked to MasterCard ..; Seven non-captive card issuers in Spain possess at least two relationships with retailers; Payment cards have also been developed in association with shopping centres or malls; Both Banco Cetelem and Uno-e Bank have issued in excess of three million cards in total; Proprietary retailer loyalty programs; Proprietary loyalty programs are up and running among more than a half of major retail chains; Coalition loyalty programs; There are three main coalition loyalty schemes with retailer involvement in Spain; Consumer finance / personal loans; Arrangements for point-of-sale finance are organized on a regional basis by some retail chains ..; Banking products; Eroski continues to collaborate with Santander Consumer Finance for mortgages; El Corte Inglés is one of seven shareholders in Inversis Banco; Insurance; Four major retailing groups are active in the distribution of insurance products; Seguros El Corte Inglés has built up a portfolio of more than 1.5 million policies; International remittance services
10.0 UNITED KINGDOM: Introduction; Retailer payment cards; Almost one quarter of major retail brands in the UK have introduced their own payment card… ..; … most of which are developed either through a single, external issuer or on a captive basis… ..; Home Retail Group Card Services possesses around 1.17 million active store card customers; In the UK, MasterCard is more influential than Visa as a retailer payment card marque; Having acquired GE’s store card business, Santander is now a market leader in the UK; LaSer UK manages a portfolio of in excess of four million cardholders; IKANO Financial Services experienced a widening of pre-tax losses during 2008; Vanquis Bank reached profitability in 2008 in spite of a near doubling of provisions for bad debts; Proprietary retailer loyalty programs; Relatively few major retail brands in the UK possess their own proprietary loyalty scheme…; Coalition loyalty programs; … which is, in part, a consequence of the participation of many in coalition loyalty programs; AIRMILES, ipoints and Nectar have very different profiles and histories…; … although co-branded credit cards are offered in conjunction with all three; Consumer finance / personal loans; A diverse range of approaches is in evidence among major retailers for point-of-sale finance; Shop Direct Finance Company is the main financial services subsidiary of Shop Direct Group…; … although it also possesses a joint venture established in conjunction with Bank of Scotland; V12 Finance distributes consumer finance primarily through web-based retail brands; Hitachi Capital has enjoyed substantial growth in its consumer finance division in the UK…; … an experience also reflected in the most recent financial accounts of Barclays Partner Finance; Black Horse, on the other hand, saw a small decline in the value of its loan book during 2008; Other competitors are HFC Bank, IKANO Financial Services, LaSer UK and Santander; Banking products; Mortgage lending has not yet entered the mainstream retailer financial services sector…; … although several major retail chains in the UK have developed a savings proposition…; … including both Marks & Spencer, by means of its partnership with HSBC; … and WH Smith, which has been collaborating with NS&I since August 2007; Sainsbury’s Bank has achieved a better level of profitability during 2008 and 2009; Tesco Bank will become a very significant challenger to incumbent retail banks in the UK; Insurance; As many as 25 major retail brands are involved in the promotion of insurance policies…; … with no clear consensus emerging with regards to the preferred operating model; Tesco is aiming to double its volume of customers with a motor or household policy; As a result of its affinity broking activity, BDML Connect has become a significant competitor; International remittance services

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Retailer Financial Services in Southern and Western Europe

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