In a distinctly bricks-and-mortar step in its increasingly aggressive branding strategy, Discover Financial Services has signed a $10 million agreement with a real estate developer to build a Discover-branded shopping center in Georgia.
Under a 10-year agreement with the Mills Corp., Discover, a division of Morgan Stanley Dean Witter, also will become the official card of all Mills properties, a group of retail and entertainment complexes.
The new mall, a 1.3 million-square-foot retail and entertainment center dubbed "Discover Mills," is to be the first shopping center to carry a credit card company's name. Retailers in the property, being built 25 miles north of Atlanta, will not be required to accept the Discover card. The opening is scheduled for 2001.
The agreement signaled a new twist in credit card sponsorships, which have typically focused on sports. Mark Morris, co-chairman of the Brand Consultancy, said a co-branding or sponsorship deal with a shopping center company is much more effective than the costly sports sponsorships many card companies have chosen.
"When you [sponsor] sports, you're going for the big event," Mr. Morris said. "What they've done is drilled down one step closer to the customer. It's a closer touch point."
MBNA Corp. issues a Visa card affiliated with Simon Property Group, another major mall developer, but Discover's close alliance with Mills takes the relationship a step further, analysts said.
"It certainly is a coup" for Discover, said Alan Bergstrom, co-chairman of the Brand Consultancy in Atlanta. "This creates a linkage with the consumer who's actually spending money and transacting."
The new mall is expected to generate $400 million of retail sales annually, the companies said, and will let Discover reach shoppers with promotions in what many observers say is its main target market: middle America.
"There is no better association than a shopping mall," said Cathy Davis, vice president of advertising and brand management at Discover in Riverwoods, Ill. "This gives us the opportunity to enhance the shopping experience," which builds loyalty to the card, she said.
Last year, Discover began an aggressive campaign to broaden the card's acceptance, adding more than 615,000 merchants to its Novus network, the most ever in one year.
Ms. Davis said merchants at the Discover Mills mall would not be under any obligation to accept Discover but that "it would be tough to have large banners and all sorts of promotional programs at a mall and then you didn't take that card."
Plans for promotional programs are still in the works, but Ms. Davis said they may include loyalty programs, special white-glove services for Discover cardholders such as free coffee and gift wrapping, and additional cash-back rebates.
The Mills properties, which include massive discounted versions of luxury chains such as Saks Fifth Avenue and Neiman Marcus, and cheaper chains such as J.C. Penney, target value shoppers who tend to build loyalty toward a particular mall and visit it at least twice a month, analysts said. Mills properties have been said to attract - from as far away as South America - customers who charter planes exclusively for shopping trips.
