From humble beginnings, when it first offered customers credit to buy General Electric appliances in the 1930s, the conglomerate's retail credit unit has become the nation's premier provider of private-label card programs.
Today, GE Capital's third-party, private-label credit card program serves more than 300 companies with more than 70 million cardholders.
"There is a staggering gulf between GE Capital and everybody else," said David Robertson, president of The Nilson Report, an Oxnard, Calif., newsletter.
Nilson ranked GE first at yearend 1992, with $12.8 billion in outstandings and 68.5 million cards. By comparison, its closest competitor -- Household Retail Services, Wood Dale, Ill. -- had $2 billion in outstandings and 4.2 million cards.
Daniel W. Porter, president and chief executive in North America of GE Capital Retailer Financial Services, in Stamford, Conn., attributes the unit's dominance to its basic tenet: helping merchants to sell merchandise.
Among recent clients are Exxon, Ethan Allen, Venture Stores Inc., and the United States Shoe Corp. Some of the retailers, such as Exxon, but not all, are prime for a cobranded program, Mr. Porter said.
"The programs for retailers should be complementary, so there isn't a cobranding strategy that excludes private label," he said.
In Exxon's case, Mr. Porter's unit maintains the proprietary Exxon card, while the consumer card group supports the cobranded MasterCard.
"You have to provide customers a choice," he said. "We're finding in a lot of cases people do prefer a private-label card, that's why they have them in the first place."
Other clients, such as the U.S. Shoe Corp.'s Women's Speciality Retailing Group, chose to launch a private-label card that can be used across the apparel group's 1,300 stores and five women's apparel brands.
It is one way that private-label programs can broaden utility and acceptance, Mr. Porter said, and it provides the retailer significant cross-selling opportunities.
The private-label business is getting stronger, accounting for 46.6% of all credit cards in the United States, notes Mr. Robertson. Those issued by third-party firms accounted for 32% of outstandings of all retail cards in 1992.
"GE has been at the top of all third-party providers for eight or nine years," Mr. Robertson said. "They have access to capital cheaper than other competitors."
Most of the private-label programs are run through GE Capital and not its two banks: GE Consumer Card Co. in Cincinnati and Monogram Credit Card Bank of Georgia.
"I think it's a relatively secure niche," Mr. Porter said. He attributes that to consumer preference for private-label cards and to the overall cost to a retailer for a private label, which can be cheaper than moving to cobranding.
Cobranding is not for everyone, he said, but if a retailer is interested in doing both, GE can offer both.
"I think what people are going to find as they think through cobranding," he said, is that "if they don't pay a lot of attention to private label, they are going to lose a lot of ground."
The company has leveraged its marketing and technology expertise to give clients valuable information about cardholder spending patterns. "We have moved rapidly toward the information side of the business."
And it is poised for what the future might offer, including interactive shopping. "I think there's a big role for private label in the interactive arena," Mr. Porter said. "I view it as a huge opportunity and not a threat."
GE Capital Retailer Financial Services At a GlanceHeadquarters Stamford, Conn.President Dan PorterOutstandings $12.8 billionAccounts 56.7 millionCards 68.5 million
Source: The Nilson Report, 1992 ranking
