Cards have a new meaning for Kmart shoppers.
Diversifying from the usual run of private-label or cobranded credit, Kmart Corp. introduced Kmart Cash a year ago. Representing prepaid value, it replaced paper gift certificates and doubles as a telephone card.
Troy, Mich.-based Kmart has a million holders of its private-label credit card, a separate program introduced three years ago with Beneficial Corp., which has since been acquired by Household International. "When the company was undergoing some major restructuring five years ago, credit cards were one of the things we thought we could do that would help us know our customers better, attract some new customers, and build some additional loyalty," said Mary Lorencz, director of media relations.
As the private-label effort began bearing fruit, Kmart began looking at ways to enhance it, Ms. Lorencz said. Customer focus groups indicated that a calling card feature would be welcome, so the retailer cut a deal with AT&T Corp. to create a new card product.
Kmart Cash is available in fixed denominations-$25, $50, and $100. It is primarily marketed as a gift certificate but can also be used when customers return items. Anyone who lacks a receipt for merchandise costing more than $5 is given the refund on the card. In advertising, Kmart suggests the card as a gift for graduations, birthdays, and weddings. Personalized messages are available from American Greetings.
Kmart has begun marketing the card as an incentive that companies can give to employees as prizes or rewards.
"I use it myself a lot for graduation presents," Ms. Lorencz said. "It's good for students. If they're going off to college, they can buy the things they need."