While the recession pinched many credit card programs. an old and perhaps forgotten competitor showed surprising signs of vitality, according to the American Banker consumer survey.

Cards issued by retailers, long the most widely held credit cards, have steadily increased in market share since 1990.

Their lead over Visa - the biggest major brand, with 60% of households this Year - grew to 12 percentage points in 1992. from nine in 1991 and seven in 1990.

A Potent Force

The comparisons may be misleading, in the sense that the retail category consists of many proprietary brands that individually do not compare with Visa, MasterCard, or American Express.

But the data indicate that stores remain a potent force in the card business, a force that competitors should not ignore - especially during a period of slow economic growth.

For it was the general-merchandise retailers that invented revolving credit as a convenience to loyal customers., and reinforced that loyalty by extending credit even during hard times.

That remains part of retailing's heritage. A department store card, often the first obtained by a young adult, is often emblematic of a lifelong customer relationship.

And with the aid of computer technology, stores have used their credit rolls as market research tools. By getting to know shopping habits and tastes, they have become adept at targeting promotions to the most appropriate customers.

Selective Targeting

For example, Nordstrom Inc., the growing upscale department store, is not going all-out to issue cards. The percentage of sales on the proprietary Nordstrom card has fallen in recent years, said John Walgamott, a corporate manager.

Instead, retailers have developed "frequent charger" programs, offering special discounts and favorable repayment terms to cardholders. These catch the eye of bank card and American Express loyalists.

The 1992 American Banker survey, which was conducted last spring by the Gallup Organization Inc., found that 86% of financial institution customers had at least one credit card.

Most-Frequent Usage

The number saying a retail card was the one they used most frequently - 18% - is well below Visa's 35%, but is within striking distance of MasterCard's 21%. The Visa and MasterCard figures each fell two percentage points this year, while the retailers gained two.

In terms of the number of households holding cards, retail stores were at 72% this year, up from 70% in 1991 and 63% in 1990.

Visa, at 60% of total households, though down a statistically negligible 1% from 1991, was still 4% ahead of its 1990 reading. MasterCard fell three points this year to 47% of households, where it was in 1990.

The household share of American Express cards, including the Optima revolving-charge brand, held at 24% this year, the same as in 1991 and up two points from 1990.

Among the national brands, only the Sears Discover card's overall holdings increased more than the 3% margin of error. Discover grew to 27% of households from 23% in both 1991 and 1990.

However, the card has had less impact in the crucial frequency-of-use category: Only 7% of card owners said they use it most often. This is up from 5% in 1991 and 1990, however, and may still be seen as quite an accomplishment for a product less than a decade old.

"Proprietary cards have always been big marketing tools, but in the past two or three years have become more so," said Larry Myatt, vice president of business development at Sears Payment Systems.

Aside from Discover, Sears, Roebuck and Co. is responsible for the granddaddy of all proprietary retail cards, the basic Sears store card, which is said to be in more than half of American households.

While private-label cards retain their mass appeal, one negative trend is continuing: Their share of overall credit card sales is diminishing.

According to The Nilson Report, a newsletter based in Santa Monica, Calif., Americans charged $74.4 billion on retail credit cards in 1990, equal to 40.6% of all card spending.

That gave those cards a significant lead over MasterCard and Visa, which had $52.4 billion in U.S. sales in 1990, for a 28.6% share.

By the year 2000, the balance of power will reverse, Nilson projected. Consumers will spend $90.03 billion on retail cards, good for a measly 10.2% share of the total market. Visa and MasterCard will be up to $519.8 billion, or 59'1%.

The retailing industry has also seen its holdings of revolving consumer debt decline by about $10 billion over the past four years, to $34 billion in the first quarter of this year. Retailers' share of revolving consumer loans, 24% in 1988, is down to 15%.

Although revolving debt on banks' books has increased 25% since 1988, to well over $200 billion, their share of the overall market declined to about 50% from 67%.

But that was because of the $60 billion of credit card receivables that have been securitized for investors. Excluding securitizations, banks have 71% of the outstandings and retailers 20%.

Marketing Angle

Many retailers, however, still value their card programs. Mr. Walgamott of Nordstrom said the usage trend will not deter marketing to his credit card customers.

"A retailer with its own card is always interested in maintaining some base because it can be an effective marketing tool," he said. Last year, the Seattle-based department store opened a bank in Colorado to operate its credit card program, as had several other chains.

At the, top of the national-brand standings, Visa's dominance over MasterCard has been attributed to the large number of big banks that have promoted Visa more heavily than MasterCard.

"There are still more Visa solicitations than MasterCard out there," said Robert Skolnick, executive vice president of BAI, a Tarrytown, N.Y., research company that tracks mail promotions. "But in the past several quarters, that has narrowed to some extent."

He pointed out that it takes only one big mailing by a large card issuer to tip the solicitation scales more toward MasterCard. AT&T apparently did that by preferring the MasterCard mark on its Universal cards.

During the second half of 199 1, more than 95% of Universal card solicitations mailed by the telecommunications giant were for a MasterCard, he said.

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