supermarket chain in Southern California. The multiyear deal includes a "sizable" investment with Ralphs Grocery Co. and is in keeping with Visa's drive to get its cards used more often at checkout counters. The card association said promotions like this tend to boost card volume by 10% to 20%, and supermarkets have been one of the faster-growing credit card categories. "This is the first integrated partnership with a grocery store that we have completed, and it will encompass everything from point of purchase promotions to Internet and (print) advertising," said Tom Edwards, Visa U.S.A. senior vice president for market development and acceptance. Initially, Visa cardholders will get a 12-pack of Coca-Cola for purchases over $75. A cobranded credit card, corporate cards, and purchasing cards are also part of the deal. The bank issuer has not been disclosed. Visa will also provide employee gift incentives such as travelers checks and gift certificates. The arrangement promises to spread beyond Ralphs' 260 stores. The unit of Portland, Ore.-based Fred Meyer Inc. is merging with two other subsidiaries, Quality Food Centers and Fred Meyer Stores, pushing total locations in the West to 824. Industry observers see the single-store promotional relationship as a return to marketing basics. The card industry's early success was tied to cooperation with retailers, they said. In the last decade, marketing and promotions had been more skewed toward travel and entertainment. Visa's agreement with Ralphs resembles a marketing and promotion deal the association announced last month with ITT Sheraton Corp. The Sheraton campaign eclipsed a deal the hotel chain already had with American Express. At Ralphs, a new purchasing card will replace a reliance on cash and checks when paying suppliers. The introduction of a Visa corporate card will displace Ralphs' American Express program. American Express declined to comment on the loss of this corporate customer. Despite the near coincidence with the ITT Sheraton deal, Mr. Edwards said the one with Ralphs is different. The travel and entertainment industry has gotten deeper into such alliances, he said, whereas supermarkets have done little besides basic promotions. "We are seeing how the Visa brand has grown and is able to encompass more than just the plain-vanilla credit card product," said John H. Bennett, a former top marketing executive at both Visa and American Express. Mr. Bennett, who is chief executive officer of his own consulting firm, Chatham, N.J.-based JHB Marketing, added: "It is just another sign of the times. It is not just one size fits all anymore, but products for all market segments." Visa said its research shows the average transaction with a Visa product at a supermarket is $36, 38% higher than an average cash transaction. "We are trying not only to reward loyalty, but to bring new customers in who are spending more money, and that is more bottom-line to our members," Mr. Edwards said.
Access to authoritative analysis and perspective and our data-driven report series.
No credit card required. Complete access to articles, breaking news and industry data.
Have an account? Sign In