2

Implications of the Davey agreement

The store card industry represents a significant slice of UK retailing. Currently 13 million Britons hold store cards from household name chains like Argos, John Lewis and Debenhams, whilst the annual store card spend in 2010 was £1.83 billion. *(Daily Telegraph)

A huge percentage of these store card holders were originally enticed into participating in the schemes because the store cards offered unbeatable ‘on the day’ deals e.g. ‘20% discount on any purchases if you take out a store card today’.

3

4

5

6

7

8

STRATEGY ONE

In this strategy, a store card promotes its affinity partner’s marketing campaign using its own existing business collateral - for example store magazines, e-newsletters, store card bill statements etc.

Strategy one is therefore the simplest form of affinity marketing and easiest for retailers to implement as it requires less work for both brands.

It also has a greater loyalty ‘feel’ to it because the offer is marketed by the store card retailer itself.

STRATEGY TWO

In the second strategy, the store card retailer will offer its customer database to a partner brand for its own use, but under strict criteria. Unlike the first strategy, the costs of the creative, print and postage are met by the partner brand with a commission-per-sale structure built in.

Strategy two is both more complicated and expensive as an affinity strategy. It is also usually a shorter term strategy with less of a loyalty component built in.

However, it must be noted that strategy two can generate superb returns because marketing response rates are typically higher. Put simply, this second strategy often generates significant revenue as well as enhanced customer value.

7B High Street MewsHigh StreetLeighton BuzzardBedfordshireLU7 1EA

Bedfordshire Office:

Office Suite 3Bowling Hill Business Park, Quarry RoadChipping Sodbury, Bristol BS37 6JL

Bristol Office: