January 15, 2009
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News: Private-Label Credit Card Market in Hurts.
To no one's surprise, the branded credit card industry is feeling the pain also. The numbers are big – as many as 73 million of us own private label credit cards, one-third of our country. Amid the economic struggle our nation has been going through, these tough times began a few years ago when this market only reported a paltry three percent growth back in 2007. The height of receivables peaked at about $114 billion at that time. By 2008, they were already on the fall, when they lost four percent, bringing branded credit cards back to 2006 levels. The receivables have shrunk down to only $109 billion. This industry's future looks as glum as the rest, with only a future projection of only ˝ of one percent growth this year.
Looking at the charts, we can easily see the demise of the branded credit card market where, back in 2001, shortly after Bush took office, there were 27 major brands showing revenues as high as $100 million. By 2004, that number had dwindled down to on 17 brands showing this much revenue. By 2007, there were only 11 left. Now we're left with only three branded credit card companies at the top, the result of struggles, collapses, merges and takeovers. Circuit City, our nation's second-largest electronics retailer bit the dust in November and had to file Chapter 11 bankruptcy. This morning's Wall Street news heralded the end of this highly respected giant that has been with us for so many years. 30,000 employees all dressed up, but no job to go to anymore.
How many more will fall? Will we ever recover? Analysts are shy to say. But they do agree that it rests mostly in the hands of consumers. Is the credit card demise linked to the loss in jobs? "You betcha". Will private label cards fare better than industry-associated cards? Probably worse. More and more, Americans will adapt to lifestyles concerned more with survival. No more vanity mindset. General merchandise mega-giants like Wal*Mart will do well because of their wide variety of essentials. Fashion stores and high-end technology will move more toward the ‘peddling' end of things. Nice speech, Mr. Bush. Now it will be the historian's turn.