Value retailer Target will restructure the rewards offered to holders of its branded credit and debit cards, swapping accrued discounts over time for an immediate 5% discount at the point of sale.
Starting this fall and in time, customers who use one of Target’s three types of REDcard products will get 5% deducted from their total bill when paying either in Target stores or online at Target.com.
Target, one of the few retailers to manage its own credit-card operations, currently offers customers a Target-branded Visa card, a Target Check Card debit product, and a Target credit card. The last was introduced in April 2010 and is only good in Target stores and on the company’s Web site, unlike the Target Visa and debit cards.
The new point-of-sale discount program for REDcards replaces Target’s former practice of awarding a 10% discount when new applications were approved—something Target cashiers could process from their registers—and then earn coupons for 10% off a future day of shopping.
Target said it has tested the changes to the cardholder rewards program in the Kansas City market since October 2009 and has seen “meaningful incremental sales and profits” as a result, especially among existing and high-value retail customers. While customers in the test area bought the same size basket of goods, the company found, they increased the frequency of their trips to Target.
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