Innovation in the retail industry has always been linked to the evolution of payments, especially the use of consumer credit. But the birth of e-commerce in the late 1990s and the emergence of mobile-first[1], digitally-native consumers has made it increasingly hard for retailers to attract and convert shoppers. While previous generations of offline retail could rely on traditional credit instruments to attract customers and retain loyalty, they don’t work for modern consumers who expect instant approvals, tailored experiences, and seamless payments.
Credit isn’t going away but it is rapidly evolving in a way retail didn’t expect, and it’s time for the industry to move away from its reliance on traditional credit. Flexible, digital, and individualized modern credit is an omnichannel tool that can help retailers provide interconnected, personalized experiences, earning loyalty from generations of modern shoppers.
The growing pains of retail and credit
You can trace the modern credit card system back to the early 1900s when department stores realized[2] they could deepen the one-to-one relationships they had with customers and generate long-term loyalty by offering a store-branded charge card.
Diner’s Club offered the first credit card[3] in 1950 that could be used at any store, which meant any retail business could join and extend credit to any consumer who carried plastic. By the end of the year, 500,000 people had signed up.
This was a huge moment for consumer empowerment in the form of universal spending potential, but it also marked the moment when credit started to evolve away from providing retailers a direct connection between spending and loyalty. The next solution retail turned to was the private label, or store-branded, credit cards.
