Charge accounts on way out?

Press, 15 August 1980, Page 1

Charge accounts on way out?

Shop charge accounts may become a thing of the past as credit cards give customers an alternative means to buy now and pay later.

High postal and administrative costs involved in providing store credit are making the plastic cards more attractive to some retailers. At least two Christchurch stores — Whitcoulls and Mrs Pope’s — have recently shifted policies on their internal credit to regular customers.

According to the president of the Canterbury Retailers’ Association (Mr T. A. Gyde), a meeting later this month will discuss possible collective action by retailers about the mounting cost of providing charge facilities. The cost of posting charge accounts ran to tens of thousands of dollars annually for retailers, who received no bulk postage concession, Mr Gyde said.

“We have got to find an alternative way to get accounts out to people or the system will come to an end and cards will take over,” he said.

Mr Gyde pointed to interest charges on money borrowed to cover credit and staff needed to control the system as other costs met by the retailer. Charge accounts do.

however, benefit the retailer by maintaining customer loyalty. Larger stores in Christchurch have indicated that they intend retaining their internal credit service.

The economies of doing so seem to be easier for them than for smaller retail businesses.

The managing director of Mrs Pope’s (Mr F. N. Baddeley) said his 10 Christchurch stores would phase out charge accounts.

Customers could obtain exactly the same service by using credit cards, he said. Most people were eligible for a credit card these days. Mr Baddeley said only a very small amount of the store’s trading was done through charge accounts and it would be “stupid” for the company to continue that system.

The general manager of Whitcoulls (Mr K. 1.Shore) said his store was attempting to drop credit for small purchases. On personal accounts, a minimum of $lO was being imposed for a charge-up, although this was flexible in special circumstances. Minimum charges were common overseas, he said. “We are trying to straighten up the disadvantages of small charges,” he said. Whitcoulls had in-

troduced it to coincide with its acceptance of a range of credit cards, Mr Shore said.

Spokesmen at several Christchurch department stores said they now accepted credit cards and would continue to run charge accounts. One manager said. “We jeolously guard our accounts and we consider them one of the better forms of credit available.” The store applied the same criteria in providing charge facilities to customers as did any organisation extending credit.

Mr Gyde said store charge accounts and credit cards provided basically the same service to shoppers; neither had a charge for payment on time and the period of free credit was the same.. He said there were at least 12 stores in Christ-

church offering internal credit. The smaller stores among these, he said, were being faced with either establishing themselves as “complete credit organisations” or using only credit cards. Mr Gyde said the meeting to be held among Christchurch retailers might result in their seeking a rebate from the Government on postage costs or uniting to use a courier service to deliver accounts to customers’ homes.

Mr Gyde suggested that a further step could be the issuing by stores of their own credit cards, as was happening in parts of the United States. The financial transactions arid processing for such plastic cards would be handled by banks, but retailers would retain the element of customer loyality, he said-