Giant Food is to offer a Visa card with 3% rebate Grocery chain cuts deal with a Buffalo bank

Supermarkets

March 14, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

In 1936, Giant Food Inc. introduced a strange concept: a grocery store stocked with everything from meat to produce.

Yesterday, the retailer trotted out another newfangled concept a Giant Visa card making it the first supermarket chain in the mid-Atlantic region and one of only a handful nationally to offer its own credit card.

To persuade the public of the power of plastic, customers will get rebates worth up to $500 a year in groceries every time they ring up with Giant Visa. Who needs cash anymore?

"That's the way society seems to be evolving," said Terry A. Gans, Giant's vice president of advertising and sales promotion.

But for Giant, more is at work than cosmic shifts in society. It's a business deal between the 12th-largest food chain in the United States and the card issuer, M&T Bank N.A., of Buffalo, N.Y.

Terms of the financial deal were not disclosed, but M&T Bank conservatively estimates that 10,000 to 20,000 customers will use the card in its first year. The potential is far greater: With 166 stores, Giant makes more than 3 million grocery transactions in an average week with about 1.5 million customers, about 20 percent of whom use plastic at the checkout counter.

"It's a no-lose situation for Giant, no-lose for consumers and obviously M&T feels the interest revolver will more than offset their expense," said Jeff Metzger, publisher of Food World, a regional trade paper in Columbia.

For Giant, officials said, the only cost of the deal is an undisclosed sum for advertising. The credit card is intended to help the retailer win over new customers, solidify loyalty among older ones and reduce the transaction fee that it pays to credit card issuers.

For M&T Bank, which will cover the cost of customer rebates, the deal is expected to bring in more credit card users and generate interest off those cards.

As for customers toting a Giant Visa, they will receive a 3 percent rebate on purchases at stores, including about 45 to 50 groceries in the Baltimore area. They also will get a 1 percent rebate on purchases at other locations that accept Visa.

The card, which does not include an annual fee, offers an introductory annual percentage interest rate of 9.9 percent until Oct. 1; afterward, it will equal the prime rate plus 8.9 percent on Gold cards, and prime plus 9.9 percent for a regular card. The prime rate is currently 8.25 percent.

Pub Date: 3/14/96

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