A co-marketing deal struck with big-box retailer Costco is the latest salvo in an aggressive co-branding and retail strategy by American Express to get its card out of consumers’ wallets and into greater retail circulation.
The details of the deal are still being hammered out, but it represents the first general-use credit card accepted by Costco and the first co-branded card Amex Bank of Canada has launched with any retailer. Costco currently has its own credit card program.
The card, which will be launched early in the new year, will act as both an American Express card and a membership card for the big-box wholesaler and retailer, says Peter Orrell, Amex vice-president and general manager.
‘There is a great amount of parity between Costco’s customer base and American Express cardholders,’ he says.
A similar agreement was struck earlier this year between Amex and Costco in the U.S. Canada is the first international market outside the U.S. to follow suit. While Amex and Costco Canada will examine the U.S. deal, any marketing plans for the card will be determined in Canada, Orrell says.
The two are actively discussing cross-promotional strategies as well as how to best market the new card, says Lorelle Gilpin, Costco director of marketing, Western Canada. Any marketing deal will likely include a direct mail campaign that utilizes Costco’s existing membership base as well as an in-store presence for American Express.
Costco, which sells everything from bulk office supplies to household and consumer goods at wholesale prices, caters to a large number of small business operators.
American Express has been courting small business owners through a number of initiatives, including the launch of its Air Miles Gold Business Card that targets small business owners with a points-based reward system.
More than 2.5 million Canadians shop at Costco annually. The alignment with the retailer allows Amex to extend its current strategy of increasing retailer acceptance of the card, says Orrell.
Several years ago, Amex was faced with a shrinking merchant base – many retailers refused to accept the card, and even those that did would often ask customers to use Visa or MasterCard, which carry lower fees. Over the past three years, however, Amex has increased its merchant base by 60% and now counts IGA, Canadian Tire and Safeway among its merchant partners.
Amex has also struck deals with professionals, such as accountants, lawyers and doctors, to accept the card in their offices.
‘We were arrogant and not listening to our customers,’ Orrell says. ‘While it’s clear that American Express cardholders fly at the front of the plane, they stay at the good hotels and they eat at good restaurants…they also shop in grocery stores and they shop at Costco.’
