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Global Retailers: Strategies of the World's Top 120 Retail Groups in Payments, Banking, Insurance and Assistance is a report and accompanying PartnerBASE™ dataset that illustrates the involvement in financial services of 120 leading retailer groups. For these, the study documents in detail their involvement in the fields of payments, banking, insurance and assistance including (where the information is disclosed), the contribution that financial services have made to group profitability in recent years. Among the 120 groups analysed, only ten had no involvement in the areas in scope and for 55 (45.8%) financial services activity can be characterised as central to their wider business strategy by virtue of their ownership of one or more captive or joint venture companies active in one or more of these fields.

Prominent examples in this respect include AEON, Carrefour, Cencosud, Falabella, Grupo Elektra, Lotte, Migros, Otto, Rakuten, Ripley, Seven & i Holdings and Tesco, all of which are featured in this study.

In addition, both for these and the other 55 groups, whose financial services operations are more operational or limited in nature, product partnerships are logged for each of their retail brands in the following areas: credit / other pay later cards; consumer finance; other banking products (i.e. mortgages, personal loans, savings accounts); insurance and assistance (i.e. accident, dental, health, household, life, motor, pet and other insurance policies plus assistance services); and online payments (including relationships for online accounts). In total, this research covers over 500 individual retail brands belonging to the 120 groups across 45 countries with consideration of close to 1,000 distinct retail operations in total, including those of brands that are present across multiple countries.

This report and the PartnerBASE™ dataset that accompanies it can be used in one or more of the following ways:

- gain access to a thorough analysis of the involvement in and partnerships for payment, banking, insurance and assistance products of 120 of the world’s leading retail groups – how does your organisation seem to be positioned relative to its rivals?

- understand which product providers have been successful in establishing partnerships with leading retail brands and groups for credit / other pay later cards, consumer finance, other banking products, insurance / assistance and online payments, and the degree to which these partnerships exist across multiple countries;

- use the PartnerBASE™ dataset to drill down to the full details – see which payment, banking, insurance and assistance products are offered by which retail groups and brands in which countries and with which product providers they co-operate in this context;

- appreciate the contribution made to total group profitability of profits from financial services for retail groups that have made involvement in financial services a strategic imperative.

Table Of Contents

Global Retailers: Strategies of the World%s Top 120 Retail Groups in Payments, Banking, Insurance and Assistance
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
A number of leading retail groups have made development of financial services a strategic priority… 2
… and many are now benefiting from enhanced growth in revenues and profitability as a result 2
10 INTRODUCTION 3
What is this report about? 3
The provision of financial services constitutes a core activity for 55 of the 120 groups investigated… 3
Rationale 3
… and appears likely to be making an increasing contribution to their overall profitability 3
Methodology 4
Survey of retailer groups and brands 4
Definitions 5
Payment, banking, insurance and assistance products and services 5
Operating models 6
PartnerBASE 7
Finaccord 7
20 GROUP STRATEGY OVERVIEW 8
Introduction 8
Total revenues and growth in total revenues 8
Walmart is by far the largest of the 120 retail groups analysed… 8
while Alibaba grew its total revenues most rapidly from 2012 to 2014 12
Overview of payment, banking, insurance and assistance services offered 16
Credit or other pay later cards are on offer from brands owned by over three quarters of groups surveyed… 16
… and insurance or assistance products from more than 40% of them 16
Captives and joint ventures in financial services 18
Close to a half of the 120 groups have at least one captive or joint venture financial services subsidiary… 18
… and these are most widespread in the field of credit and other pay later cards… 19
… followed in descending order by banking, insurance / assistance and consumer finance 19
A handful of groups own both captives and joint ventures active in financial services 19
Profitability of captive (and joint venture) financial services operations 21
The analysis is based on results spanning 2012 to 2014 in order to smooth out one-off spikes and troughs 21
A number of groups record average annual profits of more than USD 100 million from financial services… 21
… and only one (for an exceptional reason) made an average annual loss over the period reviewed 21
For two groups, losses from retailing operations have been offset by profits from financial services… 24
… and the overall importance of financial services is clear from the weighted and unweighted averages 24
30 GROUP STRATEGY ANALYSIS 27
Introduction 27
Analysis of retail group strategies in financial services is based on research conducted across 45 countries 27
ADEO 28
Brands belonging to ADEO are active across all financial services categories researched 28
AEON 30
AEON has developed extensive proprietary financial services operations, especially in its home market 30
AEON Credit Service has built up a portfolio of almost 50 million credit cards in circulation 30
Profits from financial services operations make a substantial contribution to group-wide profitability 30
Ahold 32
Financial services do not yet constitute an area of significant activity for Ahold… 32
Aldi 33
… and a similar observation can be made in relation to Aldi 33
Alibaba 34
Alibaba is building up substantial operations across payments, banking and insurance… 34
… including the Alipay online account with around 350 million users in China… 34
… plus MYBank, which like Alipay, is run through the Ant Financial affiliate 34
Taobao Insurance sells cover to both individual consumers and small businesses 34
Amazon 36
Amazon is active in financial services in different ways in a number of countries… 36
… and has developed a captive online account service in the US, but not elsewhere 36
AS Watson 38
Personal loans and insurance are available through the group's Kruidvat brand in the Netherlands 38
Auchan 40
Captive or joint venture banking operations are present in a number of European countries… 40
… which have a built up a portfolio of close to 8 million customers… 40
… including some derived from partnerships with retail brands not belonging to the Auchan group 40
Bauhaus 42
The activity of Bauhaus in financial services is focused on consumer finance and online payments 42
Beisia 43
Beisia works with Cedyna and Visa for its co-branded payment card program 43
Best Buy 44
Best Buy has switched its payment card partners in both Canada and the US in recent times 44
BJ's Wholesale Club 45
Both eHealth and Liberty Mutual benefit from insurance partnerships with BJ's Wholesale Club 45
Canadian Tire 46
Scotiabank has become a significant minority shareholder in Canadian Tire's banking operation… 46
… which has built up a portfolio of over 4 million MasterCard-branded credit cards 46
Carrefour 48
Carrefour has established a substantial international portfolio of financial services operations… 48
… having built them up progressively over the course of more than 30 years 48
Carrefour Banque achieved modest growth in most of its key metrics in the most recent year 48
Casino 50
In its home market, Casino offers financial services through Banque Casino, co-owned by Credit Mutuel 50
Credit card and insurance services have also been developed in several international markets 50
Cencosud 52
Cencosud has reconfigured a part of its financial services business through a deal with Scotiabank… 52
… but still retains full ownership of other banking and insurance operations in Chile and elsewhere 52
China Resources Holdings 54
China Resources Bank acts as a captive provider for three retail brands belonging to its own parent… 54
… although generates its substantial profits from a number of other activities 54
Conad 56
Conad has begun to develop a financial services business in Italy, its home (and only) market 56
Coop (Schweiz) 57
Banking and insurance activity is organised through Bank Coop, Credit Suisse and ERV 57
Coop Italia 59
Coop Italia's financial services offering remains limited 59
Costco 60
Costco markets insurance products in both Canada and the US 60
Couche-Tard 61
WEX Bank is employed by the group for its private-label fuel card 61
CVS Caremark 62
CVS Caremark is not yet involved in financial services to any significant degree 62
Dairy Farm International 63
Several of the group's brands have developed co-branded credit card or consumer finance offerings 63
Dansk Supermarked 65
Brands belonging to Dansk Supermarked work closely with Ekspres Bank in Denmark 65
Darty 66
Darty utilises three financial services providers, including one that it co-owns with Credit Agricole 66
Dashang Group 67
The Dashang and Newmart brands utilise Shanghai Pudong Development Bank for co-branded cards 67
Decathlon 68
Payment cards and / or consumer finance are available from Decathlon in a significant number of markets 68
Delhaize Group 70
The activity of Delhaize Group brands in financial services remains limited 70
Dia 71
The group's captive card-issuing subsidiary is active only in Spain, its home market 71
Dixons Carphone 72
The group's main involvement in financial services is through consumer finance and online payments 72
Dollar General 74
Dollar General has yet to diversify into retailer financial services 74
E Leclerc 75
The group maintains a majority stake in Banque Edel which has been active for almost 25 years 75
EDEKA 76
EDEKA maintains both captive banking and insurance brokerage subsidiaries 76
Edion 77
Edion has yet to develop payment, banking, insurance or assistance products of any type 77
El Corte Ingles 78
Santander has a acquired a majority stake in the retail group's consumer finance arm… 78
… although its insurance operations remain wholly-owned 78
Eroski 80
Eroski's main partners for financial services are Aon Gil y Carvajal and Santander Consumer Finance 80
Falabella 81
The group's financial services operations continue to grow at an impressive rate… 81
… and its banking operation in Chile claims to be the most efficient in the country 81
Future Group 83
Co-branded Visa cards have been developed in partnership with State Bank of India 83
The group's joint venture insurance firm operates independently from its retail stores 83
Galeries Lafayette 85
Following divestment of its former joint venture, the group's involvement in financial services is now limited 85
GameStop 86
Comenity Capital Bank is the issuer of GameStop's store card in the US 86
Gap 87
Gap works with Synchrony Financial for its store and co-branded credit card programs in the US 87
GOME 88
GOME has yet to develop any retailer financial services apart from online payments 88
Grupo Elektra 89
Banco Azteca has expanded its distribution reach to almost 4,000 outlets since launch 89
Profit before tax rose in 2014 in spite of a reduction in the value of consumer loans outstanding 89
The group's life insurance captive generates much higher profits than its non-life insurance subsidiary 89
Grupo Inditex 91
Zara-branded payment cards are available in each of Mexico, Portugal and Spain 91
H-E-B 93
H-E-B's financial services proposition is concentrated in Mexico 93
Home Depot 94
Subsidiaries of Citigroup work with Home Depot for payment cards in each of Canada, Mexico and the US 94
Home Retail Group 95
The Argos and Homebase brands offer a range of payment card, consumer finance and insurance products 95
Hudson's Bay Company 96
A broad range of financial services is available through Hudson's Bay Financial Services 96
ICA 97
ICA Banken provides a wide array of financial services to customers in Sweden 97
and a new insurance captive was due to be launched in the final quarter of 2015 97
IKEA 99
Much payment card and consumer finance activity is organised through IKANO Bank… 99
… which also works with brands belonging to other retailer groups in certain countries 99
Isetan Mitsukoshi 101
The Japan-based group is most active in payment cards and insurance in its home market… 101
… and is aiming to increase financial services profits to around JPY 10 billion by 2018 101
J Front Retailing 103
JFR Card, a captive card issuer, is utilised for co-branded payment cards by two of the group's brands… 103
… and generates more than 8% of the group's operating income albeit less than 1% of total net sales 103
JC Penney 105
Synchrony Financial is the provider of JC Penney's private-label store card 105
Jerónimo Martins 106
Jerónimo Martins has yet to branch out into payment, banking, insurance or assistance markets 106
John Lewis Partnership 107
A number of different types of insurance are on offer from three separate providers 107
Katz Group 108
Health and beauty chain Rexall has not yet introduced financial services of any kind 108
Kering 109
Kering's La Redoute brand in Sweden has developed the broadest financial services proposition 109
Kesko 110
OP-Pohjola is the main partner of Kesko for both payment cards and consumer finance 110
Kingfisher 111
Payment cards or consumer finance are available in four countries in which Kingfisher brands operate 111
Kohl's Corporation 113
Kohl's utilises Capital One for a private-label store card program with more than 20 million accounts 113
Kroger 114
US Bank has been working as Kroger's payment card partner for more than five years 114
K's Holding 116
K's Holding has yet to develop advanced payment, banking, insurance or assistance services 116
L Brands 117
Comenity Bank is the issuer of private-label store cards distributed by US retail formats owned by L Brands 117
Les Mousquetaires 118
The group operates a captive bank in France but works with external partners in overseas markets 118
Loblaw Companies 119
The group's financial services offering extends across virtually all products researched… 119
… and its operating income from financial services has increased rapidly in recent years 119
Lojas Americanas 121
The department store chain collaborates with subsidiaries of Allianz, BNP Paribas and MAPFRE 121
Lotte 122
The group complements utilisation of a captive card issuer with additional use of external partners 122
In recent years, Lotte Card has made an increasing contribution to the group's operating profit 122
Louis Delhaize 124
The Romanian branch of Cora has developed the broadest array of financial services 124
Lowe's 125
American Express, Credomatic and Synchrony Financial are each used for payment card issuance 125
Macy's 126
The group collaborates with both American Express and a unit of Citigroup for payment cards 126
Magnit 127
The Russia-based supermarket chain has yet to introduce financial services of any type 127
Marks and Spencer 128
Through its relationship with HSBC, Marks and Spencer has built an advanced financial services offering… 128
… and has built up a banking and insurance customer base of around 37 million individuals 128
Meijer 130

Meijer works with Comenity Bank for its co-branded credit and store card programs 130
Mercadona 131
BBVA subsidiary Unoe is the provider of Mercadona's private-label store card 131
Metro (Canada) 132
Financial services have yet to be introduced by the Canada-based supermarket brand 132
Metro Group 133
Retail brands belonging to Metro Group operate multiple payment card and consumer finance schemes… 133
… albeit insurance products have only been introduced in three countries 133
Seven country-specific online account providers are utilised in addition to PayPal 133
Migros 135
The revenues and operating profit of Migros Bank have reached a new high point 135
Morrisons 137
The UK-based supermarket chain has yet to develop payment card, banking or insurance products 137
Nordstrom 138
TD Bank has announced the acquisition of Nordstrom Bank's credit card portfolio 138
NorgesGruppen 139
Private-label store cards for business customers are on offer from a captive subsidiary 139
Office Depot 140
Office Depot has introduced a payment card in the US but not in any other country 140
Otto 141
Much though not all of Otto's financial services activity is organised through Cofidis… 141
… which has a loan portfolio incorporating more than EUR 10 billion in assets 141
Hanseatic Bank and Hanseatic Versicherungsdienst serve Otto's customers in Germany 141
Payment subsidiaries NuBON, RatePay and Yapital have all been launched in recent years 141
Pick n Pay Holdings 143
Nedbank benefits from being able to establish kiosks within stores belonging to the retail group 143
Publix 144
Financial services have yet to be introduced by the US-based supermarket chain 144
Rakuten 145
Rakuten has built up a very substantial financial services business in the ten years leading up to 2015… 145
… with rapid growth reported by each of its subsidiaries 145
Rakuten Edy is utilised as an online payment means by many retail brands selling online in Japan… 145
… although various external online account providers are employed in overseas markets 145
Financial services generate a very substantial proportion of the group's revenues and pre-tax profits 145
REWE 147
Several retail brands belonging to REWE are active in consumer finance and / or online payments 147
Ripley 148
Banco Ripley's balance sheet and profits have expanded at a significant rate in recent years… 148
… with Chilean private-label cardholders being migrated to MasterCard-branded cards 148
Rite Aid 150
The US-based health and beauty chain has not yet developed a financial services offering… 150
Rossmann 151
… with a similar observation applying to Germany-based Rossmann… 151
Safeway 152
… and to supermarket group Safeway 152
Sainsbury's 153
Sainsbury's Bank utilises a number of different providers for insurance products… 153
… and achieved fairly strong growth in underlying profitability in its most recent reporting period 153
Schwarz Gruppe 155
The owner of the Lidl and Kaufland discount supermarkets is active in a few fields of financial services 155
Sears 157
Sears is active in a range of financial services in one or both of Canada and the US 157
Seven and i Holdings 158
Seven and i Holdings has significant involvement in most areas of financial services covered… 158
… through Seven Bank, Seven Card and Seven Financial Services… 158
… which together account for an increasing proportion of the group's operating profit 158
The vast majority of Seven Bank's income derives from the running of ATMs… 158
… with both revenues and profits increasing steadily in the most recent financial year 158
S-Group 160
S-Bank has been reconfigured as a joint venture co-owned by LähiTapiola 160
Shoprite Holdings 162
Retail brands belonging to Shoprite Holdings are active in financial services in a number of different ways 162
Sobeys 163
BMO is the issuer of a co-branded MasterCard product offered by Sobeys 163
Sonae 164
AIG and Via Directa are the underwriters used by MDS Affinity for insurance sold through Continente 164
Spar 165
The group's retail formats and structure are not especially conducive to financial services development 165
Staples 167
Private-label store cards are available in both the UK and the US 167
Steinhoff International Holdings 168
In South Africa, the retail group and BNP Paribas Personal Finance have created a joint venture 168
Insurance products are available in two countries in which retail brands belonging to the group are active 168
Suning Commerce Group 170
Brands belonging to the group are active across almost all financial services fields investigated 170
SuperValu 171
SuperValu has yet to develop significant activity in financial services 171
Systeme U 172
LaSer Cofinoga is the issuer behind a Visa-branded card program 172
Takashimaya 173
The group's co-branded cards are available carrying five different payment marques 173
Target Corporation 174
TD Bank will continue to run the retail group's payment card program until at least 2020 174
Tengelmann 175
Subsidiaries of BNP Paribas hold the most consumer finance relationships with the group's retail brands 175
Tesco 176
Tesco's financial services operations are the most geographically diverse of any major retail group 176
Its captive bank has enjoyed steady growth in customers and profits in recent years… 176
although its underwriting joint venture with Ageas has struggled for both growth and profitability 176
The SPAR Group 178
The group's Build It chain has organised consumer finance through three lending institutions 178
TJX 179
Synchrony Financial issues the group's co-branded and private-label store cards in the US 179
UNY Group Holdings 180
UCS Card has expanded substantially its number of cardholders in recent years 180
Walgreens Boots Alliance 181
In the UK, Boots works with three external providers for insurance products 181
Walmart 182
Walmart has developed a financial services proposition in many countries in which its brands are present… 182
… with captive card issuers, banks or insurance brokers present in two of them 182
although the Mexico-based captive bank was sold to Grupo Financiero Inbursa in 2015 182
Wesfarmers 184
Wesfarmers has taken full control of its card-issuing entity… 184
and IAG is set to underwrite household and motor insurance sold by Coles through to 2023 184
Whole Food Markets 186
While active in three countries, Whole Food Markets has yet to develop a financial services proposition 186
Woolworths (Australia) 187
The group works with several external partners for payment cards and insurance products 187

Wumart 189
The China-based supermarket chain has yet to branch out into financial services of any kind… 189
X5 Retail Group 190
… and X5 Retail Group has adopted a similar position thus far 190
Yamada Denki 191
Credit Saison is the issuer used for the group's co-branded credit card program 191
40 APPENDIX 192

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