Ollie’s Bargain Outlet’s ‘army’ of fans is taking its first-ever credit card everywhere
Executives at goofy discount chain Ollie’s Bargain Outlet and financial services firm Sunbit say the retailer is seeing early success with its first-ever credit card, which launched last August and builds upon the popular Ollie’s Army loyalty program.
Tom Kuypers, svp of marketing and advertising for Ollie’s Bargain Outlet, said the chain found the average transaction of Ollie’s credit card holders to be double that of its typical loyalty member. They also shop more frequently at Ollie’s than the typical member, he said.
Additionally, he said Ollie’s credit card holders are more frequently using the card for day-to-day shopping at other retailers than would typically be expected for a store card. Bill Walsh, chief customer officer for Sunbit, said the Ollie’s card has much more off-brand spending compared to the typical retail credit card, where the breakdown of on-brand to off-brand spend would be around 50-50.
“The level of engagement is high even for our business,” Walsh said. “Ollie’s has got a great brand and a really loyal customer base. … It’s not just a product that you’re using one time in order to finance a purchase, but it actually becomes your everyday card.”
This loyal customer base is just one of the key differentiators that has fueled Ollie’s continued growth while other off-price competitors like Big Lots have struggled. The retailer, founded in Pennsylvania in 1982, has had several decades to build up that loyalty. It differentiates from other discount retailers in several ways: its popular loyalty program, a surprise-and-delight factor with its closeout deals, and humorous messaging centered around a mascot character based on one of its founders.
Walter Holbrook, a retail consultant and former Kmart executive, praised the chain for promoting obscure finds from window AC units to atlases and featuring quirky taglines around its stores.
“You don’t go in there with a list and say, ‘I’m going to go in and get this, this and this,'” Holbrook said. “That’s never going to work — you may go in and not have an idea that you want a book, but you look at that book department, and before you know it, you’re spending some time in there. … It’s a surprise-and-delight atmosphere.”
The unexpected nature of retail bankruptcies leads to a surprise factor with the deals: Ollie’s takes excess inventory from retailers that have recently gone bankrupt, such as Big Lots, 99 Cents Only Stores, Joann and Party City. For example, Kuypers said the company now has skateboards, likely for the first time, after it took inventory from a skateboard manufacturer that went bankrupt.
“We’re able to take that excess inventory, flow it through our system and sell those products at a discounted price to the consumer,” Kuypers said. “Our difference is value. We may not have everything that every general merchant has, but what we do have is going to be less expensive than they’re going to find at other typical retailers.”
Kuypers said Ollie’s credit card was designed as an accelerator to the loyalty program, a key part of the business that has been around since the mid-2000s. Uniquely, Ollie’s Army members get different perks based on whether they’re a one-, two- or three-star “general.” A customer’s rank scales up the more they spend.
Members make up more than 80% of the retailer’s total spend in stores, according to the company. As of the last quarter, it has 15.5 million members who have been active within the last two years. Ollie’s Army members are especially loyal; they spend about 40% more than non-members.
The new card also comes as the retailer is on a growth spurt, planting its flag in new markets and filling voids by defunct retailers.
After the acquisition of 40 former Big Lots store leases in February, and 23 prior to that, the company aims to open 75 new stores this fiscal year. The chain currently has 559 discount stores in 31 states, primarily selling closeout merchandise and excess inventory from manufacturers and bankrupt retailers. Its best performers include lawn and garden products, housewares, food, sporting goods, and candy.
With the expansion, the company expects to grow annual net sales to more than $2.5 billion. In its fiscal 2024, which ended Feb. 1, Ollie’s saw an 8% increase in net sales to about $2.3 billion, with its net income up 10% to roughly $199.8 million.
As it works its way into new regions and has modernized its marketing approach, the company is also seeing growth among younger shoppers, Kuypers said, noting that its customer base has long skewed older. Like Dollar Tree and Walmart, it has also seen an increase in customers making more than $100,000 per year, he added.
But Ollie’s customers are across the board in income, Kuypers said, so it was beneficial to add a credit card to make it easier for those in the store to buy some of the higher-priced items sometimes found in stores like air conditioners, mattresses or rugs. By quickly scanning a QR code, they can get approved and use it as payment right away, with a $10 reward for starting the card in-store.
Sunbit, which only started doing co-branded cards a couple years ago, stood out from other store card providers in that it handles all applications digitally — customers don’t have to give their personal information to a store employee — and offer higher approval rates.
“We’re all about value to our customer, and the ability to have a card out in the market that has high approvals and no fees is really huge to us,” Kuypers said. “We felt that it was a huge differentiator in the marketplace.”