Malls Leery of Proposal for Their Own Credit Cards

Shopping malls in the San Fernando Valley area have reacted skeptically to a proposal that they issue their own credit cards--good for purchases in the mall only--even though proponents say such cards are doing well at two Orange County shopping centers.

Avco Financial Services, which launched a credit-card system in October at Fashion Island in Newport Beach, recently approached Valley mall merchants in an attempt to induce them to offer the new service.

So far there have been no expressions of interest from Valley malls, said Caro Danielian, vice president of the Irvine-based firm.

“Just one more headache,” was the reaction of Barbara Teuscher, manager of The Oaks shopping center in Thousand Oaks.

“If someone has a problem with the credit card, they will tend to blame the mall, and I see nothing but problems,” she said. “Besides, there already are enough bank credit cards and department store cards available to shoppers.”

Northridge Fashion Center manager Ken Oswald said Avco’s proposal was “talked about by merchants here, but there wasn’t much interest, at least not for now.” A spokesman at Laurel Plaza in North Hollywood said there “was only a little interest among merchants here for the card idea, so we haven’t gone anywhere with it.”

Little Interest Shown

Jim Charter, manager of Topanga Plaza, the 21-year-old Canoga Park shopping center that claims to be the oldest enclosed mall in the West, said there was “hardly a flicker of interest here in such a thing, although we would do it if we were convinced it would help sales.”

Charter speculated that mall credit cards are a “prestige thing, attracting customers by making them feel they are part of a club.”

However, Marian Rothman, vice president of the National Retail Merchants Assn. in New York, said the credit cards offer shopping centers “a tool to establish mall identity.”

She said no figures were available on the number of of shopping centers that have offered their own cards.

Besides the Avco card at Fashion Island, Bank of America administers a card at South Coast Plaza in Costa Mesa. The South Coast card, first offered a year ago, is believed to be the first such card in California.

Several mall managers noted that, unlike Valley malls, whose tenants are largely national chain stores, the two Orange County centers that now offer cards have many expensive boutiques and appeal to wealthy shoppers.

Several said they might reconsider their initial rejection after seeing results from the mall card to be offered this month at Del Amo Fashion Center in Torrance, which, like most Valley malls, has mostly chain stores with a distinctly middle-class appeal.

Avco’s Danielian said that, despite the initial lack of interest from Valley centers, the firm plans to “follow up and show them the advantages of the service as soon as we get things rolling at Del Amo.”

He said Avco is scheduled to mail out this month about 300,000 preapproved credit-card applications to people living near the Torrance mall, which claims to be the world’s largest indoor shopping center.

Credit Up to $3,000

To receive cards, recipients need only sign and return the form, Danielian said. Credit limits will range up to $3,000.

Danielian would not say how many signed forms Avco expects to receive back.

Shopping center cards operate much like MasterCard and Visa cards, except there is no setup fee or annual service charge, and the card is good only at stores at the mall that choose to participate.

Neither Avco nor Bank of America has yet been able to persuade any of the major department stores, which have their own cards, to honor a mall card.

Danielian said Avco levies an annual finance charge of 18% on outstanding balances and charges merchants “the same as bank cards--a little less than 3% of the sales price” for card transactions.

At Fashion Island, 250,000 preapproved applications were mailed out in October, and about 30,000 have been returned, he said. Of the mall’s 70 stores, 65 honor the card.

Declined to Give Figures

Danielian declined to provide current figures on card sales. He predicted that the cards would eventually account for 10% of the Newport Beach facility’s $140 million annual sales, making the service profitable.

At South Coast Plaza, which projects $400 million in sales this year, 14,000 shoppers now carry the card, said spokesman Werner Escher, director of community relations. He declared the program a success.

Of the plaza’s 180 stores, 123 honor the card.

Danielian said that Avco is negotiating to establish a credit-card system at the Beverly Center and the Century City malls.

“We are endeavoring to show them that, with the cards, they will bring in shoppers who would otherwise have gone to other shopping centers,” he said.