Trading stamps - Business in United States of America

Definition: Stickers awarded to shoppers that can be redeemed for merchandise
Significance: Trading stamps were one of the first forms of coupons issued to reward customers for repeat business. Their popularity led to the creation of other incentive programs.
Developed during the late nineteenth century, trading stamps are a form of coupons that can be collected and glued into small books. The process is simple. A trading stamp company makes money by selling the stamps to retailers. The retailers distribute the trading stamps to customers as rewards for purchases. The customer collects the stamps, then uses them as currency with the trading stamp company to purchase a variety of items. The stamps create customer loyalty and increased sales for the retailer.
In 1890, Schuster’s Department Store, located in Milwaukee, Wisconsin, was the first retailer to use trading stamps in the United States. This store awarded trading stamps as an incentive to customers who paid for their purchases in cash rather than using store credit. In 1896, Sperry & Hutchinson (S&H) Green Stamps Company opened, eventually becoming one of the most profitable trading stamp companies. The use of trading stamps was not without controversy, and in 1897, a number of merchants who were not using the stamps issued a legal challenge. Trading stamps were deemed illegal by the Court of Appeals of the District of Columbia; however, this ruling was soon overturned.
The early twentieth century brought new opportunities for trading stamp companies to expand their customer base. Grocery retailers had been the primary distributors of the stamps, but as more retailers began to offer stamps, grocers began to give the stamps to all customers, not just those paying cash, in order to compete. Gas stations, a new form of retailer, became another popular outlet for trading stamps.
The trading stamp companies were the most profitable from the Depression through the 1960’s. During the later part of this period, the S&H Green Stamps Company claimed that it was printing more stamps than the postal system. By the mid-1960’s, almost 50 million American homes were saving trading stamps. The number of trading stamp companies skyrocketed to approximately three hundred, creating at least 17,000 jobs and payrolls of more than $500 million per year.
Trading stamps began to decrease in popularity during the 1970’s, as inflation made them too costly for businesses. Large companies began to replace them with preferred customer cards and other rewards programs. In 1988, a study cited lower profits for stores using trading stamps. In 2000, the S&H Green Stamps were converted to S&H Greenpoints, digital points gained by purchases at participating online retailers and grocers, which can be redeemed for rewards. In 2008, Eagle Stamps, one of the last existing trading stamp companies, went out of business.