What were blue chip stamps?

Blue Chip Stamps were a unique form of customer loyalty program used primarily in the early to mid-20th century. Department stores would issue stamps to customers as an incentive for paying with cash instead of credit. Customers collected these stamps in booklets and, once filled, could redeem them for various prizes such as furniture, jewelry, or other goods 1 2 3.

The program evolved into a more structured business when it was decided that the stamp service could operate independently, allowing customers to collect stamps from multiple stores and aggregate them for better rewards. This created a system with significant float, meaning the stamp company held large amounts of money over time as customers gradually redeemed their stamps 1 4.

Blue Chip Stamps became a dominant player, particularly in California, and attracted the interest of notable investors like Warren Buffett and Charlie Munger. Their investment strategies leveraged the float and the underlying value of the Blue Chip Stamps company effectively 3 5.