As cost-conscious consumers look for easier ways to pay off big purchases over a longer period, retailers not offering point-of-sale finance risk losing out, says Gerald Grimes, managing director of Hitachi Capital Consumer Finance
New research, that the Hitachi Capital Consumer Finance team conducted, shows that retailers which don’t offer finance, both in store and online, stand to lose 44% of potential customers.
Over a quarter of respondents (26%) said they would have gone to another retailer if a financing option hadn’t been available, while a further 18% said they would have thought twice about buying the product.
Only a third would have bought the product the same day.
Our study found that jewellery, healthcare and electrical products are the most affected – with retailers losing a significant number of potential customers when no finance is offered for more expensive items.
What’s clear from these results is that the future of retail is no longer just about product and brand; it is increasingly about the ability to offer flexible financing options to suit the individual.
Point-of-sale finance is giving a boost to the high street. Growth can be encouraged further by making credit options accessible via all channels, giving consumers flexibility to suit their personal finances and purchasing habits. As e-commerce, social media and mobile purchasing evolve, retailers that provide an innovative, omnichannel approach, and a fuller shopping experience, are the ones which will thrive.
A number of household names are already making moves in that direction, with John Lewis, B&Q, DFS and Beaverbrooks all offering consumer lending through Hitachi Capital UK plc – the UK’s leading point-of-sale credit provider, lending over £1bn a year to retailers.
And just last year, Hitachi Capital signed a deal with Amazon to offer new pay monthly options on orders of more than £400. Although US Amazon shoppers can buy on credit with a store card, the UK is the first country in the world where Amazon has offered instalment loans.
With major players like these leading the way, the trend to offer retail finance is gaining traction.
We are not only seeing an increase in appetite for finance options from retailers, customers are also looking for alternative options at the point of purchase. Asked whether the offer of finance ‘heavily influenced’ their decision to buy, 83% of the participants in our research said yes, while 50% said it played a ‘very important’ role.
The study also found a direct correlation – up to 80% – between offering point-of-sale credit and increased sales. In an evolving high street in which consumers are demanding ever more flexibility across all channels, the ability to offer point-of-sale finance is set to increase in influence.
These findings clearly show that the availability of different finance options can transform retail business, enhance bottom-line profitability and increase brand value. Retailers slow to embrace this consumer need risk falling far behind.
Find out more about retail finance solutions at: https://www.hitachicapital.co.uk/retail-finance/
(A Retail Times’ sponsored article)