Credit is easier than product, say lenders
By Joseph Dobrian, special for today’s furniture
HIGHLIGHT — Credit and leasing service providers continue to broaden and deepen their offerings to home furnishings consumers. The current challenge, they tell Furniture Today, is not the availability of credit, but the timely supply of products.
There’s not much that these vendors can do to address supply issues, but they make it easier for customers to pay for furniture that ends up in their homes.
“The pandemic has prompted greater demand for financing,” said Mike Rittler, managing director of TD Bank Retail Card Services. “According to our survey, 78% of consumers who used financing for their last purchase said that the ability to finance affected the amount they were willing to spend, and 92% said it was an important factor in proceeding. to their purchase.
“In general, the consumer is in a strong financial position and experts do not expect access to credit to be affected by inflation or other market factors in 2022,” Rittler continued. “It’s important to meet consumers where they are and create consistent experiences across in-person and online channels. TD continues to expand its “Instant Request” capabilities to its retail card service partners. This allows in-store customers to initiate a finance request on their smartphone by simply pointing their camera at a QR code. »
Curtis Howse, executive vice president and CEO for home and automotive at Synchrony, said the acceleration of digital transformation – like the evolution of points of sale and shopping journeys – has created new expectations. in financing, to which Synchrony responds in several ways.
“Our most recent biennial study on the major purchase journey illustrates the changing nature of buying furniture,” he said. “Ten percent of shoppers have never visited a physical store. The use of mobile devices for product research has exploded, with 93% of shoppers using a mobile device, up 37% from last year. nearly three-quarters of consumers surveyed said financing makes larger purchases more affordable, 78% said they were comfortable financing through a retailer-specific credit card; and 51% look for financing options when making major purchases.
“To meet these new expectations, we’ve accelerated contactless features and increased digital capabilities, including direct-to-device, pre-fill, and text-to-apply.”
At Wells Fargo Retail Services, Senior Vice President – Relationship Management Steve Jermier noted an ongoing trend of spending on home improvements now that more and more people are working from home. Recently, he has seen price increases create renewed interest in financing.
“We believe the move to a more digital shopping experience is here to stay,” Jermier said. “In the furniture industry, digital capabilities haven’t always been a priority, but today it seems to be at the heart of every conversation we have with our customers. Our job is to create a simple and seamless online financing experience and do everything we can to leverage that same technology in stores.
“The changes our customers will see this year will be geared towards an even more streamlined way to integrate our digital capabilities into their business,” he added. “Supply chain continues to be the variable that none of us can pin down. As a result, we have extended authorization periods for nearly all of our customers and programs impacted by supply chain constraints.
According to Vicki Turjan, president of Versatile Credit, post-pandemic second look loans have proven to be essential in building a comprehensive and resilient financing program for retailers.
“Versatile Credit was in the process of developing our contactless finance app technology, Snap Sign, in late 2019,” she said. “The technology was originally designed to provide retailers with a simple and secure way to deliver a seamless transition experience to mobile. As shoppers and retailers became more security conscious and adoption of QR codes increased , Snap Sign was perfectly positioned to provide a new self-service funding option and enable merchants to move the funding process to consumers’ mobile device.
“In-store,” Turjan continued, “we’ve seen growth in our storefront licenses, which give retailers the flexibility to use Versatile’s technology as well as their own devices, to provide financing.”
Versatile’s recent changes include dynamic cascading routing and the transition from lender-specific solutions to solutions designed to integrate with the merchant’s existing sales processes and technology stack.
“Retailers who focus on brand loyalty through the use of revolving lines of credit from their financial partners are winning with an increase in repeat purchases as customers focus on their homes,” said Mark Denman, president of Genesis Credit. “When COVID-19 surfaced in 2020, credit approvals tightened due to the unpredictable situation. Once the economy began to stabilize and consumers started shopping again, credit approvals increased to pre-pandemic levels.
“Our Second Look product closely mirrors the programs you get from a prime lender, so your customers with less than perfect credit still get a premium-like experience.”
Genesis Credit has worked to accommodate retailers and consumers by extending authorization times for retail partners due to supply chain issues and increasing lines of credit for consumers due to inflation, Denman said.
“The pandemic and supply chain issues have not directly impacted us as a financial solutions provider,” Denman noted. “Good communication between the retailer and the customer, regarding any delays, is vital.”
At Snap Finance, Executive Vice President Ryan Slobodian is looking forward to “a 2018 or 2019 environment” this year.
The supply of commodities is far greater than the supply of money, he said, and there is plenty of the latter available. So many customers are willing to settle for substitutes for inventory that doesn’t show up, just to get furniture into their home.
“Inflation is an obvious concern,” Slobodian said. “This could have negative effects on consumer behavior. The average shopper might have less money for non-essential purchases, which could pinch demand a bit.
“We see a continued need for omnichannel solutions and we continue to release products that enhance that experience: hybrid solutions, so we can likely bring new solutions to people with credit issues as online growth continues to eclipse physical activity. We continue to improve our presence in e-commerce.
Koalafi’s vice president of sales, Craig Leffew, pointed out that the oldest Gen Z customers are now 24 and starting to spend more money on home furnishings. The younger generation is cautious about using credit cards, he noted, so they are embracing financing as an alternative.
“These consumers grew up in the age of on-demand internet and smartphones, and they expect funding to be a seamless and convenient process,” Leffew said. “With Koalafi, buyers from all credit backgrounds can answer a few simple questions from their phone and get an instant decision on a pay-over-time product that’s right for them. They also see clear and simple terms in advance, before agreeing to anything. It is this kind of frictionless and transparent funding experience that is required.
“Last fall, we launched a unique financing solution that allows merchants to offer one of the widest ranges of financing products to customers with great or no credit, all through a single application,” said continued Leffew. “With Koalafi, retailers can meet almost any customer’s financing needs through one provider and one app.”
People who acquire furniture on a financial lease are not forgotten. According to Mike Giordano, Chief Commercial Officer of Progressive Leasing, nearly one-third of U.S. consumers can be considered underserved by traditional credit systems, and the lease-to-own potential of this group is more than $30 billion. dollars per year.
“Retailers who understand how to tap into this vast pool of potential customers by offering flexible and transparent payment options are ahead of the competition when it comes to capturing this potential addressable revenue,” he said. he declares.
“The concept of flexible payment options for consumers has taken the retail world by storm and is expected to grow in importance. Customers are now looking for retailers that offer the ability to pay for goods with flexible and accessible terms, such as buy-it-now or buy-it-now-pay-later options. »