Credit: Financing options benefit retailers, consumers

October 17, 2017

October 9/16, 2017: Volume 32, Issue 9

By Lindsay Baillie


Screen Shot 2017-10-17 at 10.31.11 AMWith competition for the consumer’s disposable dollars heating up in the home improvement retail sector, more floor covering dealers are relying on credit programs to gain an advantage. These financing options not only provide consumers with more flexibility in making their purchases, but they also open the gateway to bigger tickets for floor covering retailers.

According to a recent study by Synchrony Financial—which offers credit programs for retailers and consumers—91% of flooring cardholders said financing made the purchase of big-ticket items more affordable. What’s more, 39% said they wouldn’t have made the purchase or would have gone to another merchant if financing was not available.

For dealers such as Greg Miller, president, Henry’s Floor Covering, Greencastle, Pa., offering credit to consumers is a no-brainer. The flooring store offers two credit options: six months and 12 months. “Our customers find with credit options they can upgrade to better products, do their complete project instead of having to do the project in phases and don’t have to rely completely on their savings. And, at the end of the project we’re paid in full.”

Those who choose to offer credit solutions have found the benefits are mutual for both consumers and retailers. Barrington Carpet, Akron, Ohio, offers its customers 12-month, no-interest credit options from both Mohawk and Shaw. Providing the shopper with various credit solutions, according to the company, helps close sales as well as bring customers into the showroom. “Offering credit is a must in attracting consumers into the flooring market,” said Craig Phillips, president. “Flooring dealers are in competition every day with other markets such as the furniture and electronic businesses. Those industries have traditionally used credit as a closing tool. During the national Shaw and Mohawk sales there are benefits for everyone—longer payback periods for the consumers and finance rate buydowns for the dealers.”

Financing options are also often made more accessible through various buying groups, including Flooring America. “The financing cost is negotiated by [group management] for Classique Floors, which makes it very appealing us,” said Judith Huck, owner, Classique Floors, Portland, Ore. “We also want our customers to be able to purchase from us any way they want.”

It is also important to note that credit programs can be an added bonus for retailers whether or not they have a large number of customers looking for financial solutions. Just ask Deb DeGraaf, co-owner, DeGraaf Interiors, Grand Rapids, Mich., who continues to offer these solutions despite having a low number of consumers requesting credit. “We offer credit all year long and always have a 12-month, no-interest credit option available. We’ll advertise it pretty heavily when there are sales going on with Shaw and Mohawk, and we’ll have on average five to eight customers per sale period take advantage of it.”

For DeGraaf, credit is a necessity for her business because it’s available in other competing industries. “By offering credit your ticket price goes up and it makes it more affordable for customers to spread out the payments.”

One crucial point about offering credit is fully disclosing the cost of financing to the customer. As Henry’s Miller explains: “We’re upfront with our customers that there is a cost to using financing, and most are already aware of that fact.”

Talking to customers about credit and interest rates is part of best practices among most retailers. The retail sales associates at Abbey Carpets Unlimited, Napa, Calif., make sure customers are aware of the high interest charges associated with not paying off the purchase in the allotted time. “This heavy interest could be a negative if you don’t make sure your clients understand the results of not paying it off in full in the time frame of the contract,” said Janice Clifton, owner.

In addition to explaining the terms of a credit card, some flooring dealers require customers to make a specific down payment. For example, Classique Floors requires its customers to pay 10% to 25% down depending on the length of the financing chosen.

Retailers can also take advantage of credit opportunities regardless of their store’s location. For example, Abbey Carpets Unlimited is in a more affluent area yet still has customers who are interested in opening a flooring credit card. “On a fairly regular basis, a customer will choose the financing option, and this often enables her to upgrade her flooring choice or do more areas than she originally intended,” Clifton explained. “Our funding source provides us with the interest-free financing for a discounted rate not too much larger than the upgraded credit cards our customers would normally use. For our store, it provides us with a way to complete a sale that may be more than the consumer is ready to spend right now.”


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