By Emily J. Cappiello
One of the most important ways to increase floor covering sales is credit. When the economy dipped, consumers had a hard time getting credit, but now that consumer spending has increased, credit lenders like GE Capital, TD Retail Card Services and Wells Fargo are ensuring retailers have the means to create blossoming sales.
Private-label credit cards are one way retailers offer credit to consumers. “It gives the consumer an unencumbered line of credit that doesn’t impact her ability to use her Visa/Mastercard/Amex in her daily life,” said Marc Sczesnak, president of Mahwah, N.J.-based TD Retail Card Services, the private label credit card division of TD Bank N.A. “A private label card also provides lower-cost financing and longer-term payment options than a bank card.” He added that financing plans, such as no-interest programs from six to 60 months, can help a consumer pay less in interest and obtain a manageable monthly payment that enables her to make larger purchases.
Sczesnak said some consumers who desire a high-ticket item may hesitate to make the purchase with their bank card because they do not want to incur high interest rates. Others may have too limited a credit line to purchase pricier goods on their bank cards. “With a private label program, floor covering retailers can extend an additional line of credit to qualified customers that does not interfere with the spending limitations on their bank cards.”
There are many benefits for the retailer as well. For example, Sczesnak said a private label credit card program differentiates that dealer from the competition. “A credit program also provides retailers with marketing opportunities they don’t receive with universal cards. Examples include statement inserts and messages that can be included every month; loyalty programs that help drive business; special financing promotions that enable the retailer to drive higher sales, and database marketing opportunities that can be used to focus campaigns and get more bang for the marketing buck.”
There are many options when it comes to determining which lender is best. For example, retail groups like Abbey Carpet and Alliance Flooring turn to Wells Fargo. Wells Fargo’s Flooring Solutions credit program offers services that meet both dealer and consumer needs. The Flooring Solutions program is customer centric in its special-terms promotions while offering dealer-centric features such as pricing. In addition, retailers can choose from 12-, 18- or 24-month, no-interest promotions.
Large companies like Shaw and Mohawk offer lines of credit to retailers with an emphasis on its aligned dealers during the past two years. Both companies have a strong connection with GE Capital. Mohawk boasts more than 1 million consumers holding private store credit cards with about $5 billion in credit lines. In addition, it offers Mastercard/Visa processing through Chase.
Aside from specific programs, flooring manufacturers are ensuring retailers have the necessary physical tools when the consumer applies for credit. As an example, Shaw teamed with Versatile Systems and CitiFinancial to place easy-to-use, in-store kiosks in retail locations. “In this challenging market, it’s more important than ever to make the credit application process simple and accessible,” said Scott Humphrey, director, Shaw Flooring Network.
In addition, some major flooring companies like Shaw and Mohawk are teaming up with Blue Tarp, a credit provider specializing in business-to-business credit management services for the building materials industry. Consumers can use Blue Tarp privately to apply for a line of credit, encouraging more customers to apply on the spot in a flooring store. “If a consumer is denied credit, it is a private matter and not an embarrassing or awkward situation for the sales associate or buyer,” Humphrey said. “If approved, it encourages her to make the purchase at that store.”
Distributors also offer lines of credit, which can serve as either an emergency line or just another way to continue the flow of goods into a retail store. In 2012, the industry’s No. 1 distributor, J.J. Haines, cut off its partnership with BrandSource and will be working directly with GE Capital to bring additional lines of credit to its customers.