Financing encourages consumers to buy now

Home Inside FCNews Financing encourages consumers to buy now

Volume 26/Number 25; April 29/May 6, 2013

By Jenna Lippin

Spring is one of the most popular seasons for home remodeling and rejuvenation. As such, it is a time when manufacturers and retailers stage promotions with the intent of incentivizing the consumer to purchase.

One successful strategy is offering special financing, which allows consumers to spread their payments out over a period of one to four years. Not only does this boost foot traffic, it also drives higher average tickets. Customer satisfaction and referrals also increase when payment options are available.

GE, which has provided consumer financing for more than 80 years and has served the flooring industry for 25 years, said financing is mutually beneficial for consumers and retailers. “For customers, financing gives them more choices, including the flexibility to get the flooring they want, be more selective and obtain better quality products,” said Stephen Roe, general manager, floor covering, GE Capital Retail Finance. “For retailers, it is a business-building tool, enabling them to sell more flooring with a wider range of options at affordable prices. Ultimately, this leads to greater customer satisfaction, loyalty and referrals.”

Shaw Floors is currently holding its The More You Buy, The More You Save sale featuring Caress by Shaw Floors. Running through June 3, the promotion features a 12-month payment program with deferred interest, allowing each retailer to determine if he requires a deposit for purchase, which is made using Shaw’s GE-sponsored credit card. “[Shaw’s] program with GE Capital allows retailers to offer promotions from six months to 60 months based on consumers’ needs,” said Kay Wiley, Shaw’s financial benefits coordinator.

Like Shaw, Mohawk is also offering special credit features during its Love Your Floor event. The annual promotion runs through May 13, and is offered exclusively to Floorscapes and ColorCenter retailers. In terms of financing, there are two offers available through the promotion: no interest financing until January 2016 or payments over 18 months with deferred interest. Monthly payments must be made against the principle. Both special finance offers include a credit buy down for retailers, who may individually decide what type of down payment is required.

Floor covering retailers are also using credit offers to entice consumers this spring. Specifically, they are promoting deals that include special financing and zero interest. For example, Coles Fine Flooring, with six locations in the San Diego area, is currently highlighting no interest on purchases paid in full within 12 months.

Similarly, Bob’s Carpet Mart is holding a spring sale at all 15 of its Florida stores. Financing programs are offered “for every budget” on both hard and soft surface products. Consumers can apply for a Bob’s Carpet Mart credit card and, if approved, may take advantage of 0% interest for 12 months on purchases of $500 or more.

The major buying groups also generally offer financing incentives during the spring selling season and this year is no exception.  Carpet One, for example, will run its Sweet Dreams promotion between May 13 and June 30 around the launch of its Tigressa Cherish product. “Generally, our members find that offering financing with a promotion is one of the most valuable things they can do,” Jessica Corea, vice president of marketing, Carpet One Floor & Home, said. “It leads to higher average tickets. We find the 36-month financing offer does the best for us. When we have a large national promotion like this one, we will often buy down the financing for our members, which gives them even more incentive to pass this on to their customers.”

Case in point: Between January and May of 2012, Cummings Carpet One Floor & Home signed 21 more customers onto GE Capital’s 36-month, special financing offer than it did in 2011. Cummings confirmed that the average ticket price of those consumers selecting the 36-month special financing offer at his store was $5,000.

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