October 14/21, 2019: Volume 35/Issue 8
By Megan Salzano
Easy, flexible shopping. That is the experience consumers are looking for today, and independent flooring retailers must deliver that experience in order to remain successful in their markets. To that end, payment options such as financing and credit promos are key for any independent flooring retailer looking to succeed.
In fact, according to Synchrony Financial’s 2019 Major Purchase Study, 50% of shoppers reported promotional financing options were important when deciding where to make their purchase. “Retail is ultra-competitive, and with the increase in digital shopping platforms, retailers need to consider how each aspect of their business competes,” said Kevin Cassidy, vice president, lifestyle markets – payment solutions, Synchrony Financial. “For payment options, this is no different. By offering promotional financing options, flooring retailers can provide their customers with the flexibility they desire.”
Financing also helps to make large purchases such as flooring less daunting for consumers.
Steve Weisberg, president of Crest Flooring in Allentown, Pa., noted the benefits of the monthly payments financing affords. “Financing offers a way for a consumer to purchase our products and services on a more affordable monthly basis rather than making a bigger payment at one time,” he told FCNews. “We have found over the past seven years since introducing financing, the vast majority of customers have an easier time com- mitting to the purchase with monthly payments. Financing affords us a new reason for our customer to say, ‘yes.’”
In addition, as retailers continue to struggle with lower ticket sales due to the explosive popularity of vinyl, financing may help lure consumers away from low-cost flooring products and toward the big-ticket options they truly covet. “Financing helps give the customer more options and allows them to make their decision based not just on budget, but also on design tastes and desires,” Cassidy explained. “This is especially critical within the flooring industry, where consumers will experience their purchase for many years. With promotional financing, design and comfort can be a stronger variable in their buying decision. This enhances product satisfaction and encourages repeat purchases.”
Billy Mahone, president of Atlas Floors Carpet One, San Antonio, Texas, added, “I do think that without long-term financing options available a certain percentage of consumers would end up settling on a lower cost flooring option instead of purchasing what they really want.”
In fact, according to Synchrony Financial’s study, cardholders who recently purchased flooring reported spending $1,261 more, on average, than general big-ticket flooring shoppers.
“I use RollMaster Software to do my accounting—it tracks my findings and I can see what my average ticket and margins are,” said Kurt Duitsman, president of Floors For Living with multiple locations in Texas. “If you look at the average ticket for financing compared to Visa or check you can see the difference. Twelve-month financing comes to more than $4,000; 24-month financing is more than $5,000; and 48-month financing is nearly $7,400. Visa is about $2,700 while a check is less than $4,000.”
Jeff Jones, president and co-owner of American Flooring in Yulee, Fla., with his wife Maureen, said he has experienced the same uptick in ticket price when dealing with financing. “People who come in looking for financing don’t have the cash to drop $5K-$15K and they might not want to put it on a credit card with 10%-15% interest rates. But, 12-36 months, no interest? They will take that. They think, ‘I can’t afford $10K, but I can afford a couple hundred dollars a month.’ It does increase the ticket price.”
Beating out the competition is another benefit retailers can expect when taking on special financing. For Mahone, being able to offer his customers long-term financing allows the store to compete with the national chains and big-box stores. “I think a lot of customers who come in are pleasantly surprised when they realize what options are available to them,” he told FCNews. “Having long-term financing options available could be the deciding factor on a consumer choosing your business over the competition. There are even instances where a customer will choose your bid with long-term financing, even though they got a lower quote elsewhere.”
While promotional financing options may help drive business, advertising is a key step in making those promos successful. “When advertised, either as a component of a comprehensive marketing campaign or consistently as an everyday value proposition, promotional financing can be extremely effective at bringing customers into the store,” Cassidy noted.
Weisberg said advertising is a key component of his credit promo strategy. “We constantly advertise financing and promote it in every aspect of our sales approach and price lists.”
For Duitsman, it’s advertise or bust. “I advertise 51 weeks a year, and I advertise financing 51 weeks a year. You’ve got to be out there when your customer wants it. When they are thinking they want flooring, I want them to think about us and financing.”
Special financing benefits, by the numbers
Synchrony Financial recently completed its 2019 Major Purchase Study, the seventh such study it has conducted over the past eight years. Its findings show a direct correlation between consumer spending habits and special financing—an in-store offering keen retailers should provide.
- 50% of those shoppers surveyed reported promotional financing options were important when deciding where to make their purchase.
- 89% of Synchrony cardholders reported feeling promotional financing makes their large purchases more affordable.
- Additionally, and potentially even more critical for flooring retailers, Synchrony cardholders who recently purchased flooring reported spending $1,261 more, on aver- age, than general big-ticket flooring shoppers.
“Consumers show a desire for choice and payment options, and that’s what promotional financing provides,” said Kevin Cassidy, vice president, lifestyle markets – payment solutions, Synchrony Financial. “Of course, depending on the type of purchase and the total amount financed, some consumers may prefer a shorter-term with a larger monthly payment, while other consumers may desire a longer-term and a smaller monthly payment even if that means paying interest on their purchase.”