By Megan Salzano The COVID-19 pandemic has expanded what the term “flexible shopping” means to consumers today. Long gone are the days when a website and highway sign were enough to entice patrons into the store to shop around for their forever flooring. Now, easy, flexible shopping means everything from mobile design appointments to curb-side pickup and even at-home and virtual experiences. One piece of the puzzle that has always been a staple in the flexible shopping experience is financing. In-store financing options help consumers not only afford their first-choice flooring, but also often expand upon those choices—which means retailers grow their bottom lines.
“Consumer financing is probably the most underutilized sales tool by most flooring retailers,” said Keith Spano, president of Flooring America/Flooring Canada. “On average, consumer financing is used on 5% of sales by most flooring retailers. The best average 35%. We can all do better.”
According to Spano, there are several misconceptions among flooring retailers that lead to the misuse or underuse of valuable financing options that could otherwise help boost sales and grow the business (see sidebar in print edition). With a healthy credit strategy in place, however, retailers have found increased ticket sales, better margins, healthy brand awareness and customer satisfaction and quick and easy funding. The key, experts say, is to bring the financing in house and not force a consumer to rely on typical credit options to make a purchase.
“Average credit card purchases hover around $1,500-$2,000 whereas financed purchases average $6,000—three-times that amount,” Spano explained. “Additionally, our credit lines average $7,000, meaning they instantly have an open to buy for the next project or the ability to trade up to a better product because they know they have the credit. This is an incredible sales tool for the RSA. When you know what the customer has to spend, you’ve won half the battle.”
Spano cited research showing almost half of all Flooring America and Flooring Canada members are involved in kitchen and bath renovations. Financing is especially helpful for these consumers who typically spend $75K-$100K on their kitchen remodeling projects. To that end, he said CCA Global is piloting a kitchen and bath financing program to help close K&B remodel sales and increase average tickets by selling the entire project. “K&B financing is a terrific tool to close remodel sales,” he said.
But it’s not only about growing the business. Smart credit options can also help flooring retailers compete across the board. “Offering financing is critical because we’re competing with every other home fashion and home appliance product out there—all of which promote financing,” Spano explained. “Additionally, flooring is a postponable purchase. That is why we need to offer financing—to make it affordable for consumers to do it now and not put it off.”
FCNews spoke with several flooring retailers who strategize financing within their stores. All of whom agree financing is a key part of their business strategy. “We love offering [financing], and we offer it to everyone and often,” Typhannie Watson, owner, Carpeting by Mike, Somerset, Wis., told FCNews. “We don’t know what their finances look like and you can’t judge people on that when you meet them. We want to focus on the flooring that best fits their needs and wants. The financing option we offer gives them the power to make the best decision for their home and their finances.”
Retailers agree that financing helps increase the overall size of the ticket, which can be to the customer’s benefit just as much as the store owner’s. “They can manage their finances and get what they want out of their flooring purchase—not what they can afford at the time of the purchase,” Watson said. “They might not be able to afford the hard surface and soft surface purchase at the moment, but with the flexibility of payments over time they can get it done all at once and enjoy their new floors.”
Adam Pace, CFO, Metro Floors, Lancaster, Calif., agreed, noting that financing can also be the difference between updating one room and finishing the whole house. “Like most consumers, they look at the monthly payments rather than the total cost,” he explained. “It can be the difference between someone choosing what they love instead of settling for what will get them by. It helps by making larger purchases more affordable to more people. [And] it expands your market in a way which is always going to lead to more and larger sales.”
Steve Weisberg, president of Crest Flooring, Allentown, Pa., concurred, adding, “I positively believe the offer of in-store financing does make a larger purchase more appealing—mainly because most people just don’t have $5,000 to $10,000 available to spend. Spreading the expense to a monthly payment becomes a lot more palatable. That does not necessarily mean a customer will buy more than they planned on, but it gives so many people the opportunity to do something they may have put off because they can finance at 0% rather than dig into savings.”
Weisberg added that in-store financing adds to the store’s bottom line “because we get paid in full once the job is priced out and the application is approved. After that, it can take three to six weeks to get the product installed.”
For Crest Flooring, Weisberg said the store offers in-store financing every day at three different levels depending on the category of product. “Our entire floor covering offerings are set up as bronze, silver and gold (good, better and best),” he explained. “The everyday offer is 12, 18 and 24 months, respectively. Twice a year, for eight-week periods, we offer 36-month financing programs, which have always been extremely well received.”