Retail Observer

RETAILOBSERVER.COM DECEMBER 2014 38 I f you own a retail store, you know that the success of your business is contingent upon your customers' spending ability. However, according to Credit.org, around 27 percent of Americans have poor credit. This staggering statistic has left retail stores suffering as the consumer's purchasing ability is limited based on their cash in hand. Also, trends show that the next generation of buyers is not working to build their credit. Because of these statistics, it is more important than ever for retailers to offer financing to their customers. INDUSTRY TRENDS For small and large businesses alike, this statistic of poor credit means that about one in four shoppers have lost purchasing power. Not only is poor credit an issue, but also, roughly 50 million adults in the United States have no credit files whatsoever, according to USA Today. Retailers are also losing sales because people are not aware of their credit score, and are unsure of their buying ability. In fact, according to Student Monitor Financial Services, 85 percent of college students did not know their credit score when asked. Another statistic from Bankrate.com shows that 63 percent of millennials do not even own a credit card. These millennials will make up more than one in three adult purchasers by 2020. Retailers are losing sales and missing opportunities to succeed because of these trends. The good news: all of these problems can be solved by alternative financing. WHY OFFER ALTERNATIVE FINANCING? The solution to turning customers into buyers is offering financing without a credit check. Termed as "No Credit Needed" financing, retailers can increase their customer base by at least 25 percent by offering this option in their store. Instead of basing lease amounts on past credit history, allow your customers to be approved based on their current income and bank history. With certain credit lenders, customers who make on-time payments have the opportunity to potentially build good credit with primary credit bureaus. In today's economy, retailers offering financing to their customers have a huge competitive advantage over retailers who do not. Retailers who want to increase sales, close more deals, and grow their business should offer their customers a "No Credit Needed" financing option. HOW TO SELECT A FINANCE COMPANY There are dozens of finance companies to choose from, so as a retailer, where do you begin? • Select a finance company that will get you the maximum customer base possible. Because so many consumers have poor credit, and with trends of the future generation of buyers, it is imperative to offer a finance option that does not require credit. • Partner with a company that doesn't pass financial liability on to you. The goal is to grow your business, so don't lose any of your hard-earned money. Select a program that lets you choose how much your store is charged. • Offer a program that gives your customers as many incentives as possible. Give your customers the option to build good credit by using a finance company that reports their payments to a credit bureau. This means more sales and more repeat, happy customers. • Select a company that is accredited by the Better Business Bureau and holds a positive ranking. These rankings are a clear indication as to the credibility of a company and their business record. • Don't limit your expectations for your finance company. Select a company that offers more than just financing. Expect your finance company to become your marketing partner by providing free, customized materials to your store. • Be cautious of finance partners whose parent or affiliate companies also have brick-and-mortar locations. While your rates might be a fraction lower, you may be selling the customer's lifetime value for a small, one-time discount. Select a finance company that will protect your brand and send your customers directly back to your store. Stephanie Probert Guest Columnist Stephanie Probert is the Marketing Manager at Crest Financial. To learn more about financing options visit www.CrestFinancial.com. RO ALTERNATIVE FINANCING: The key to expanding your business

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