An overwhelming number of UK shoppers would consider buying a product or service through retail finance, but are disappointed by the lack of flexible finance options on offer, according to a new report.
A survey of 1,000 UK shoppers by specialist finance provider Duologi found that 78% said they would purchase through POS finance, which allows merchants to offer their customers a loan backed by a financial lender and the ability to repay it in monthly instalments.
The findings showed that, with £620 the average amount people wanted to borrow, this is a £25 billion lost revenue opportunity for retailers who don’t offer a flexible finance option to their customers.
The POS concept is relatively untapped among KBB independent studios. Over the summer, ex-display reseller Used Kitchen Exchange partnered with Close Brothers Retail Finance to offer customers a number of different payment options.
Helen Lord, Used Kitchen Exchange founder and director, expected a sales uplift of 30% over 12 months off the back of introducing the repayment options, which included 0% interest over a certain period for certain displays.
But others are less keen. Alno dealer Hampshire Kitchens in Alton has been offering finance options through Pegasus Finance for about 18 months, but owner Jerry Craven told kbbreview that it hadn’t been used once.
“It’s advertised on our website and on point-of-sale material in our showroom, but I’m not really comfortable with it.”
He said he doesn’t go out of this way to shout about it. “Our customers don’t ask about it,” he said.
The Duologi results showed that 34% of the survey’s participants would be more likely to spend with an organisation that offers POS finance options, suggesting that consumer spending behaviour could favour the retailer that offers POS finance options.
Almost a third (29%) said they would want to borrow between £1,000 and £5,000 from the retailer for a purchase, while 26% said they would be more likely to spend more than originally planned if they found out they could access a good amount of credit from the organisation.
But 94% of respondents said they wouldn’t think to ask if a merchant offered POS finance.
In the Duologi report, the firm’s co-chief executives Gary Little and John Taylor, said: “Consumer mistrust following the banking crisis, the rise of technology-based industry disruptors and considerable demand for credit have all contributed to an environment in which POS finance can thrive.
“Merchants that offer this service stand to grow their business profits, brand loyalty, widen their customer base and steal market share from rivals.
“What does a good POS finance offering look like? Transparency is key, particularly as so many consumers have had bad experiences of credit in the past. Consumers are also calling out for a range of flexible options, the ability to access funds quickly and through varied channels.
“However, awareness for POS finance is low, so organisations that commit time to promoting their offering can expect to see an impressive return on investment.”