By Joseph Dobrian, Special to Furniture Today
Providers of consumer credit, specifically for furniture purchases, generally sound optimistic about their prospects for the near future. They point to the ever-increasing variety of consumer credit products, as well as greater efficiencies provided by technology, as the driving factors.
They add that the increasing likelihood that a customer will find financing — even with a dodgy credit history or no credit history — make it less and less usual for anyone to go home without merchandise.
Vicki Turjan, president and chief operating officer at Versatile Credit, points out that in the recent past, financing options were primarily seen as a tool to “save the sale,” but with today’s combination of lending products and frictionless access to those products, credit both drives the sale and propels higher revenue.
“The key for retailers is to understand which solutions are suitable for a given situation, accurately measure the success of the program and make changes as necessary,” she said. “At Versatile, we’ve found that there is no single answer to the question of which engagement points are best, as they all serve a purpose at different points in the shopping experience, and may depend on the varied selling processes and technology stacks of retailers.
“We ship as many kiosks today as we did 10 years ago because they serve as incredibly effective tools for generating approved applications. Snap Sign, our Quick Response code-based technology, allows shoppers to apply through the full process on their personal mobile device while providing lenders and retailers with a strong, cryptographic guarantee that the applicant is in-store.”
Another major change comes from retailers’ desire to merge data from their financing programs with other disparate, but related, parts of their technology stack, Turjan said. Her company’s recent release, Versatile Insight, was specifically designed to help retailers quickly and easily view and analyze data from their finance platform with the help of a convenient, adaptable, and user-friendly analytics platform.
“The technology allows retailers to have a better understanding of the day-to-day performance of the financing program while also having the tools they need to identify trends and find actionable insights,” she said. “The uncertainty of the last year has also led many retailers to explore operational efficiencies and explore how their business can make decisions to add value and build scalable solutions and processes.”
What’s in a credit score?
Ryan Slobodian, executive vice president of Snap Finance, points out that particularly in these uncertain times, traditional credit scoring doesn’t always reflect what is going on in a consumer’s life. As more consumers apply for credit, he says, his company can get more granular in finding attributes that can lead to more positive outcomes.
“There’s tremendous power in ‘machine learning’ and artificial intelligence tools,” he said. “Also, traditionally, the application process would be handled at a credit desk by a store associate. Now it’s more likely to be handled by the customer’s hand-held device, and the credit applications are getting shorter. There used to be 40 or 50 fields to fill out. Now it’s about nine, and you have higher completion rates, faster responses, less friction. That all drives growth for our retail partners.”
Slobodian also praises Snap’s SnapExpress program, which delivers a virtual debit card to the consumer, removing the need for point-of-sale integration, thus requiring less manpower from the store.
On April 21, 2021, Snap Finance announced a partnership with Affirm, a transparent alternative to credit cards. Retailers using Snap can now seamlessly integrate Affirm’s additional financing options to capture more revenue from high-intent shoppers and offer alternative payment options to the 40% of consumers who are building or rebuilding their credit profiles.
Snap and Affirm help retailers offer a pay-over-time option that takes into consideration more than a consumer’s credit score when making underwriting decisions.
“Snap is on a mission to redefine who can participate in the alternative payments revolution,” said David Laycock, chief commercial officer at Snap. “With Affirm, Snap delivers more inclusive options for retailers across sizes and categories, helping them build lasting relationships with their customers.”
Consumers can apply for Affirm with just a few pieces of information, without impacting their credit score. Underwriting decisions are made in seconds at checkout, capturing more conversions and offering a flexible pay-over-time option that fits a variety of consumer needs.
A seamless process
“Credit has evolved to become a much more seamless part of the purchasing experience, both in-store and online,” agreed Mike Rittler, head of TD Bank Retail Card Services. “We’ve seen a shift away from shoppers applying for credit in-store by sharing information over the counter.
“We’ve been working to transfer the credit application directly to a customer’s device, whether that’s through marketing prior to the shopper coming into the store or through capabilities like ‘Snap to Apply,’ which enables shoppers to use a Quick Response code to access a credit application on their mobile device while at a retail location,” he added. “Ultimately, the experience must be seamless and must be in the shopper’s hands. Younger generations, as they make up more of the market, will undoubtedly demand it.”
Rittler said he also sees shoppers gravitating to various types of credit products: not only revolving cards, but also installment loans for a single purchase. It has becoming increasingly important, he warned, for retailers to offer a variety of financing options.
More payment choices
Jim Seger, senior vice president and general manager at Payment Solutions and Synchrony, noted that consumers now demand more payment choices, and merchants are responding with flexible financing solutions.
“Today’s consumers are looking for flexible payment options that support budgeting, alleviate stress of purchases, force payoff in a set time, and avoid unnecessary interest,” he said. “Savvy merchants are looking for options that drive improved conversion and trust, attract new customers, increase ticket average and increase loyalty.”
Historically, Seger said, installment and revolving credit purchases were distinctly segmented. Customers would gravitate to installment loans for large purchases and use revolving credit for everything else.
“But now,” he says, “the lines between the two have blurred. Today’s consumers expect more choice in financing, any given price point.”
Equal payments products (EPP) have emerged to support both everyday and larger purchases through a wide variety of equal payment revolving- and closed-end solutions, Seger noted. EPP provides consumers with the added flexibility of equal payments over time, be it short or long term.
“In addition, consumers continue to expect simple, seamless omni-channel experiences with access to financing solutions regardless of when and where they shop,” he concluded. “This shift has only sped up during the pandemic.”
Lease-to-own choice
Progressive Leasing’s chief commercial officer, Mike Giordano, noted that virtual lease-to-own offerings have grown substantially over the past few years as more retailers have become familiar with the products and understand the value credit-challenged consumers can bring to their business. New credit products are giving consumers more choices in how to transact, he says, and smart retailers allow customers to take advantage of these options.
“Several factors have driven changes in the credit industry over the past few years,” he said. “First and foremost is the continued shift towards e-commerce, which has accelerated during the pandemic. In response, retailers continue to strengthen their online experiences and incorporate credit offering and lease-to-own products into those platforms.
“Additionally, consumers are driving the demand for new ways to pay for purchases, which leads to a need for innovation and technologies to help retailers answer that demand,” Giordano continued. “For example, the unique credit challenges facing Millennials — such as student loan debt, delayed entrance into home ownership and other hinderances to building a traditional credit profile — have driven a need for credit products that take into account more than just a credit score when determining eligibility.
“Considering all those factors, retailers that offer lease-to-own and other similar products have a leg up on the competition when it comes to attracting new customers and increasing revenue.”
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Credit options abound for furniture purchasers - Furniture Today
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