Retailers have had to work hard to differentiate themselves from the crowd

Retailers have had to work hard to differentiate themselves from the crowd

The retail landscape has been changing at a rapid rate over recent years and retailers have had to work hard to differentiate themselves from the crowd. The rise of digital capabilities has driven a rise in the number of online retailers and increased competition. This has meant that attracting and keeping customers is now more important than ever. So what can retailers do to stay ahead of the competition?

One tool available that helps meet the challenge of the changing retail landscape is giving customers more payment options. Offering different finance options can be a simple and cost-effective way of attracting new customers and retaining current ones. However, it is often overlooked by retailers when they look at ways to improve their offering for customers.


Changes to business rates for bricks and mortar retailers mean it is often difficult for retailers to cut prices in order to beat the competition. However, this doesn’t mean that retailers can’t introduce options that make purchasing easier for customers. For example, point of sale finance can make large items more accessible by splitting the cost of purchase into smaller more manageable monthly payments, thereby spreading the cost of purchase for the customer. Close Brothers Retail Finance research and analysis shows that this can lead to an increase in the value and number of sales for retailers.

Indeed, Close Brothers Retail Finance analysis1 showed that retailers have reported up to a 30 per cent increase in sales when offering finance as an option at checkout. In addition the analysis showed that over half of customers who bought using retail finance would have chosen to buy the product elsewhere if retail finance had not been available. 59 per cent said that they had only bought a product because retail finance had been available.

However, just 5 per cent of SME retailers offer retail finance. This is because many still have misconceptions about what retail finance is for, with many believing it’s not relevant to their customer base. Yet, research by the YouGov has shown that one in three (31 per cent) middle class people, those classed as ABC, could not pay an unexpected bill of £500 in a lump sum without resorting to borrowing. This would suggest British households don’t always have money saved for unexpected replacement of essential items like a washing machine or oven so could welcome the option to spread the cost of big ticket items over a set payment plan to make them more affordable.

Close Brothers Retail Finance research shows that those SMEs offering retail finance reported an increase in sales, with one in seven (13 per cent) saying that it created a demand for more expensive goods.

Retail Finance provides an option for customers to pay monthly over a fixed term – therefore managing their budget carefully with no surprises.

Another misconception centred on debt, is that one in five retailers believe their customers would not want to take on debt even with 0 per cent interest. Consumer debt has been rising over the last few years, but this is largely driven by debt held on credit cards. Figures from the Money Charity put the total credit card debt in the UK in November 2017 at £70 billion. Broken down, this would mean a debt of £2,574 per household and would take an average of 26 years and three months to repay, bearing the average interest, if only the minimum payment was made each month.

Retail finance, meanwhile, offers the customer a fixed monthly payment over a fixed term, preventing consumers from incurring unplanned or incremental debt. By helping customers understand the benefits of paying back debt over a fixed term, retailers can reap the rewards of retail finance as they support customers with the right type of repayment option, that are suitable for their needs.

Retail finance and online shopping

While some people might associate retail finance with just buying big ticket items in-store, for example furniture, it can also be beneficial for high priced online purchases. Indeed, 63 per cent of consumers abandoned their online baskets when an online retailer did not offer their preferred payment method (56 per cent have done the same in a high street shop).

Retail is one of the most difficult spaces for customer retention and loyalty and therefore knowing the customer and providing services that will make purchasing more accessible and that meet the needs of today’s customers is paramount for retailers looking to beat the competition.

Alex Marsh, managing director of Close Brothers Retail Finance says, ‘It’s a competitive space and therefore anything that can help retailers stand out from the crowd will be beneficial. Particularly at cash crunch times of the year such as January, retailers that offer the opportunity to spread the cost of goods will be particularly welcomed by consumers.’

Further reading on retailers

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