Finance companies anticipate no surprises for 2020

HIGH POINT — Providers of financing options for retail purchasers of furniture say they’re not worried about the effect of the 2020 Presidential campaigns on their business nor on consumer spending.

They agree that they provide services that are calculated to help the consumer in any economic climate. Moreover, they say, furniture is less of a discretionary purchase than, perhaps, a new car or a vacation — and thus the sales of it are relatively unaffected by current events.

A panel of consumer credit and lease-to-own vehicles recently responded to a list of questions from Furniture Today, about the outlook for 2020 in relation to the current political situation.

 

Furniture Today: Looking forward to 2020, do you anticipate that the presidential campaigns will cause any disruptions in sales? Why or why not?

“To assess the retail outlook, you have to go back to axiom that it’s always about the economy,” said Ryan Slobodian, executive vice president of Snap Finance. “No matter which candidate or party is in the lead, as long as the economy rolls along, people will continue to buy.

“It looks like the international trade disputes are being resolved, and we may see greater consumer appetite next year, as concern over tariffs dissipates,” he added. “Retailers have been doing a good job of keeping costs down, but inevitably the tariffs have flowed through to the consumer a little.”

Steve Surman, vice president of sales and marketing at Progressive Leasing, said, “Uncertainty is inherent in any election, particularly if there is a change in administrations. We’re not expecting any material changes in the foreseeable future, but we’re watching closely.”

Mike Rittler, head of TD Bank Retail Card Services, notes that major election cycles always result in a period of uncertainty that’s felt in various parts of the economy. In uncertain times, he says, consumers may change the way they spend their money, particularly when it comes to big purchases like furniture.

“Offering financing is a great way to attract and retain customers,” Rittler said. “Our recent survey at High Point Market found that more than half of furniture retailers view financing as a means to encouraging customer loyalty, driving repeat business and growing sales.”

A Synchrony spokesperson reported that the political situation — and the presidential campaign in particular — will not affect the company’s strategy or performance.

“Synchrony is a leading consumer financial services company that delivers customized financing programs across many industries including retail, health, auto, travel and home,” said the spokesperson. “We support the home industry in many ways — including furniture, decor, flooring, appliances, windows, consumer electronics, home improvement and more — by extending $12 billion in buying power to Americans annually.”

 

Furniture Today: Can consumer financing mitigate election year sales disruptions?

“In the most recent election cycles, we have not seen much change in consumer spending,” Slobodian asserted. “People continue to fill their day-to-day needs, and as their furniture wears out, they replace it. Furniture is a necessity and has a certain lifespan. Unless something significant happens in the economy, we don’t foresee any great change, and usually, a change of President is not a big influence.”

With the uncertainty that may come in an election year, affordability could make the difference for customers who are wavering about a big purchase, Rittler said.

“Financing is a tool that can help consumers see the possibility of affording a purchase where they otherwise might not have,” he pointed out. “By offering financing options, retailers give customers payment flexibility. This reassures consumers that acquiring furniture is possible at a price they can afford, which always helps drive sales.”

 

Furniture Today: Do you find that consumers are more or less likely to use financing for their non-essential purchases (such as furniture) during a presidential election year?

“This isn’t something we’ve looked at in detail,” Surman admitted. “However, most of our customers use our lease-purchase option for essential purchases in election years and non-election years alike, and many consider furniture an essential purchase.

“You need a comfortable bed and a solid night’s sleep for a productive day, or a sturdy kitchen table around which a family can enjoy meals together and kids can complete their homework,” he added.

To the extent that fiscal policy differs by candidate, Surman noted, some uncertainty could arise until the situation solidifies. However, he expects more stability once the public has a handle on what’s coming next.

“Our bigger concern,” said Slobodian, “is that we’ve been on a winning streak for 10 years now, coming on the heels of one of the worst recessions in history. Some people worry that the next recession will have a capital R, too, but most economists I talk with think that if we have a recession, it will have a lower-case r.

“Recessions are natural; they happen. Once people realize that, they’ll steam along. We’re excited for the holiday season. We’ll see lots of activity among our retail partners.”

Rittler noted that offering the product isn’t the whole battle. Once you get the customer in the door, he says, it’s what else you offer your clients that can help close the sale.

“Understanding your customers’ needs — and offering financing that makes sense for your industry — can make you the retailer of choice for the customer time and time again,” he concludes. “This is true especially in uncertain times, but also in your sales process overall.”

 

Furniture Today: Are you offering new products, services or policies that furniture retailers and customers might appreciate?

“We recently launched TD Complete, a waterfall application and sales processing platform hosted by Versatile Credit,” Rittler said. “Using the platform, retailers can instantly approve customers by providing access to financing options from multiple lenders at once, providing the greatest coverage of the credit spectrum, all available in a single, streamlined interface.

“At the Las Vegas Market, only 27% of furniture retailers surveyed by TD offered waterfall financing,” he added. “This indicates to us a need for further awareness and education of this option, which is something we are implementing with our retailer clients. Leveraging waterfall financing will allow retailers to approve more customers for financing options and, in turn make more sales to those customers that need the flexibility of payment that financing offers.”

Surman said, “Progressive Leasing works with more Furniture Today 100 retailers than any other lease-to-own provider. In addition, Progressive offers an e-commerce plugin that allows online retailers on any platform to begin offering a lease-purchase option to customers in less than an hour.”

Slobodian said Snap Finance continues to focus on end users, to ensure that they’re treated with respect and dignity.

“Snap now has a solution for credit-challenged individuals that works in all 50 states — including Wisconsin, New Jersey and Minnesota, the three states that don’t allow lease-to-own arrangements,” he reveals. “Snap Loan, a 12-month plan, is a different product that mirrors lease-to-own, and provides a solution for those states.”

“Our investments in technology across multiple platforms — in-store, online and mobile — allow us to engage customers when and where they want,” said the representative from Synchrony. “By advancing our technology platform, we continually provide partners with a seamless front-end experience, which is increasingly more important as the technology revolution transforms retail.”

Earlier this year, Synchrony launched the Synchrony HOME Credit Card: a no-annual-fee credit card designed for people who want a dedicated credit line for all their home-related purchases. The card is accepted at more than 1 million retail locations nationwide and across the Internet.