If You Finance Them, They Will Spend

TD Bank survey shows impact of credit and websites on sales

By Alan Wolf, YSN

Consumers are ready and willing to pull the trigger on big-ticket purchases if given the means to do so.

That was the key takeaway from TD Bank’s most recent Retail Experience Index, a bi-annual study of Americans’ shopping habits, especially when it comes to major purchases. The report is based on a poll of approximately 1,000 consumers who made a large purchase — defined as $500 or more for a single item — sometime during the prior year.

Although TD, a new BrandSource partner, clearly has skin in the consumer finance game, the shoppers spoke loud and clear: Nearly half (45 percent) of those surveyed said they are more likely to purchase from retailers who offer store-branded credit cards and other financing options, while nearly 80 percent said the ability to finance affected the amount they are willing to spend.

What’s more, one in five consumers (21 percent) said they had financed their most recent big-ticket buy, and of those, 92 percent said a retailer’s financing program was an important factor in proceeding with the purchase.

“Financing options are no longer viewed as a perk for shoppers when selecting a retailer for their next big purchase, but rather a key differentiator in where they buy these goods,” said Mike Rittler, Head of Retail Card Services at TD Bank. “As consumer preferences vary and evolve, it’s important for retailers to not only offer financing, but a variety of options to meet their customers’ individual needs, and ultimately increase repeat business.”

And apparently, there’s plenty of repeat business to have. Although respondents had already made a big-ticket purchase last year, 70 percent said they are likely to make another big buy by March. Home goods comprised the top spending categories cited by those surveyed, led by electronics and music equipment (43 percent); home appliances (39 percent); furniture (35 percent) and home improvement products (35 percent).

Elsewhere in the poll, shoppers underscored the importance of maintaining a customer-friendly e-commerce site. Nearly a third (31 percent) said the retailer’s website was the biggest influence in their decision making for their last major purchase, marking the first time in the Index’s history that the online channel proved more influential than brick-and-mortar stores.

The changeover was no doubt spurred by the pandemic, as 81 percent of respondents said they had shifted all or a portion of their shopping online since the outbreak of COVID-19. And, as AVB’s Chief Marketing Officer John White predicted at BrandSource’s 2020 Convention, the new shopping behaviors are becoming permanent, although physical storefronts will continue to play a key role.

Specifically, 32 percent of consumers said they expect to do more of their shopping online in the future, while 41 percent said they prefer to browse and research products online and then make their purchases in-store.

 “The shopping experience is evolving, and retailers are tasked with providing their customers with a fully integrated, cohesive experience that easily translates from online to store,” Rittler added. “Many retailers have invested in contactless financing, virtual showrooms and robust online customer service to provide the most seamless and safe experience possible across channels.”

Not surprisingly, the survey also found that availability of inventory has become a competitive differentiator for retailers amid the ongoing supply chain woes. Fully 91 percent of consumers said they are more likely to make a major purchase from a retailer with faster delivery, and only 13 percent said they are willing to wait one or two months to receive their order.

The complete TD Bank retail report is available here.