Consumer financing makes better goods attainable

By Mason Knight, YSN Contributor

If you are flying in for the Las Vegas Furniture Market at the end of the month, take a moment to look down from the window about 20 minutes before the plane lands. That tiny blue spot in the middle of all that desert is Lake Mead. 

Once overflowing with Colorado River water, Lake Mead has been drying up over the last few years. The surrounding rocks and mountains show telltale signs of the lake’s former abundance.

So it is with consumer bank accounts over the last two years. There was a flood of money from various stimulus legislation. Combine that with over a year with nothing to buy and nowhere to go. The result is that U.S. consumers had a full-on faucet of cash flowing to their bank accounts. Savings rates were in the 20%-of-income range for much of 2020 and early 2021. 

The floodgates opened last spring and shoppers drained their savings for long-awaited purchases and vacation trips. With a little bit of luck, you got your beak good and wet in that steady stream.

Then the free cash stopped. Inflation happened and gas doubled in price and the new anniversary gift became a dozen eggs and a gallon of moo juice.

The retail world is at a point with lots of goods to sell, a somewhat normal supply chain and shoppers with merchandise needs.  It’s just that they don’t have a lot of scratch in the sock drawer.

But there is a 20th century solution to a 21st century problem.  You don’t even need to dial a rotary phone to use it.  It’s good ol’ consumer credit.  You know, that thing that made Sears, JCPenney and every automobile company great. Buy now, pay later. 

I travel to, and competitive shop, retail stores just about every week. Payment per month is almost completely forgotten, and I haven’t heard a sales associate present a credit offer since 2015. Sure, offering credit costs you money. It costs money because it makes money.

Offering credit simply makes big-ticket merchandise affordable. Your shopper doesn’t have to take $1,199 out of the bank to buy a mattress. They only have to give you $99 today and $99 a month for 12 months.

See: If You Finance Them, They Will Spend

Simple 12-month, no-interest financing can also help your shopper enhance their enjoyment of their new bed. The shopper that is on the fence about upgrading to an adjustable base can now pay cash for their mattress and then finance a nice base at about $69 for the next twelve months. If they want to add on those super cool pillows, chalk up another eight to 10 bucks.

That same 12-month finance offer can help your shopper avoid the pitfall of buying the cheapest mattress and expecting heavenly sleep. Their $499 or $599 budget (or, gasp, $399 budget) becomes a nice down payment on a $999 bed with the balance paid off at $30-$50 a month. Less than their cell phone, designer coffee or cable bill.

Offering financing can be costly to the retailer. Especially at the 48- to 60-month charge of around 18%. In simple math, your $1,000 sale nets you around $820. But one-year equal payment charges are around 4.85%, or about two-and-a-quarter more than your bank card processor is charging. That’s $25 bucks to make a $1,000 sale or upgrade. I’ll take that amount in this economy every day of the week.

RelatedCash Back from BrandSource Financial

Offering and processing credit is easier than ever. Everyone likes no-cost financing. Rich people stay rich by using other people’s money. Most shoppers get an approval decision in minutes.  The largest consumer finance sources are giving the OK to over 90% of applicants. Initial credit lines for mattress shoppers are over $4,400, immediately giving your shopper more leverage to buy better goods. The average first purchase for credit shoppers is about $300 better than cash buyers.

Lots of shops are advertising 60-month free financing. The hoops and hurdles are pretty high for the average shopper: $4,000 minimum purchase with 25% down. You may not want to advertise 12-month financing, but it is an excellent closing tool.

Start with quoting the first price your customer asks about in both dollars and dollars per month. For example, “This bed is $1,199 or $99 a month,” or “You can get the adjustable base, pillows and protector for $899 or $75 a month.” Your shopper will let you know if they are cash customers or want to enjoy the convenience of budget payments.

Another start is to show the cost-per-month on every mattress in your store priced between $599 and $2,499, based on a 12-month term.

Consumer credit built our economy. Lee Iacocca of Chrysler fame started his career at Ford Motor Co. by offering a base model car for “$50 a month in 1950.” For the next 50 years retailers and manufacturers created brand loyalty and provided billions of dollars of goods that improved customers’ lives.

It may be the right time to look back to the past to keep moving your business forward.

Mason Knight consults with home furnishings companies that want to further develop and grow their sales and profitability. Contact Mason care of

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