In-store credit proving to be a boon for retailers

Innovative, tailored programs working best

By Louis Iannaco

Oct. 21/28 2013; Volume 27/number 13

In-store credit is something that has been available to flooring retailers for a number of years. Depending on a dealer’s business philosophy and  comfort level while utilizing these innovative methods, some decided to take advantage of these programs, ultimately benefitting from unexpected sales. FCNews spoke with a few dealers implementing credit options.

Dave Snedeker, division merchandise manager for Nebraska Furniture Mart in Omaha, explained the company offers several credit promotions each month, most of which span 18 to 24 months. “On few occasions throughout the year, we will offer longer terms.”

Because flooring is one of the largest purchases a consumer makes, coming up with such a large amount of money up front can be limiting, Snedeker explained. Therefore, extended terms with no interest are very appealing to many of his customers. “It makes it easier for her to budget the purchase she really wants. Flooring is a purchase that is easier to put off or extend, and this helps her make the decision to buy now.”

Offering smart, innovative ways to help consumers make on-the-spot decisions is the premise behind many in-store credit programs. Joan Cocuzzo, owner of Flooring America of Franklin in Franklin, Mass., said one of the more successful programs she provides is designed for a targeted audience by pairing homeowners who are looking to sell their homes with real estate agents.

“You must be a realtor to participate,” she explained. Usually when a home is being sold, the flooring is very much in need of replacement. “Often, the homeowner doesn’t have the extra money to install new floors that would help the home sell faster. This promotion offers minimum payment until the house is sold—up to one year. We get a floor sale, the realtor sells the house and the homeowner has up to a year to pay.”

Cocuzzo stated the promotion helps houses sell quickly as it allows the homeowner to pay in full once the paperwork is passed. “It works out great and we get a lot of referrals from this promotion—all year long.”

Working with each customer on a tailored program is something in which Don Roberts, vice president of CAP Carpet, a GE Capital dealer with locations in Oklahoma and Kansas, takes pride. He explained that financing has taken a significant decline over the years, mostly due to the loss of the ‘no/no’ programs. “Even ‘90 days, same as cash’ was a big item for us. For the past few years we’ve been running discounts for cash, as people were leery about taking on debt.”

The company is still running cash discounts, he explained. “We’re also using finance programs like a smorgasbord. We ask the following questions: What works best for the customer and her budget? Does she need long-term, low-payment 60-month financing or is she in need of a smaller term, like just 12 months?” In order to meet the needs of each individual consumer, Roberts said CAP Carpet “offers it all, including a cash discount. The customer decides what helps her obtain the floor she desires. We quote each project in its entirety, then explain to the consumer it will only cost her $X per month, factoring the 36-month program. It’s working great.”

Like Snedeker and Roberts, Stephen Lipp, owner and president of Carpet One in Fort Wayne, Ind., another GE Capital dealer, believes in using multiple programs to attract business. “We offer a variety of credit promotions throughout the year. Recently, we’ve implemented a three-year, no interest program which has had positive results. In the past, we’ve offered the 24-, 36- and 48-month promotions.”

The offers that proved to be most effective are those that make it possible for the consumer to pay monthly, rather than in one lump sum, to re-floor her home. “And since they work, I run the finance promotions all of the time, throughout the year,” Lipp said.

As for Roberts, he believes his promotions are working well because many flooring purchases have been delayed for the last few years due to the suffering economy. “We’re finally seeing a good amount of new construction and people are starting the domino process of moving around. Also, the people who have saved money want to keep it in the bank for security and are now financing for items they want, knowing they have the money if needed.”

To attract those consumers who are now ready to buy, Roberts provides financing throughout the year and rotates the offerings with varying monthly payment options and square footage. “We’re currently running a living room, three bedrooms and hall promotion for $79 a month,” he said. “We’ve completed multiple offers ranging from $69 a month to $199 a month. We mix it up to target as many buyers as possible.”