High-tech retail credit systems gaining ground
August 19, 2014,
The Hive, a touchscreen tablet computer mounted in a housing for countertop use, is one of the retail credit technology delivery options offered by Versatile Credit.
Among the advantages: Today’s systems can quickly handle what was once a time-consuming job, and can be more comfortable for the consumer and the sales associate.
“The main reason we went to it was to make credit more accessible on the floor. There’s also a privacy factor,” said John Schultz, president of Erie, Pa.- based retailer John V. Schultz.
For about 18 months, the store has been using a LendPro system in kiosks on the sales floor. Customers can enter their information privately and find out how much credit they have available, even before they start shopping.
Such systems, from Lend- Pro and from other providers including Versatile Credit and NewComLink, also can help retail salespeople avoid awkward situations. If consumers find out they’re denied credit by a primary lender from a computer, the salesperson doesn’t have to deliver the news.
However, the news often isn’t all bad. A customer denied by a primary lender can be rolled to a secondary financing source. Some stores, including John V. Schultz, also are offering a rentto- own option for consumers that also are denied by secondary lenders.
Schultz said his company has “gotten a lot more aggressive” in finding a financing or RTO option that will work for customers. “We’re not walking so many people with credit problems,” he said.
“It’s all about incremental sales,” said Mike Herschel, executive director of Furniture Marketing Group, the High Point-based buying group of primarily large furniture stores, of which John V. Schultz is a member. FMG recently went with LendPro as a recommended retail technology provider, and more of its members are expected to adopt the system.
Herschel said customers with good credit already know it. But those who are “on the bubble” can benefit from quickly finding out what they qualify for, and stores can capture sales from that group.
Jeff Byal, chief financial officer of NewComLink, said that’s a key advantage of his company’s technology, which retailers can use on a variety of devices and can link with a point of sale system.
“We are a financial technology platform that has a full spectrum of financing options,” Byal said. Primary lenders on average deny about 50% of credit applications, and the NewComLink system is aimed at offering options that include secondary lenders and can also include rent-to-own.
He added that NewComLink can move quickly if a store’s roster of lenders changes, without having to involve the retail salespeople. This is especially important in the secondary market, where the lineup of lenders isn’t as stable as it is in the primary market, Byal said.
Versatile Credit, another provider, also says it has plenty of credit options with about 19 primary and secondary credit sources. The company also offers a variety of hardware options, including standard kiosks and a countertop model called The Hive that debuted earlier this year, and is described as a tablet computer inside an enclosure.
Versatile, whose parent company is Versatile Systems, also offers up some statistics in comparing its electronic credit application and approval process to the more classic paper application process. The company says stores using its kiosks typically see an increase in credit applications of 20%, with declined applications reduced by 40% because of the quick availability of alternate credit sources, and an increase in retail transaction size of 15%.
John Schultz said he’s happy with the results of his Lend- Pro system, but noted that the turndown rate is actually a little higher — because it’s so easy to apply, more people with questionable numbers are “fishing” for credit, he thinks.
But Schultz adds, “The salespeople like it. It frees them up.”
Whether the electronic retail credit technology is right for a store might depend on its sales approach, however, according to longtime retailer and financial consultant Marty Grosse. Grosse, who with his wife operates a San Antonio-based home furnishings information site for consumers called Furniche.com, said some stores may want salespeople involved with customers as they work to extend credit, because it builds the relationship. And the retailer may want its back office staff to be involved as well.
“I think it depends on their selling strategy and philosophy,” Grosse said.
But customers at Becker, Minn.-based Becker Furniture World stores seem to appreciate the privacy, and retail salespeople are happy to let consumers deal with credit availability on their own, using the retailer’s Versatile Credit kiosks, said Tiffany Erickson, business support manager.
“It’s kind of plug and play so you don’t even have to think about them,” she said.
She said Becker has used the Versatile system for six or seven years, ever since it was recommended by the store’s primary lender, GE Finance. And the kiosks only handle GE credit — while Versatile can accommodate secondary lenders, Becker hasn’t seen the need for any, Erickson said. In fact, many of the store’s customers have saved up to buy furniture and only need credit for part of the purchase.
Like many stores, Becker also offers a financing application on its website, although actually extending finance requires that the consumer present ID and sign a form at a store.
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