Nearly everyone has felt the impact of the challenging economic environment. The latest unemployment figures and consumer confidence reports point to continued turmoil for many, including the retail segment.

In times like these specialty retailers in the outdoor, cycle and fitness markets must carefully examine their business and do everything possible to maximize productivity and increase sales opportunities. Customers are not easy to come by these days, and those that do come in tend to hold their money a little tighter. How can a retailer keep store traffic and conversions up in such circumstances?

Consumer financing, perhaps now more than ever, is an important tool for specialty retailers. A financing program can be a key marketing vehicle for your store, because it provides an incentive for consumers to buy and can be a mechanism to track sales data and drive repeat business. When used in a smart way, a financing program can be the hub of the retail marketing wheel.

The fact is people still want to buy sporting equipment. Even in this volatile economy, there are plenty of reasons consumers will make a sports-related purchase.

Pumping Up Flat Sales

There is no secret formula for retail success as a specialty retailer, but there are some key mechanisms that long-term profitable dealers use to keep their businesses humming. Consumer financing is an important component.

A consumer financing program gives you effective ways to promote sales and maintain profitability even during a slow economy including:

  • Increasing consumer buying power
  • Offering additional payment options
  • Creating unique promotional opportunities
  • Driving enhanced profitability

Consumer buying power: There’s often a struggle for a consumer between what they can afford now and what they really want to buy. For sports enthusiasts, the difference may be a few hundred dollars. A financing program can bridge the gap for that consumer to get exactly what he or she wants – the perfect bike, the right helmet, the gear, gloves, etc. The customer leaves your store completely satisfied and you’ve forged a new relationship.

Payment options: These are especially important in an uncertain economy. Consumers appreciate choice and the chance to get the gear they want with six months or a year to pay for it with no interest charges. Offering flexible terms and the ability to make manageable monthly payments gives shoppers the confidence to make the purchase.

Promotional opportunities: Creating interest and excitement is vital for stimulating consumer traffic. Promoting a special, limited-offer financing program will create buzz about your business and encourage consumers to check out your deals. It’s hard to pass up a great offer for an essential sports-related item or service even when money is tight.

Enhanced profitability: Enhanced buying power, payment options and promotional offers all combine to help invigorate sales, both the number of tickets and the size of each. When used properly, consumer financing can put your sales into a higher gear even when you’re peddling through a tough economy.

Steering in a Strong Direction

Retailers who are skeptical of the impact of consumer financing need only to speak with a dealer who is using a financing program effectively.

Jason Reser, owner of Reser Bicycle Outfitters in the Cincinnati suburb of Newport, Kentucky offers a 90-day no interest, no payment plan for purchases of $199 or more. Reser reports,” The customers who finance are all across the board. College students to young professionals to wealthy old riders, there are customers in every demographic group who take advantage of our financing program.” He continues,” The average ticket sale of a purchase that is financed is definitely higher than cash purchases. The customer can upgrade now rather than wait. And we definitely see our financing customers coming back.”

Retailers shouldn’t assume that financing is only for cash strapped consumers. Wealthy consumers with less limited funds appreciate choice and value the opportunity to use someone else’s money for six months to a year.

Ask the Right Questions First

Dealers who are considering adding a consumer program to their marketing program should always ask tough questions of any potential retail-financing partner. It's important to know what sort of approval rates the dealer can expect and the criteria for customer approval.  The retailer should be sure to know all of the costs associated with the program and how much it costs you when offering special financing deals. Extended-terms deals can be great for business, but they will trim profit margin a little, so retailers need to do the math before signing up for any new program.

It is uncertain when the U.S. economy will rebound, but retailers can focus now on making the most of their financing program until that time. If you don’t have a consumer finance program, now is the time to consider in-store financing. If you already offer financing, talk with your lending representative about getting more mileage from it through employee training, promotions and sales analysis.

Maximizing all the benefits of your financing program will help you steer through this tough cycle and emerge stronger than ever.

Dennis Murphy is vice president of sales for GE Money’s sporting goods industry program.  He can be reached at:
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