With customers facing record inflation and wages failing to keep up the pace, many are craving more flexibility to pay for goods and services within their monthly budget, while merchants are having to deal with the consequences of the macro-economic environment – so it’s crucial to find payment solutions to match, writes Deko’s Irina Bordea …
This rise in cost of living has had a profound impact on both high street and online retailers, who are seeing customers abandon baskets in record numbers as they aren’t provided with the appropriate means to pay for their desired goods – including furniture.
This year has seen furniture prices soar by +16.8% compared to 2021. The industry is at risk of losing out on sales if support, such as flexible payment solutions like buy now, pay later (BNPL) are not put in place to help retailers and customers during this difficult time.
To be able to better support their customers, retailers must act now to enhance their platforms and provide financial flexibility or options. By providing different payment options at checkout, retailers will be able to secure sales and customers will be able to confidently make purchases within their budgets.
When money is tight, traditional payment methods such as debit and credit cards sometimes aren’t the right options for customers, who are often balancing spend limits with the cost of living increase, or fear interest rising on credit card bills. Many shoppers are instead looking for retailers that are able to provide them with alternative payment methods that allow them to cover larger basket size purchases while splitting the payments over a period of time suitable to them.
This need is shown by the growing BNPL market size, with over 17 million people in the UK using a form of the service last year. Customers with more freedom to spread their costs are able to manage their finances in sums that best work for them.
There is not one universal retail finance solution for retailers, with the landscape varied and sometimes difficult to navigate. Furniture retailers should understand the myriad of options available to them in the market – and the best ones for their customers.
Every retailer has different needs depending on the price point of the goods and services they provide, with traditional retail finance offerings – or existing BNPL solutions – not always the right solution.
Multi-product, multi-lender platforms are avilable which cater to baskets of various sizes, providing retailers with bespoke repayment options. This way, businesses offering services like home improvement or furniture can select the option which best matches their product range and business model. This is especially beneficial when customers think twice about making one-off payments in tougher financial periods.
Some payment solutions can confidently back baskets up to £25,000 and for up to 60 months. By using a provider backed by multiple lenders, retailers can be assured that customers have the best chance of qualifying for credit and being matched with the right lender to finance their purchases. This in turn helps customers buy more of the things they want, allowing businesses an opportunity to maximise their checkouts. A multi-lender approach can increase basket acceptance rate by an average of +26%, and in some cases as much as +45%.
A recent UK study found that the rate of basket abandonment among mobile, tablet and computer services shoppers in Q1 of 2022 was averaging at 77%. Equating to more than three in four customers failing to convert on their desired purchases, millions of pounds worth of sales are lost every year. By providing a range of payment solutions at checkout, businesses can help reduce their basket abandonment.
By integrating with a payments solution provider that has deep experience in the furniture industry, businesses can also help their customers navigate through these difficult times and enable them to buy the furniture and household goods they need to maintain a good quality of life. By automatically matching customers with the right lender during the purchase journey, the approval rate of applications for finance is increased – offering relief to both businesses and customers.
At a time when household budgets are squeezed, offering such payment solutions can make a real difference in people’s lives, allowing customers to buy the necessities they need for their home while enabling retailers to continue to thrive.