By Adam Kirkby, above, Head of Sales, etika
The recent mini-budget announced by the UK government reflects a dramatic shift in the economic policy environment that has been seen across the world. Unsurprisingly, market researcher GfK has reported that economic and personal financial confidence both fell to their lowest levels since 1985.
During the summer, Deloitte reported that UK consumer confidence was at a record low of -19% in Q2 2022 as a result of the rising cost of living. As consumers’ money goes a shorter way than before, they must be more careful with how they manage their monthly budgets.
With that said, despite low consumer confidence, there is still a very valid need for people to purchase big-tickets items of value. Consumers are adapting spending behaviours in line with significant economic changes and in some instances, that means delaying payments or dividing them into more attainable monthly sums.
For small and medium retailers, facing an increasingly competitive market, risking dramatic falls in sales in Q4 and beyond, there is a challenge to remain relevant while selling big-ticket items particularly against larger competitors. Offering payment options is one way smaller retailers can differentiate themselves while also supporting the needs of their customers in our current landscape.
Providing accessible payment opportunities
Today’s consumer is used to having options at every touchpoint and this shouldn’t end at the checkout regardless of the size of your business. However, at a time where trust in the economy is at an all time low, financing options do need to be adequately vetted, and shown to be fair and flexible. As the buying power of the British Pound becomes more constrained, consumers need to feel secure in the affordability of the purchases they are making.
Small and medium businesses exploring the ways that they can make the payment process easier for their customers are going to be best placed to service these customers moving forward. Providing a flexible service allows customers to break down larger prices into monthly repayments and buy what they need, when they need it without the implications of having to raise the total lump sum immediately.
With that said, navigating a financially oppressive landscape while keeping consumer wants and needs at the forefront of operations is not an easy task. As inflation continues and the economy remains uncertain, more will seek consumer finance to secure the items they love and need. Done in the right way, this should not harm consumer credit or well-being but how can retailers be sure of that?
All flexibility is not equal
The number of consumer finance options available are increasing quickly due to customer needs. But while it’s great to have options, businesses should be mindful that not all are created equally. There are some key factors to consider when choosing the right payment platform.
Walking the tightrope between enabling purchases and means testing for affordability can mean that some platforms fall short. It is important to find finance partners that prioritise responsible lending practices, and leverage technology to offer bespoke financing that fits the budgets of each customer.
Partnering with regulated providers allows shoppers to be confident in their buying decisions with the knowledge that their financing solutions are protected within a regulatory framework. Retailers can rest assured that their customers’ experience remains frictionless through their finance offering.
Transparency is another important component within consumer finance. It is imperative that finance is affordable, so being upfront about fees or any potential costs that could be overlooked is crucial. The right provider will ensure that there are fair finance options to support the needs of the customer. The retailer will need to ensure that any additional costs are communicated in a clear and concise way.
Ultimately, retailers who can offer more personalised solutions to finance are more likely to stay ahead of the competition. The aim is always to give the customers the products they want, with finance they can afford and this will be different for every individual. Providing an experience that involves better processing and vetting of customer information will support consumers in the best way possible, leading to a more positive interaction and enhanced customer satisfaction which is crucial as you grow your business.
While providing flexible finance options should certainly be the aim for smaller ecommerce businesses focused on bolstering consumer confidence, it remains critical that they choose the right payment options. These options will need to be robust enough to contend with a buoyant but still uncertain marketplace amidst regulatory and economic changes. Shaping a partnership with providers that speak to the consumers needs will help stabilise the purchasing tightrope and mitigate against the risk and impact of an economic downturn. For both customers and retailers.