Brian Flesk, Head of Retail at Novuna, talks about the benefits of furniture finance and how it can help boost sales.
UK households purchase over 24 billion pounds worth of furniture and furnishings each year. It’s a thriving, yet competitive sector and furniture retailers are rightly looking at ways to stay one step ahead.
While customers often first research their planned purchases online at the start of their buying journey, they also seek physical touchpoints in-store prior to committing to a purchase.
Therefore, implementing an effective omnichannel strategy where the customers’ purchase experience is as frictionless as possible is key.
Benefits of offering furniture finance
One of the key ways retailers can outperform competitors is by offering customers the chance to spread the cost of their purchase.
Point-of-sale finance plays a crucial role in attracting and converting browsers into buyers, while also helping to enhance average transaction values in the process. Finding ways to differentiate is particularly important for furniture retailers, as many physical stores are situated in retail parks where multiple competing retailers are vying for customers.
As one of the UK’s leading providers of retail point of sale finance, working with over 200 furniture retailers including some of the high street’s biggest brand names through to niche online ecommerce retailers, we’ve seen business volume across the furniture sector increase YOY, up to 6% in 2023/2024. This is thanks, in part, to 0% finance continuing to rise in popularity which makes up 94% of all finance transactions in this sector.
Boost sales
The option to pay using interest free credit can be a valuable marketing tool, driving footfall in-store and traffic online, accelerating purchasing decisions and converting sales.
It allows customers to spread the cost of their purchase, which can give them access to a big-ticket item that they might not otherwise be able to afford.
There’s no reason for customers not to take interest free finance as they won’t pay a penny more than they would if they’d paid upfront. It just gives them extra breathing space and an opportunity to spread the cost. Our own data shows 53% of furniture customers cite finance solutions as the key reason for completing the purchase of a big-ticket item.
Increase average transaction values
As the customer will be spreading the cost rather than having to find hundreds or even thousands of pounds upfront, they often also feel more comfortable upgrading their purchase or adding an extra item to their order all while adhering to their monthly budget.
Indeed, within the furniture market, Novuna data reveals that 41% of customers state they spend more on furniture items when finance is available, confirming the crucial role point of sale finance plays in enhancing average transaction values for retailers.
Through our max loan product, customers have the opportunity to understand their full borrowing potential. This gives furniture retailers an ideal upsell opportunity, as customers can automatically access additional finance without needing to reapply.
So, rather than limiting themselves to one-off purchases, they may wish to undertake entire makeover projects for their homes. That’s ideal in today’s current climate, when customers may be opting to stay put and focus on investing and renovating rather than going all-out on a new property purchase.
Reach more customers and avoid abandoned baskets
To address the decline in discretionary spending of recent times, we’ve rolled out a unique package of smart, bespoke credit options, with numerous tailoring options, empowering furniture retailers to create tailored finance deals for their customers.
Our soft search, instant decisioning and unique loan tailoring options accelerate purchasing decisions and minimise customers from abandoning a potential sale at the final stage of the transaction process.
With the immediate availability of soft search, customers can check their eligibility for finance with no impact on their credit report. They’ll shop with more confidence if they know they’re going to be accepted for their preferred finance option.
Our unique tailoring functionality can also turn declines into accepts by suggesting a lower loan amount, longer term or higher deposit. Or we can lower the cost of borrowing by reducing their loan term. These bespoke options not only allow customers to create a payment plan that suits them, but can also enable retailers to benefit from lower subsidy costs.
Strengthen brand loyalty
Good experiences stay at the forefront of a customer’s mind when making another purchasing decision.
Offering finance through a reputable provider strengthens brand loyalty with existing customers, giving them yet another reason to return when they’re shopping for a new piece of furniture.
Supporting retailers to create a great customer experience at every touch point is why Novuna recently won Best Finance Provider in the Big Furniture Group Awards and our award-winning customer service is accredited by the Institute of Customer Service.
With signs of consumer confidence returning as inflationary and cost of living pressures ease, ensuring retailers have the right tools in place to meet consumer demand will be vital in order to stay one step ahead in the furniture sector and drive sales in a flourishing, yet competitive market.
