Transamerica Distribution Finance's Eric Lindblom is concerned that a possible end to the Fed's interest rate cuts will "pose a challenge to electronics and appliance industry efforts to stimulate sluggish sales."
Lindblom, senior VP/GM of Transamerica's electronics and appliances group, volunteered several issues for electronics/appliance retailers to consider when shopping around for a financial provider. He stressed, "After 30 years in the business, I am convinced that one of a dealer's most important decisions is the selection of an inventory-financing provider. Servicing an industry as variable as ours requires resources, flexibility and experience to effectively deal with the fluctuations of the market."
Those electronics/appliance retailers that are looking for a financial provider should look for a variety of qualities in a prospective company, Lindblom said, a wide variety of vendors and distributors being a key feature. "With a larger base of vendors from which to select, dealers can stock — and supply to their customers — a wider array of product lines and SKUs."
When shopping for a financial provider, "just in time" purchase of goods isn't always right for all types of retailers and most types of products. A prospective provider must have a "comprehensive understanding of the industry" so it can design "dealer financing programs to match" the retailer's market and cash flow, he said.
The just in time strategy "is not always the best method to capture all allocations of the hot product at the right time to insure store traffic and profits," Lindblom said.
He added that more manufacturers are beginning to offer extended interest-free periods to dealers, a la the new wave of similar deals in the car business. For retailers this means "lowered costs and dealers choosing to stock goods. And while financing isn't generally included in a manufacturer's core competencies, an inventory finance company specializes in financing goods. This means it has a better understanding of the management risk tolerances across a more diversified dealer base, and can offer more flexible repayment terms for the dealer."
Other important qualities that Lindblom urges retailers to consider when looking at financial providers are:
- Experience in the industry, both as a company and the prospective account exec that will handle the retailer's business;
- The availability of electronic data interchange (EDI) and other online technologies from the financial firm, which will increase productivity and cut costs.