Playing The Right Cards Can Strengthen Dealers' Hands

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A soft economy can be scary for retailers, especially small- to medium-sized chains. Consumers get very price-sensitive, which often benefits national superstores that have more buying clout.

But there's no reason spongy economic conditions should translate into panic. Smart retailers can thrive in such conditions if they know what marketing buttons to push.

Today more than ever, consumers are looking for attractive financing options. When it comes to appliance and electronics sales, special financing deals have become a make-or-break issue.

With the support of a finance partner, even small retailers can offer big opportunities to their customers. In fact, at GE Consumer Finance we've found that aggressive financing options can help create demand and bring new customers into stores, and retailers don't have to carry the credit risk.

Private-label credit cards are one way to energize consumers. Research shows that customers with private-label cards have a higher degree of loyalty to the issuing store, and they typically purchase more than they would with a regular credit card.

By offering a private-label card, retailers build their store's brand image — putting them on equal footing with bigger competitors. And by working with a finance partner, the retailer has access to attractive programs, such as deferred-interest or no-interest deals. The marketing information gleaned from these types of programs is priceless, because it allows stores to zero in on their best customers with promotional mailings and special offers.

From an accounting standpoint, adding a private-label card is easy. In fact, it simplifies life for accounting departments and customers alike. Whether it's by phone, fax or the Internet, retailers can keep their program running smoothly by investing just a few minutes each month. Customers can check credit balances and make electronic payments if they choose. And the best news is the finance company does all the work.

Business-to-business financing also helps the regional retailer in a sluggish economy. A finance company can help ease cash flow problems with a private-label revolving charge or net invoice program. Inventory financing options also can help retailers keep adequate inventory on hand to attract customers.

For example, GE's scheduled pay and pay-as-sold financing options allow retailers to receive extended terms from a manufacturer to better match their payment terms to their sales cycle. These are options that help retailers weather the slow months without reducing stock.

Creative financing to manufacturers is another way to buoy the regional retailer during an economic slowdown. With credit from a financing partner, manufacturers can offer extended terms to retailers. When "net 30" isn't enough, the manufacturer can offer an additional 30, 60 or 90 days by financing either the inventory or receivables. In this case, the financing company takes the credit risk and solves the aging receivables problem for the manufacturer.

Many manufacturers now use aggressive financing as a way to leverage their dealer channels. Special "from the manufacturer" financing offers to the consumer are very attractive to everyone. They provide incentive for the customer, build store traffic and move merchandise for the manufacturer.

Financing should be seen as a flexible marketing tool. The proactive use of financing programs can keep customers interested and enthusiastic, even when news on the economy is less than positive.

Options translate into opportunities for retailers who are in a position to make the most of them.

Mark Begor is the president and CEO of GE Consumer Finance-Americas.

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