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GUEST COMMENT Point-of-sale (POS) finance – The changing face of the retail industry

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Point-of-sale (POS) finance has been a core part of the retail landscape for many years, as one of the best and most convenient ways for consumers to get their hands on purchases they might not otherwise have been able to afford. In fact, recent research from Barclays Partner Finance found that more than half of POS finance users would not have been able to make their purchase if finance hadn’t been available.


However, as times get tougher for the high street, and in an increasingly competitive retail environment, savvy merchants should be on the hunt for ways in which they can improve their existing POS proposition, in order to get their products into the hands and homes of a greater number of consumers.


Changing consumer preferences


One of the biggest factors behind the recent growth of POS finance is the fact that consumers have become much more comfortable with monthly payment models. Much of this is due to the rise of the so-called ‘subscription economy’, characterised by the growth in demand for on-demand and subscription-based access to goods and services – whether that’s quick and easy transport, through apps like Lyft and Uber, or online music streaming services like Apple Music and Spotify.


As these kinds of services become the norm, people are changing the way they think about ‘ownership’ – moving away from up-front payment in full, and towards pay-to-use and monthly payment models. Where previously the idea of purchasing an item or service ‘on finance’ might have seemed risky, the changing perception of ownership means that a growing number of people are opening up to the opportunities that POS finance provides.


Taking POS finance online


The growth of online and mobile shopping has led to consumers becoming much more tech-savvy, and convenience has become the most highly sought-after factor when deciding where to shop, and how to pay. As a result, the aspiration for both retailers and finance providers has to be to make the experience of paying with POS finance as slick and easy as paying with a card. At the same time, both we and our clients understand that the processes underpinning that experience need to be robust, using the most up-to-date and accurate information to make responsible lending decisions.


Today, new technologies are allowing retailers to streamline their online finance offerings, and make them more efficient. For example, it is vital that retailers optimise their online POS finance journeys across all devices, in order to give consumers the quality of experience that they are coming to expect from other parts of their lives.


Retailers should also consider deploying digital tools like finance calculators and soft-search eligibility checkers, which are great ways to help customers understand how much they are likely to be able to borrow, empowering them to make more informed decisions about product specification. At heart, it’s all about putting the customer in control.


Supporting in-store purchasing


However, POS finance isn’t just for online retailers. One trend that brick and mortar stores are particularly well-placed to take advantage of, and where POS finance can be especially relevant, is the growing market for connected and ‘smart’ devices.


Consumer interest in smart household goods is on the rise, with shoppers looking to invest in a growing number of state-of-the-art items such as heating devices, doorbells, lighting, white goods and smart security. According to research by PWC, up to £10.8bn will be spent on smart home devices in 2019.


While much of retail has moved online, when it comes to buying fridges, ovens and washing machines, many people still prefer to go to bricks and mortar showroom to see in person how things look, feel and work. That presents an opportunity for retailers, who can use the physical environment to bring to life the interplay between these new connected devices in a much more engaging and hands-on way than in the online environment.


We also know that over 80 per cent of consumers choose POS finance to allow them to make bigger, higher-quality purchases, so the connected goods market – where price points are typically higher – is an area of retail where monthly payment models can be really effective in driving sales. Therefore, retailers with connected devices should maximise awareness of their POS finance offers by investing in in-store advertising and staff training, in order to capitalise on this trend.


POS finance is no secret to retailers looking to grow sales and increase their customer base. However, as consumer attitudes towards ownership continue to evolve, at the same time as technology is delivering slicker and more personalised experiences, retailers should reconsider the role that POS finance plays in their sales journey, and whether they are using it to its full extent for the benefit of both their business and its customers.

 

Author: Richard Brassey, head of retail, Barclays Partner Finance

Picture credit: Fotolia

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