Christer Holloman is CEO of Divido, a retail finance platform that allows companies to offer instant customer finance. Here he explains its advantages for independent kitchen and bathroom businesses

For most of us, the money we spend on kitchens, bedrooms and bathrooms is only really exceeded by the purchase of our homes.

But there is no escaping that these significant investments often require a remortgage or homeowner loan.

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And the sad thing is that for many, dreams of a new kitchen or en suite are increasingly delayed thanks to stagnant wage growth, inflation and an uncertain economic outlook.

In Mintel’s report on consumer and retail credit from February this year, 62% of 2,000 adults said they hadn’t purchased home improvements in the past three years.

A statistic like this urges retailers to start thinking about adopting new business models.

It’s really interesting how consumers have embraced subscriptions over the past few years. We’ve been doing it with mobile contracts for so long that it’s become the norm, similarly with purchasing cars.

But now, everything from Netflix and accounting software, to music, fashion and food delivery is offered as a monthly subscription.

This is a really significant shift as we see customers embrace paying for products and services where payments are spread out.

And it’s time for retailers from all sectors to start looking at instalment finance too. It is never about enticing customers to spend beyond their means, but instead giving them the flexibility to bring forward that aspirational purchase.

There are now plug-and-play solutions that allow retailers to offer customers finance at 0% interest, either in the store or online at the check-out. At Divido, when a customer applies for finance, credit checks are run in seconds and when approved, the lender pays our retailer partner upfront and immediately.

In the kitchen bedroom bathroom space, we work with a range of retailers to help them increase sales volumes, including Woolroom, the bedding and furniture company, whose sales have increased by 20% since offering Divido. They too have seen that the average order value from customers using Divido is more than 700% greater than those buying without the finance option.

Credit card convenience

We know that when it comes to home improvements, customers overwhelmingly opt for credit cards. And we also know that they do so because of convenience, even in the face of the additional charges.

You only have to look at Amazon to realise that removing friction in the customer journey leads to more sales.

So that made me think, what if retailers could deliver a finance option that combines this convenience, but at absolutely no extra cost to the customer?

Point of sale finance at 0% delivers a better customer experience, building brand affinity, boosting sales and driving repeat business.

Late last year we surveyed 2,500 of our customers and found that 40% would not have completed a purchase if finance had not been offered.

Of these customers, 36% would have instead gone to a rival retailer, and 18% would have opted to buy cheaper products.

For too long only the largest players have offered finance, but it isn’t that complicated, and it truly delivers results.

Read more financial topics pertinent to independent kitchen and bathroom businesses.