IER-JAN2010-PG26-31.2:Layout 1 24/12/2009 11:43 Page 27
Reviews from the top
DOMESTIC AND GENERAL
The last year has proven to be an interesting market for warranties at retail point of sale,
particularly as it has fared very well in the otherwise turbulent retail environment. In fact, one
could say it has fared well because of the turbulent markets.
On the negative side, reducing sales volumes of TVs and major domestic appliances
meant less potential warranty customers coming through the door. Thankfully this
decline was balanced out, and in many retailer stores actually overcome and improved
upon, by increased conversion rates. While fewer people are buying major electrical
purchases, those that do are more likely to purchase a repair plan at point of sale. So
why is this?
Firstly, many of today’s TV and domestic appliance customers are making distress
purchases rather than considered upgrades or the wanton spending sprees of previous
years. In a distress purchase scenario the customer probably has a pile of dirty washing
at home or ruined food from the freezer in the bin or a family irate that they have no TV.
In this case they will be far more responsive to the peace of mind, both emotional and
financial, that a warranty can offer them into the future.
The second major reason for increased conversion rates is the economic climate
itself. Whether customers are making new, distress or upgrade purchases the uncertain
outlook means that they will have a weather-eye on the future and the longevity of their
purchase. Again this makes the customer much more responsive to the benefits of a
three or five year repair plan, particularly if it doesn’t add cost to the purchase price
Lee Miller
today. D&G’s 10-month payment terms and ongoing pay-monthly plans have seen
exponential growth in the last twelve months as customers want the benefits of a
Director of Retail Sales
warranty without adding more to their credit card bill on the day.
The third and perhaps most pertinent reason for the increase in warranty sales
conversions is the actions of the retailers themselves. With reduced turnover, incremental sales are a vital ingredient to keep retail
shops on the High Street alive, and the reduced footfall means retail staff have longer to work on their sales pitch to the customer.
D&G’s warranty sales training program has seen unprecedented demand in the last twelve months from retailers really looking to
make profitable warranty sales a major part of their business.
The take home message from 2009 and the continued tough market dynamics is that warranties will play an ever more important
role in the High Street marketing mix throughout 2010.
January 2010 TheIndependentElectricalRetailer 27
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