Consumer finance | SHOPFLOOR ANALYSIS


OFFERING FINANCE: THE PROS AND CONS


The car industry makes extensive use of consumer finance but the KBB industry has never fully embraced it. With tough times looming, Toby Griffin looks at the options available and asks KBB retailers why they do or don’t offer it to their customers


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f you’ve bought a new car in the past five or 10 years, there’s a very good chance that you bought it using finance offered by the dealership. In fact, around 90% of new car purchases in the UK are now made using finance in one form or another, so it seems that car buying has moved from something that is saved up for then bought outright, to a product that is paid for monthly.


The link between purchasing cars or kitchens and bathrooms has always been an indirect one, but there are strong similarities. The prices vary hugely depending on specification. They are sometimes bought as a distress purchase, but are generally bought as a luxury. “A family saloon is similar to the price of a kitchen,” explains Helen Lord, founder of Used Kitchen Exchange. “The car industry is streets ahead of the kitchen industry when it comes to selling. We have a lot to learn from them.” So what then, with car purchases being nearly always on finance, does the kitchen and bathroom industry – in particular the independent sector – are


November 2022 ·


the reasons behind their reluctance to add it to their sales armoury?


What is consumer finance? First things first, let’s explain what is meant by the term ‘consumer finance’, and what forms does it take? According to the Finance and Leasing Association, consumer finance is “a form of lending that provides credit to a consumer for personal or household use. It comes in many forms, [including]... hire purchase, conditional sale and personal contract purchase plans, personal lease plans, secured and unsecured personal loans, credit cards, store instalment credit and store cards”. With respect to the KBB


industry though, it is generally used to spread the cost or delay the outlay of a purchase through


three main types: i) interest-free credit – normally for a period of one to five years, ii) ‘buy now, pay later’ – where payments generally start after a year, or iii) a standard interest-bearing loan with fixed-rate interest. According to price comparison website Kitchen Compare, “most kitchen retailers offer a number of flexible finance deals to help you spread the cost. While many people don’t hesitate to shop around when it comes to finding the best price for their kitchen, we recommend you also take a good look at the finance plans available as these can make all the difference to your final decision”.


The car industry is streets ahead of the kitchen industry when it comes to selling. We have a lot to


learn from them. Helen Lord, founder, Used Kitchen Exchange


The use of the word ‘most’ in Kitchen Compare’s assessment seems surprising. Having worked almost all of my 20 years in the industry in the independent KBB sector, I know for a fact that it is rare to offer finance, or even be asked by customers for it. A search on the internet for retailers offering finance packages brings up B&Q, Homebase, Ikea, John Lewis, Magnet, Wickes, Wren, Bathstore, and Easy Bathrooms; big-name internet traders such as Victorian Plumbing, Victoria Plum, and AO; franchise operation The Kitchen Depot, even high-end retailers such as Tom Howley. So, overall, and


with a few notable


exceptions, this seems to represent the majority of the bigger outlets in the entry-to-mid- sector of the KBB industry.


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