2019 Financial Roundtable: Dollars and Sense
Dealerscope: Please give us your quick take on the status/current health of the retail industry.
Chad Lyon, Managing Director, Wells Fargo Commercial Distribution Finance: At Wells Fargo CDF,
we are seeing positive trends specific to our business and I think it’s because the retail environment seems to be pretty healthy. Heading into 2019, it started off how we expected but I do think the government shutdown added an element of uncertainty followed by new questions on individual tax refunds. However, based on our internal data, our credit lines remain in good ranges and the feedback from customers on their business is optimistic.
Eric Christensen, VP Payments Fraud & Financial Services, Digital River: We live in a world where people, technology and the general pace of life are continuing to move at a rapid pace, and now more than ever the ecommerce experience must keep up with that pace to meet shoppers’ demands for an easy, seamless buying experience. As e-commerce continues to become a more important lifeline for brands, businesses are inevitably becoming global. As a result, it is key for brands to deliver localized experiences for their customers to ensure they capture as much revenue as possible.
Chris Garrido, President, SmartPay/Tempoe: The retail industry has seen an overhaul in recent years in how it works to attract, retain, and grow new business. Customers expect more from retailers, with 53% of customers preferring to shop brands they can interact with via social media and complete their transactions online. This trend is compelling retailers to pivot their sales techniques and digitize their shopping experience. With an eye on innovation, TEMPOE has set a course to meet these challenges and become THE OBVIOUS CHOICE in alternative financing using technology as its driver.
Dealerscope: What major trends are you keeping an eye on with regards to the products/services you offer to retailers?
Lyon: CDF is a specialized division within Wells Fargo that offers inventory finance for companies, many of whom are retailers. We need to closely follow a variety of trends because we create customized financial solutions for our customers. However, specific to inventory finance lending, we monitor trends that have an effect on a retailer’s inventory levels. For example, we see a few macro drivers in the market currently; consumers expecting same day/next day deliveries from ecommerce purchases, retailers improving the shopping experience with more products on display – we work directly with our customers to address inventory levels and position them to be able to react to the changing consumer preferences. We strive to stay current with the market to ensure we are supporting our customers as these trends continue to drive consumer demand.
Christensen: Two key trends Digital River is watching closely are focused around consumer protection and e-wallets. In terms of consumer protection, GDPR, PSD2, and tokenization are all positioned towards protecting buyers and reducing fraud in ecommerce. Meanwhile, the increased adoption of e-wallets continues to be more prevalent around the world. PayPal and Venmo are growing their customer base every year, and Apple Pay and Google Pay continue to make strides into the e-commerce space and will be key payment vehicles in the next couple years.
Garrido: As companies become more agile, they are looking to connect with customers more directly through their online shopping experience and adapt their eCommerce platform to fit the individual shopper’s needs. We partner with retailers to create the desired online shopping experience, allowing retailers to offer a leasing option online and in-store, all while delivering the same personalization, optimization, and affordability customers have come to expect.
TEMPOE provides greater bandwidth through our seamless POS integrations that enable retailers to offer leasing as an option upon checkout and decisions within seconds. Our application process is simple and supported up by sophisticated decisioning models. ‘No credit required’ means just that; and is perhaps the most critical element for a long-term strategy and financial viability in the tertiary market.
In addition, we have implemented new mobile offerings, such as our Text-to-Apply, which gives consumers an opportunity to learn their eligibility within a few clicks, saving time for themselves and our retailers.
Dealerscope: Short of having your team do on-site training with retail sales associates, what advice would you give to retailers to ensure that their sales teams are properly and effectively presenting your services to their customers?
Lyon: Since we work business to business, we do not do on-site training for sales associates but we do offer a program to our customers called CDF Connect, which is an educational series that shares insights on topics relevant to running their business: such as succession planning and financial statement analysis. We address broader audiences at buy fairs or vendor meetings.
Garrido: Sales associates are on the frontlines; they are the driving force in sales and should be knowledgeable on all of the payment or leasing programs offered by the store in order to drive a positive customer experience and repeat business.
Based on our extensive relationships with our retail partners, we are discovering that, in many cases, consumers are opting to bypass traditional credit offerings: either they want to forego the possibility of a rejection or they want to escape the credit inquiry or trade line put on their credit reports, so they choose our leasing solution instead.
To capitalize on the customers desire for alternative payment options, we encourage store associates to focus on basics: 1) Welcome every customer that walks into the store; 2) Ask each customer “what brings you in today?”; and 3) Show them the product selection. Sales associates then need to: 4) Remind customers early in the sales process of all the promotions that are currently being offered; and finally 5) Inform them of all of the ways that they can pay – including any lease options. Interested customers will ask for more details about the financing options that best fit their situation.
In addition, we implement proven marketing initiatives and rewards programs that focus on driving repeat business back to our retailers. Our efforts continue to drive lease volume for our partners year-over-year with many of customers coming back for another lease.
We understand that questions will come up from your sales team and customers alike. Our retail support and customer service teams have been transformed over the past 18 months. As a retailer/customer-centric, service delivery culture, we are fulfilling our responsibility to our retailers and partners as an extension of their business, giving TEMPOE added momentum.
Dealerscope: What the biggest challenge that your industry faces and how are you working to address it?
Lyon: Our biggest challenge is finding new and innovative ways to support the ever-changing demands the independent retailer faces. We have supported this market for decades through many cyclical and economic cycles and we continue to challenge ourselves every year to find new areas to support our customers.
Christensen: Some of the biggest challenges our industry faces are around security and the increased pressure to handle consumer data in a responsible manner. Additionally, consumers today are looking for a seamless buying experience no matter where, when and how they shop. It’s critical for ecommerce providers to offer consumers local currencies, payment methods, and languages that will help provide seamless and successful ecommerce transactions. Merchants must focus on maintaining consistency across channels, ensuring quality support services, and incorporating new technologies to stay ahead of consumer buying and shopping habits.
Garrido: The leasing industry has seen significant growth, in part due to low unemployment and strong consumer confidence. With the consolidation of some key players, and possible acquisition of the smaller providers, the landscape will continue to evolve in the tertiary financing space.
With this continued expansion, one of the key challenges will be economic stability of the leasing partner. Retailers expect a quality partner as larger shares of their business are gained by a leasing component.
Dealerscope: What's your outlook for the remainder of 2019?
Lyon: We think the market will remain relatively healthy. Unemployment is low, wages are growing, and consumer confidence is generally high. We expect a modest growth rate in our financing activity for the rest of the year but are always prepared for the unexpected.
Garrido: TEMPOE is on a great trajectory. Our outlook going into 2020 is tremendous as we see exponential growth this year. We have the best clients in retail and will continue to attract and retain quality partners.
Our clientele continues to expand their platform to mobile, eCommerce, and all manners of shopping to meet their customer’s needs. With strong partnerships and collaboration with key retailers, TEMPOE has been able to provide consistent and stable revenue streams, which has allowed us to secure the necessary capital to support our growth for many years to come.
TEMPOE continues to develop new products and solutions that allow for expansion and engagement, not only to meet demands in a changing retail market but to stay ahead of the curve and become The Obvious Choice for both our retailers and their customers.