How tailored finance can help retailers and their customers through the cost-of-living crisis

Written by

Brian Flesk

Head of Retail

Tuesday 8th August 2023

Two people discussing their finances, a notepad and calculator in front of them

Hard times call for smart measures: how tailored finance can help retailers and their customers through the cost-of-living crisis

By Brian Flesk, Head of Retail

The ongoing cost-of-living crisis is an undoubted concern for both consumers and retailers.

There's an increased focus on cutting down: on expenditure in the shops, at the petrol stations, on holidays, meals out, trips to the pub, even, for the most vulnerable, basic things such as heating homes or catching a bus to work.

These strains, complicated by global logistics problems dating back to the pandemic, the looming challenges of Brexit and elevated energy prices due to war in Ukraine, all make for a cost of living ‘perfect storm’ affecting both consumer confidence and household budgets.

With the biggest income squeeze in nearly 50 years, consumers are having to think outside the box when it comes to managing their budgets, meaning flexible finance solutions are really coming to the fore.

Services such as buy now, pay later and interest-free credit are well-established options for consumers. But modern problems call for modern solutions. Solutions that are better adapted to what retailers and their customers need. Solutions that don’t negatively impact a customer’s credit file, and allow for more effective financial management.

Novuna Consumer Finance’s unique package of services includes options for reducing loan repayments, cutting repayments terms, and even applying on different, more affordable terms after being declined.

But why are these so vital to your customers? To understand how and why these services are increasingly relevant now, first we have to understand what’s happening out there in the retail sector - and how the cost-of-living crisis is hitting shoppers and retailers alike.

Sharp inflation and a subsequent cost-of-living crisis has been predicted by economists as an inevitable consequence of returning to ‘normal’ after the pandemic. Very few predicted the exacerbating factor of Russia’s invasion of Ukraine though, and its many knock-on effects on global supply chains and fuel prices.

One of these is that after years of no movement, interest rates are on the way up - most recently to 5.25% - making borrowing more expensive for UK consumers.

It all adds up to a huge strain - on parents with families to support, on vulnerable people already barely coping on low incomes, and on retailers grappling with the double whammy of a sudden drop in spending, and their own rising costs as margins come under increasing pressure.

We all know problems in global supply chains will mean higher costs getting goods to the shelves - evidenced by a steep rise in the UK’s Producer Price Indices (PPI) last year - as well as delays in delivering goods to people’s doors.

As a consequence, retailers are facing the difficult decision on whether to pass those costs on to consumers or take the hit on profits to keep their customers on side.

Major grocers from Co-op and Tesco, as well as non-food retailers have all announced major drops in profits, citing rising inflation as a significant contributor. But of all the sectors affected, big-ticket items such as furniture and electricals have been hardest hit by belt-tightening.

In this pressured environment, retailers need immediate solutions. One of these is to fine-tune their own supply chains for greater efficiency and lower cost.

According to a survey conducted for Retail Week magazine, the number one priority, identified by 42% of respondents, is making improvements to real-time supply chain visibility and data analytics, followed by investments in tech to ensure greater accuracy in stock levels.

Faced with higher costs and eroding margins, efficient supply chain management becomes even more essential to a retailer’s business.

That means greater visibility and oversight of all aspects of your supply chain and warehousing operations, enhanced workflows, better communications, and the ability to identify problems and snags in the system quickly and efficiently.

Improvements and efficiencies like these are essential to any business in straitened times. But in a crisis of confidence and spending, what consumers need are options tailored to their individual circumstances.

That’s why Novuna Consumer Finance offers a suite of unique finance solutions designed and adapted with the retail industry - and its diverse customers - in mind.

We offer soft search functionality so that retailers and customers know with 100% accuracy whether they will be accepted for their preferred credit option before undertaking the full application, saving time and avoiding unnecessary impact on credit files.

We have designed a unique ‘accept tailoring’ service that gives the option of a shorter repayment plan if it’s affordable for the customer, saving them money in interest whilst also reducing the retailer’s subsidy costs.

Conversely, we also offer ‘decline tailoring’ - a second chance to apply for a loan to be repaid over a longer period, thereby decreasing each monthly repayment.

These and many more services allow our retailer partners to offer customers exactly what they need: flexible finance options with low-cost monthly payments, all at the click of a button on their own ecommerce platform, or quickly and simply in store. Many will be using both channels in order to make sure they get the best deal.

Nothing can remove the wider global factors affecting all retailers, and consumers, in 2023 and beyond. But there are ways to mitigate the pressure these forces are placing on your business right now, attracting more customers and helping them every step of the way.

If you’re interested in finding out more about Novuna Consumer Finance’s unique tailored finance options and how they can help your business and your customers’ back pockets alike, speak to the team now on