DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
For some consumers, retail finance products can make the unaffordable affordable 2
Store cards are often taken out as they provide an instant discount on a product 2
Store cards are priced higher to reflect the more relaxed lending conditions 2
Many retailers offer co-branded credit cards which have become increasingly popular 2
Store installment credit has proven to be more popular for non-standard consumers 2
Mail order credit is useful for those who do not have the time or capability to visit the shops 4
The market for traditional mail order has suffered as consumers move online 4
The relationship between retailers and finance houses favors the retailer 5
The arrangement process for retail finance products places much of the exposure to risk on the finance house 5
The relationship between retailers and finance houses gives retailers the incentive to continue to push these products 6
Retailers tend to focus on one relationship with a finance house 6
Retailers seek to dictate which financial product should be used 6
It is important for finance houses to stay informed about the retailer's activities 7
There was an improvement in the fortunes of some retail finance products in 2008 and 2009 7
The recession has seen an improvement in the fortunes of the three retail finance products 7
The value of outstanding balances has risen for mail order and store installment credit 9
Store card lending has continued to decline despite attempts to attract more business in 2008 10
The average rates on store cards have risen over the last four years 10
Santander has the largest share of the store card market in terms of number of cards issued 11
The Duet Network has the highest average balance per store card 12
Store card advertising soared during the early part of the recession as providers saw a revenue opportunity 13
Store cards holders are more likely to be female and young to middle-aged 14
Store cards are more popular in the higher household income brackets 15
The majority of consumers with a store card have one that is active 16
Households with medium to high income are generally more likely to have active store cards 17
The mail order finance market is dominated by a few players 18
Shop Direct Group has maintained its leading position in the mail order market 18
Agency sales have continued to decline during the economic turmoil 19
Mail order providers try to encourage multiple purchases through their advertising strategy 19
Store installment credit has seen the strongest relative performance during the recession 20
There has been some change among the main players in store installment credit over the past couple of years 20
Store installment credit gross lending spiked in December 2009 as shoppers looked to beat the VAT hike 20
Store installment credit will remain important for as long as people make impulse purchases 20
Important trends have emerged in the retail finance market 20
Co-branded credit cards have taken share from the store card market 20
Some retailers have abandoned co-branded credit cards and are trying something different 21
Retailers have switched their emphasis onto monthly payments from interest free deals 22
Many of the customers most likely to get into arrears have passed through the system 22
Retailers have taken measures to deal with the issues posed by fraudulent behavior 22
With retail finance products continuing to decline, the future lies in co-branded cards 23
There is little incentive for retailers to take the business in-house 23
The mail order market is going niche 23
Regulation of the store card market is likely to have a detrimental impact on future growth 24
A move to ban POS store card payment protection insurance could have an adverse impact 25
There may be a move to online application for store cards 25
The economic environment will have an impact on the performance of the retail finance market 25
As the market recovers from the recession, borrowers will return to credit products with lower APRs 25
The retail finance market is likely to undergo some changes in the future 26
Some retailers may completely drop store cards in favor of credit cards 27
Retailers may also look to provide other financial products to consumers 27
APPENDIX 28
Supplementary data 28
Definitions 30
Balances outstanding 30
Gross advances 30
Non-standard 30
Store installment credit 30
Mail order 30
Store cards 30
Further reading 31
Ask the analyst 31
Datamonitor consulting 31
Disclaimer 31
List of Tables
Table 1: Summary of advantages and disadvantages associated with installment credit 3
Table 2: Average balance per store card by brand, 2008 13
Table 3: Demographic breakdown for number of active cards by age and gender 17
Table 4: Breakdown for number of active cards by household 17
Table 5: Mail order agency sales by company (£m), 2007-09 19
Table 6: Retail finance gross lending (£m), 2003-09 28
Table 7: Retail finance balances outstanding (£m), 2003-09 28
Table 8: Number of store cards in issue (000s) 29
Table 9: Store card advertising expenditure (£), 2003-09 29
Table 10: Forecasts for retail finance products (£m), 2009-14f 30
List of Figures
Figure 1: The different retail finance products each offer something different to consumers 5
Figure 2: The recession either sparked an upturn or slowed the rate of decline for the three main retail finance products 8
Figure 3: Store installment credit has witnessed a recent upsurge in balances outstanding which is consistent with the increase in gross advances 10
Figure 4: The average rate on store cards bucked its long-term trend in 2008 11
Figure 5: Santander had more than 50% of the store card market in terms of cards in issue in 2008 12
Figure 6: Advertising data dropped between 2005 and 2007 but picked up during the early part of the recession 14
Figure 7: Females and those within the 25-34 age range are most likely to carry a store card 15
Figure 8: Those in the higher income groups are more likely to have a store card 16
Figure 9: Shop Direct Group has maintained a one-third share of the mail order market 18
Figure 10: The number of co-branded cards has shown some growth over the last five years 21
Figure 11: Store cards are expected to decline the most between 2009 and 2014 26
[Inhaltsverzeichnis ausblenden]
