Retailers welcome ‘record’ credit surge in Q1
The strong growth in the retail credit market is said to be mirrored across the wider consumer finance market, which expanded by 20% in May 2022 compared with the same month in 2021, reaching £10.4bn
The retail store and online credit sector welcomed its “faster ever” start to the year, as new business volumes reached £2.1bn in the opening quarter, according to the Finance and Leasing Association.
This marks the highest ever level of borrowing for Q1 with an increase of 12% compared to the same period in 2021.
This momentum was reportedly sustained early into Q2, with record new business volumes for both April (£731m) and May (£810m). This is said to put Q2 2022 “on course” to follow in registering the highest ever volume of retail store and online credit for any previous second quarter.
In addition, digital lending marketplace, Freedom Finance, said that the retail store and online credit sector experienced its fastest ever start to a year in 2022 and looks set to reach further highs.
Freedom Finance, which provides embedded financial services to retail brands like Argos, ASDA and Very, reported that strong figures demonstrate the high demand for products that offer flexibility and choice at all points throughout the customer journey.
The strong growth in the retail credit market is said to be mirrored across the wider consumer finance market, which expanded by 20% in May 2022 compared with the same month in 2021, reaching £10.4bn.
Michael Davidson, chief revenue officer at Freedom Finance, said: “The data is evidence that the embedded finance revolution is creating an urgent need for retailers, and other sectors, to start providing and widening the range of financial services they offer customers. The retail credit market looks set for accelerated growth as embedded financial services are increasingly becoming the norm to meet the needs and wishes of customers.
“Retail credit allows shops to offer their customers a convenient line of credit, often at the point of sale and on favourable terms. Retailers also frequently weave in incentives like vouchers or discounts to encourage repeat business and brand loyalty. Demand for easily accessible credit products which offer good terms and can help people manage their finances better is only likely to grow.”
He added: “Retailers will also be expected to start offering a greater variety of financial products to their customers, such as insurance, and embedding these services into their offering will be vital to their success in the future.
“Delivering better finance options for customers at any touchpoint through their journey helps retailers enhance customer experience, build trust and loyalty with potential buyers and maintain relevance in the rapidly evolving consumer credit landscape.”
