The cost of living crisis is a major concern for both individuals and businesses. It's characterised by an increase in the price of goods and services coupled with a reduction in disposable income. Small businesses, especially those in the luxury retail industry, are having to reconsider their strategy as a result. When people feel the pinch, there's less enthusiasm to buy non-essential items, such as jewellery and watches.
But that doesn’t mean your jewellery store can’t still thrive in difficult economic circumstances. Here, we look at how retail finance can combat the effect of the cost of living crisis on your jewellery business.
Impact of the cost of living crisis on jewellery businesses
Unfortunately, jewellery businesses are particularly prone to the effects of the cost of living crisis. The rising cost of goods and services has made it difficult for jewellers to maintain profit margins as customers reprioritise their spending.
Consumers are spending less on luxury items like jewellery, which has reduced sales for some businesses. And even those that have continued to thrive still need to find new ways to attract customers and increase sales and revenue further.
Understanding retail finance
Retail finance refers to a range of financial products and services designed to help businesses improve sales, reduce checkout drop-offs and increase average order size (AOV). Modern-day retail finance typically includes flexible payment options, such as buy now pay later (BNPL), digital credit and monthly instalments. These options are specifically designed to address the needs of customers who may be thinking twice about a purchase due to the high cost involved with paying in one setting.
How retail finance combats the cost of living crisis
Retail finance offers many benefits to jewellery businesses to help them fight against the cost of living crisis. Here are some ways that retail finance can benefit your business:
Provides customers with flexible payment options
Retail finance can help combat the cost of living crisis by offering customers flexible payment options. With the rising cost of goods and services, shoppers may struggle to pay for high-ticket items like jewellery in one go. With retail finance options, such as BNPL, businesses can make their products more accessible to customers by offering a greater range of payment options, thereby increasing sales.
Increases spending power
Retail finance is integral in combating the cost of living crisis as it increases consumer spending power. By offering finance, consumers can make purchases they may not be able to afford otherwise. This can help ease the burden of rising living costs as they have more flexibility for budgeting and can allow for jewellery purchases without depleting their disposable income.
Reduces checkout drop-offs
Checkout drop-off rates occur when a consumer abandons their purchase at the checkout stage, often due to concerns over the final price or if they have difficulty making the full payment. By offering flexible payment options like digital credit or instalment plans, your jewellery store can make items more affordable and manageable for consumers, thus reducing the likelihood of checkout drop-offs. Subsequently, you can help increase conversion rates and revenue while also providing consumers with more affordable access to your items.
Repeat business and improved customer loyalty
Retail finance can help foster customer loyalty and repeat business, as consumers are more likely to return to a retailer offering their preferred payment methods. Additionally, by providing financing options that align with consumer preferences and needs, your jewellery store can help build stronger relationships, leading to increased trust and brand loyalty.
Easy and fast application process
The right retail finance provider improves shopper access to finance through a fast, easy and transparent application process. For instance, if a customer can see their eligibility before applying, they’ll feel more confident about going through the financing process. Every aspect improves, from the customer experience to the number of shoppers using finance and shopping with you.
Considerations for choosing a retail finance option
When considering a retail finance option, your jewellery store should factor in several aspects. These include the speed and flexibility of integration, plus how likely the provider is to accept applications from the right type of shoppers.
Deko, for instance, is the only retail finance provider offering a multi-lender solution. This means a customer is automatically moved from one lender to the next if their first application is rejected. Even better, the entire process happens in the background and doesn't disrupt or delay the shoppers' experience.
Diamonds are forever
The cost of living crisis has significantly impacted all types of businesses, including jewellery stores. But retail finance can be a solution to combat the effects of the crisis and encourage shoppers to buy your jewellery items. By providing shoppers with flexible payment options, jewellery businesses can stay ahead of the curve in difficult economic times and even thrive against the odds.
