AUSTIN, Texas, Nov. 10, 2014 /PRNewswire/ -- Gen Y consumers, whose annual spending power is estimated at $200 billion, prefer to shop at retailers that offer financing options, according to a new study.
An eNation study of more than 2,000 consumers, commissioned by financial technology company NewComLink, found that 59 percent of shoppers between the ages of 18 and 34 say their choice of retailer is impacted by whether that retailer offers financing options.
"Gen Y represents the future of retailing, and its members are more aware of—and open to—second-look financing options than the generations that came before them," said Jeff Byal, chief financial officer at NewComLink.
According to the survey, Gen Y shoppers are more knowledgeable about retail financing options than previous generations. For example, 32 percent of Gen Y consumers are aware of second-look financing options, compared to only 13 percent of those 55 and older. Additionally, 56 percent say the availability of financing options impacts their final purchase decision, compared to just 36 percent of 55-plus consumers.
Gen Y shoppers are also more open to using financing for a wider array of products and needs. While most age groups said they were more likely to use financing for appliance and furniture purchases, many members of the Gen Y group would also use it to buy electronics (38 percent, versus 27 percent of the general population) and jewelry (21 percent, versus 11 percent).
Gen Y may also be more likely to need alternative credit options. According to Experian, the average consumer between the ages of 19 and 29 has a credit score of just 628 and holds $23,332 in debt. By comparison, consumers 66 and up have an average credit score of 735, and the average Baby Boomer (ages 47 to 65) has a score of 700.
"Up to 50 percent of primary credit applications are routinely declined, which can lead to lost sales for many retailers," said Suneet Paul, NewComLink's co-founder and CEO. "Secondary financing options can help consumers, especially Gen Y consumers, buy what they want, when they need it. As a result, retailers who offer financing choices see increases in customer loyalty as well as revenue."
Based in Austin, Texas, NewComLink (NCL) is a financial technology leader with an omni-channel platform that easily and efficiently integrates multiple secondary financing options into a single offering for retailers. The market-leading platform is able to integrate with multiple lenders—including retailers' preferred lenders—to increase revenues while also improving the sales experience and increasing customer loyalty.