Business: Set up: Founder: Turnover: No of Employees: Location: Dublin
ANUMBER of weeks ago, I wrote here about the basic fundamental model that retailers use to drive their sales: F x C x A = S. ‘Footfall’ (the number of customers entering the store) multiplied by ‘conversion’ (the percentage of those that actually buy rather than just browse) multiplied by ‘average transaction value’, equals sales. This formula gives a retailer the key pointers for where to focus their efforts.
Good retailers are instinctively very skilled at all three levers. But as the industry changes and pressure mounts with new competition every day, I believe that quality support mechanisms that help retailers to succeed are worth investigating. A NEW RENTAL CONCEPT In 1985, Aussie Andrew Abercrombie noticed that every business he went into had a photocopier. He developed a new rental concept, that enabled businesses to rent rather than buy their machines. Over time, the business branched out into renting other office equipment across the spectrum. He met fellow Aussie Gerry Harvey (of Harvey Norman) and together they conceived a new idea. Trialling at first in two stores, Flexigroup enabled consumers to rent their new products over a specific time frame. It was an incredibly successful model that was loved by consumers and retailers alike.
From there the business took off and opened in Ireland in 2007. As we all know, the world collapsed around us about then and Flexigroup just kept their heads down servicing the Irish Harvey Norman business. In 2013 the business started to expand and today, headed up by CEO and Carlow man PJ Byrne QFA, it has volumes/ sales of €50m. With a multinational and diverse support team of 50 employees, it enables retailers to drive more footfall, convert browsers to spenders, and helps to increase ATV. THE BUSINESS MODEL Flexigroup conducted a wide-reaching survey of retailers and consumers, listening carefully to what their needs were. Consequently, the main product today is Flexifi which is an instalment plan for consumers. As an alternative to credit cards or cash, it enables consumers to buy products such as electronics or furniture and pay back over a short time. This is with no interest charged to the consumer.
Obviously there are terms and conditions attached, and there are also different product categories for varying amounts advanced. The average value of a loan is €2,300 and the average term is two years. However, there are many cases of short-term loans that are paid back in four fortnightly instalments and plenty of cases where consumers finance purchases of just a few hundred euro.
Once a consumer is approved, the money goes directly to the retailer on handover of purchase.
Eleanor and Daragh had just moved into a new house and were expecting their first baby. Eleanor applied for Flexifi and was approved for €8,000, making the transition to the new house much simpler. Through Flexigroup partner Harvey Norman, the couple were able to fit out their entire living room and purchased many of the necessities for their new baby in Mothercare, all within their budget.
Retailers are the primary customers of Flexigroup and it is already supporting hundreds of retailers countrywide, including Woodie’s, Paul Sheeran Jewellers, Best Menswear and Therapie Clinic.
The service is funded by the retailer through a ‘management service fee’. As the product grows in reputation, it drives footfall to those stores that provide the service.
As the consumer browses and contemplates a purchase, a retailer might nudge them over the line by suggesting a Flexifi payment option. And to increase ATV, a retailer might also use the Flexifi proposition to up-sell to a higher spec.
“One retailer in particular has experienced an increase in sales of over 30pc which they attribute solely to having a good point of sale finance offering. Furthermore they also saw their average basket size grow threefold” said PJ. THE FUTURE As the company continues to invest in technol- ogy, a future service will allow the consumer to be pre-approved for finance and then purchase in a ‘partner store’. When they have made their selection, they will simply pay through their mobile phone. This won’t be restricted to the current ceiling of €30 for contactless payments. Flexigroup will control the security of the transaction and enable instant payment direct to the retailer.
There are other endless possibilities for new products. With the rise of AI (artificial intelligence) and the digitalisation of many finance products, the scope for growth and innovation is limitless.
Flexigroup is determined to be at the forefront of this digital revolution.
Flexigroup has already won ‘Best Supplier of the Year’ with Retail Excellence Ireland. I can see how it will support more and more retailers with F x C x A = S.
Flexigroup chief executive PJ Byrne at the company’s headquarters in Custom House Plaza. Photo: Tony Gavin