FI­NANCE

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

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

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