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Consumer Attitudes Towards Retail Credit - UK - October 2015

Published By :

Mintel

Published Date : Oct 2015

Category :

Banking

No. of Pages : N/A

Consumers may tell us that they are unenthusiastic about taking out credit to buy goods, but the evidence suggests that the demand for credit has risen steadily with the economic recovery. People may still be cautious, but they want to spend more. The only problem for retailers is that people most want to spend more on leisure. However, retail sales are growing in both value and volume terms and we think that this willingness to borrow will also support retail sales growth.

Table of Content

Overview

What you need to know
Areas covered in this report

Executive Summary

The market
Economic recovery is leading to greater demand for credit
Figure 1: Gross credit extended as % all consumer spending, 2003-14
Retail credit market worth £49 billion in 2014
Figure 2: Retail credit, 2014
Forecast
Figure 3: Retail credit extended, 2010-20
Retailers and credit
Market shares
The consumer
Who uses retail credit?
Figure 4: Retail credit used in the last year, July 2015
How much credit?
Spending plans
Figure 5: What extra money left over is spent on, July 2015
Retailers used for credit
Figure 6: Retailers borrowed from, July 2015
Why they borrowed
Figure 7: Why people take out credit from retailers, July 2015
Checks done before taking out credit
Figure 8: Checks carried out before taking out retail credit, July 2015
Credit and the shopping experience
Figure 9: Attitudes towards credit and the shopping experience, July 2015
Attitudes towards credit offers
Figure 10: Attitudes towards buying on credit, July 2015
What we think
No great enthusiasm for retail credit
Lack of financial sophistication among consumers
A minority service, but one that can be important

Issues and Insights

Interest free credit – Because it is there
The facts
The implications
Just how sophisticated are people about credit?
The facts
The implications
Credit and the recovery
The facts
The implications
Just how important is it to offer credit?
The facts
The implications

The Market – What You Need to Know

Recovery
Market size
Credit cards and car finance dominate
Prospects

Market Size and Forecast

Retail in the context of all consumer credit
Finance and Leasing Association data
Figure 11: Total consumer lending by FLA members, 2014
Retail credit market size
Figure 12: Retail credit market, 2009-15
Figure 13: Retail credit by segment, 2013-15
Leisure and other spending
Leisure
Other spending
Figure 14: Consumer spending, by broad category, 2014
Forecast
Figure 15: Retail credit extended, 2010-20
Figure 16: Totals and forecast, retail credit, 2010-20

Market Drivers

Figure 17: GDP growth, 2005-14
Consumer lending through the downturn - mortgages
Figure 18: Total outstanding secured lending, 2004-15
Consumer lending through the downturn – unsecured lending
Figure 19: Total outstanding unsecured lending, 2004-15
Figure 20: Total outstanding unsecured lending by credit cards and other lending, 2004-15
Figure 21: Outstanding unsecured consumer debt as a proportion of all consumer debt, 2004-15
Figure 22: Consumer credit outstanding as a % of all consumer spending, 2003-14
Figure 23: Gross unsecured credit extended, 2003-14
Figure 24: Gross credit extended as a % of all consumer spending, 2003-14

Key Players – What You Need to Know

Market leaders
A marketing tool
A service or an integral part of the offer?
Store cards – expensive and in decline
Banking not the same as retail credit
Innovation and launches
Little used

Types of Credit Offer

Mail order
Figure 25: Levi Jeans repayment example, 2015
Figure 26: Shop Direct example, 2015
Interest free credit and the household goods retailers
Figure 27: Interest free credit retailer comparison, 2015
Banking
Figure 28: Tesco and Sainsbury retailer comparison, 2015
Credit and store cards
Figure 29: Selection of retailer credit card rates, 2015
Figure 30: Retailer store card rates, 2015
Leasing
A note on ‘Interest Free Credit’
Shop Direct
Next
Dixons Carphone
Home Retail Group
B&Q
Homebase

Innovation and Launch Activity

Leading Retailers

Figure 31: Leading retailers: share of retail credit, 2014 (est)

The Consumer – What You Need to Know

Who borrows?
How much?
Willingness to spend
Who do they borrow from?
Why do they borrow?
Checks carried out?
Credit and in-store experience
Attitudes to taking our credit

Who uses Retail Credit?

Figure 32: Retail credit used in the last year, July 2015
Figure 33: Number of different credit offers used, July 2015
Figure 34: Profile of users of particular types of credit, July 2015
Figure 35: Profile credit users by the number of types of credit used, July 2015
Figure 36: Credit used by region relative to national average, July 2015
Figure 37: Credit used by age of children in household relative to national average, July 2015

How Much Credit?

Figure 38: Retail credit: Amounts outstanding, July 2015
Figure 39: Profile of those with debt from retailers, July 2015

Current Attitudes towards Debt

People are still cautious about their spending plans
Figure 40: Savings in last three months and plans for next three months, 2012-15
Figure 41: Reducing debts, actual and planned, 2012-15
Figure 42: Those who have not and do not plan to save or pay off debt, 2012-15
Spending plans
Figure 43: What extra money left over is spent on, July 2015

Retailers Used

Figure 44: Retailers borrowed from, July 2015
Figure 45: Profile of borrowers from retailers by retailer used, July 2015

Why did People Borrow from Retailers?

Figure 46: Why people take out credit from retailers, July 2015
Figure 47: Profile of reasons for taking out credit from retailers, July 2015
Checks done before taking retailer credit
Figure 48: Checks carried out before taking out retail credit, July 2015

Credit and the Shopping Experience

Figure 49: Attitudes towards credit and the shopping experience, July 2015

Attitudes towards Credit Offers

Figure 50: Attitudes towards buying on credit, July 2015
Profile of those who agree with the attitude statements
Figure 51: Profile of those who agree with the attitude statements, July 2015
Profile of those who disagree with the attitude statements
Figure 52: Profile of those who disagree with the attitude statements, July 2015
Regional differences
Figure 53: Regional profile of those who would rather save than borrow to buy, July 2015
Figure 54: Regional profile of those for whom the type of credit on offer is important in choosing where to shop, July 2015

Appendix – Data Sources, Abbreviations and Supporting Information

Data sources
Financial definitions
VAT
Forecast methodology
Abbreviations

List of Table

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