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Consumer Attitudes Towards Retail Credit - UK - October 2015

“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.”
– Richard Perks, Director of Retail Research

This report looks at the following areas:

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

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Table of contents

  1. 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

                                                                                                                                    Companies Covered

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                                                                                                                                    Consumer Attitudes Towards Retail Credit - UK - October 2015

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