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Consumer Attitudes towards Retail Credit - UK - December 2017

“Consumer credit has been rising fast to finance recent retail sales growth. But consumer confidence is falling and incomes are under pressure. We think that consumers will start to cut back and pay down some of their debt. So all credit will fall, not just retail credit. We think that it is time retailers put more emphasis on their credit offer. By relying on credit card companies or PayPal to provide credit they are missing an opportunity to learn more about their customers.”
– Richard Perks, Director of Retail Research

This report looks at the following areas:

  • Do people still need retail credit?
  • Interest free credit (IFC) – an unavoidable expense
  • So what if there’s a consumer slowdown?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Retail credit only a small part of all consumer credit
              • Figure 1: FLA members: share of credit lending by main product, 12 months to August 2017
            • Retail credit is losing share of all consumer credit
              • Figure 2: Retail credit as % all consumer credit, 2012-17
            • Retail credit up 2% in 2017
              • Figure 3: Retail credit by FLA members, 2012-22
            • The outlook for consumers is poor
              • Figure 4: Mintel’s consumer confidence tracker, Jan 2014-Nov 2017
            • Tightening regulation
              • Companies and brands
                • How do retailers lend?
                  • Other IFC lenders
                    • Interest bearing debt
                        • Figure 5: Leading credit providers, share of all retail credit, 2016
                      • A service to customers
                        • The consumer
                          • Credit cards and PayPal top the list
                            • Figure 6: Sources of credit used in the last 12 months, September 2017
                            • Figure 7: Profile of borrowers by credit used, September 2017
                          • Clothing retailers most borrowed from
                            • Figure 8: Types of retailer borrowed from, September 2017
                          • Clothing the product most borrowed for
                            • Figure 9: Products bought on retail credit in last year, September 2017
                          • “Because it was there”
                            • Figure 10: Reasons for using retail credit, September 2017
                          • Credit only for a minority
                            • Figure 11: Attitudes to taking out credit, September 2017
                          • Flexibility a bonus
                            • Figure 12: Consumer attitudes towards retail credit, September 2017
                          • What we think
                          • Issues and Insights

                            • Do people still need retail credit?
                              • The facts
                                • The implications
                                  • Interest free credit (IFC) – an unavoidable expense
                                    • The facts
                                      • The implications
                                        • So what if there’s a consumer slowdown?
                                          • The facts
                                            • The implications
                                            • The Market – What You Need to Know

                                              • Retail credit only a small part of all consumer credit
                                                • Retail credit is losing share of all consumer credit.
                                                  • Retail credit up 9% in 2017
                                                    • The outlook for consumers is poor
                                                      • Tightening regulation
                                                      • Market Size and Forecast

                                                        • Retail credit in the context of all consumer credit
                                                          • Finance and Leasing Association (FLA) data
                                                            • Figure 13: FLA members: share of credit lending by main product, 12 months to August 2017
                                                          • Retail credit comes in several different ways
                                                            • Retail credit market size
                                                              • Figure 14: Total consumer lending by FLA members, 2013-17
                                                              • Figure 15: Retail credit market, 2012-17
                                                            • Retail credit in decline
                                                              • Figure 16: Retail credit as % all consumer credit, 2012-17
                                                            • Forecast
                                                              • Figure 17: New Retail credit extended by FLA members, 2012-22
                                                              • Figure 18: New retail credit extended by FLA members, 2012-22
                                                            • Forecast methodology
                                                            • Market Drivers

                                                              • GDP – Post referendum
                                                                • Outlook for consumers
                                                                  • Figure 19: Real incomes growth: wages growth vs inflation, 2014-17
                                                                • Consumer confidence weakening
                                                                  • Figure 20: Mintel’s consumer confidence tracker, Jan 2014-Nov 2017
                                                                • Consumer credit has financed the recent boom
                                                                  • Figure 21: Outstanding amounts of consumer credit, 2007-17
                                                                  • Figure 22: Consumer credit: amounts outstanding relative to all consumer spending, 2007-17
                                                              • Regulatory and Legislative Changes

                                                                  • Crackdown on bad debt
                                                                    • But write-offs falling anyway
                                                                      • Availability of unsecured credit tightening
                                                                        • FCA investigating high cost credit
                                                                        • Companies and Brands – What You Need to Know

                                                                            • How do retailers lend?
                                                                              • Other IFC lenders
                                                                                • Interest bearing debt
                                                                                  • A service to customers
                                                                                  • Leading Players

                                                                                    • Home shopping
                                                                                      • Mail order
                                                                                          • Figure 23: Mail order companies’ terms of trade, November 2017
                                                                                        • Littlewoods vs Very
                                                                                          • Online pure players
                                                                                            • Figure 24: Online pure players’ credit offers, November 2017
                                                                                          • Furniture and carpets
                                                                                            • Figure 25: Furniture and carpet retailers’ credit offers, November 2017
                                                                                          • Brighthouse
                                                                                            • DIY and electricals
                                                                                              • Figure 26: DIY retailers’ credit offers, November 2017
                                                                                            • Department stores
                                                                                              • Figure 27: Department stores’ credit offers, November 2017
                                                                                            • Clothing
                                                                                              • Next
                                                                                                • Figure 28: Clothing retailers’ credit offers, November 2017
                                                                                              • Other
                                                                                                • Credit cards
                                                                                                  • Figure 29: Leading retailers’ credit cards, November 2017
                                                                                                • Leading credit providers
                                                                                                  • Figure 30: Leading providers of retail credit sales and credit extended, 2016 (est)
                                                                                              • Market Share

                                                                                                  • Figure 31: Leading providers of retail credit, 2016
                                                                                                  • Figure 32: Leading credit providers, share of all retail credit, 2016
                                                                                              • Innovation and Launch Activity

                                                                                                • Soft searches
                                                                                                  • The end of long 0% balance transfers?
                                                                                                    • Opportunities in Open Banking
                                                                                                      • Helping choice and decision making
                                                                                                      • The Consumer – What You Need to Know

                                                                                                        • Credit cards and PayPal top the list
                                                                                                          • Clothing retailers most borrowed from
                                                                                                            • Clothing the product most borrowed for
                                                                                                              • “Because it was there”
                                                                                                                • Credit very unpopular
                                                                                                                  • Flexibility a bonus
                                                                                                                  • Who Borrowed and From Whom

                                                                                                                      • Figure 33: Sources of credit used in the last 12 months, September 2017
                                                                                                                      • Figure 34: Profile of borrowers by credit used, September 2017
                                                                                                                  • Retailers Used

                                                                                                                      • Figure 35: Types of retailer borrowed from, September 2017
                                                                                                                      • Figure 36: Profile of users of retail credit by type of retailer used, September 2017
                                                                                                                      • Figure 37: Retailers borrowed from, September 2017
                                                                                                                  • What do People Borrow to Buy?

                                                                                                                      • Figure 38: Products bought on retail credit in last year, September 2017
                                                                                                                    • Who bought what
                                                                                                                      • Figure 39: Profile of users of retail credit by products bought on retail credit, September 2017
                                                                                                                  • Why Did People Use Retail Credit

                                                                                                                        • Figure 40: Reasons for using retail credit, September 2017
                                                                                                                        • Figure 41: Profile of users of retail credit by reason used, September 2017
                                                                                                                    • Attitudes to Taking Out Credit

                                                                                                                          • Figure 42: Attitudes to taking out credit, September 2017
                                                                                                                          • Figure 43: Profile of shoppers by credit attitudes, September 2017
                                                                                                                      • Attitudes to Retail Credit

                                                                                                                          • Figure 44: Agreement with the following statements, September 2017
                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                          • Consumer research methodology
                                                                                                                            • Data sources
                                                                                                                              • Financial definitions
                                                                                                                                • VAT
                                                                                                                                  • Abbreviations
                                                                                                                                  • Appendix – Market Size and Forecast

                                                                                                                                    • Forecast methodology

                                                                                                                                    Consumer Attitudes towards Retail Credit - UK - December 2017

                                                                                                                                    £2,195.00 (Excl.Tax)