Study: Gen Y shoppers prefer retailers that offer financing options

Austin, Texas --Gen Y consumers, whose annual spending power is estimated at $200 billion, prefer to shop at retailers that offer financing options, according to a new study.



An eNation study of more than 2,000 consumers, commissioned by financial technology company NewComLink, found that 59% of shoppers between the ages of 18 and 34 say their choice of retailer is impacted by whether that retailer offers financing options.



"Gen Y represents the future of retailing, and its members are more aware of—and open to—second-look financing options than the generations that came before them," said Jeff Byal, CFO at NewComLink.



According to the survey, Gen Y shoppers are more knowledgeable about retail financing options than previous generations. For example, 32% of Gen Y consumers are aware of second-look financing options, compared to only 13% of those 55 and older. Additionally, 56% say the availability of financing options impacts their final purchase decision, compared to just 36% of 55-plus consumers.



Gen Y shoppers are also more open to using financing for a wider array of products and needs. While most age groups said they were more likely to use financing for appliance and furniture purchases, many members of the Gen Y group would also use it to buy electronics (38% versus 27% of the general population) and jewelry (21% versus 11%).



Gen Y may also be more likely to need alternative credit options. According to Experian, the average consumer between the ages of 19 and 29 has a credit score of just 628 and holds $23,332 in debt. By comparison, consumers 66 and up have an average credit score of 735, and the average Baby Boomer (ages 47 to 65) has a score of 700.



"Up to 50 percent of primary credit applications are routinely declined, which can lead to lost sales for many retailers," said Suneet Paul, NewComLink's co-founder and CEO. "Secondary financing options can help consumers, especially Gen Y consumers, buy what they want, when they need it. As a result, retailers who offer financing choices see increases in customer loyalty as well as revenue."