Financial Roundtable: Hear from Experts on Retail Finance

As we move another year past the worst of the pandemic, there remains much uncertainty in the consumer tech industry. Therefore, we asked some questions of a pair of leading figures in that particular world.  

Velicia Sutton is the Electronics and Appliances Leader for Wells Fargo Distribution Finance, while Curtis Howse is the CEO, Home & Auto for Synchrony. Here are their answers to our Dealerscope questions:  

DS:  In what ways has the pandemic period and all its corollaries (i.e., supply-chain disruptions, inflation, etc.) impacted the retail finance sector – particularly for the consumer technology and appliance industries? And how long do you expect the effects to sustain and continue to impact your sector? 

VS: Following many of the supply chain disruptions and in light of the current economic environment, our retailers are focusing on managing cash flow and inventory levels again. Many dealers are experiencing higher inventory levels as the market normalizes or as they wait for pieces to complete an order.  

Some retailers are proactively putting strategies in place to better manage their inventory and many dealers are also taking advantage of inventory financing’s extended terms, which helps with inventory management and helps improve liquidity. To support these efforts, Wells Fargo continues to proactively manage credit lines. Over the past few years, we’ve also worked with manufacturers on IT enhancements to improve our order approval process, which ultimately created further credit line capacity for our retailers. Thankfully, supply chain distributions have improved but as consumers weather uncertainty in 2023, cash flow and inventory management will be critical for retailers. 

DS: What major trends have arisen recently that you are tracking, with regard to leveraging them to tailor the particular financial products and services you offer to retailers so they can profitably serve their consumer technology and appliance customers? 

CH: Consumers are looking for a simple, streamlined experience when considering credit as a payment option for their electronics and appliance purchases. Synchrony’s PreQualification is a great example of a capability that allows customers to quickly see if they qualify for Synchrony financing and view their initial credit limit with no impact on their credit score. This secure, customer-initiated digital capability allows customers to know their buying power before committing to make a purchase.  

VS: We continue to follow and applaud the digital enhancements that our retailers made and continue to make coming out of the pandemic. Likewise, we are committed to collaborating and supporting the technology and appliance industries through business cycles, innovation and evolving customer needs. These past few years have reiterated the importance of real-time data. To that end, we continue to invest in Application Programming Interfaces (APIs) and advancing our customer reporting and analytics capabilities. 

DS: How are your methods of training retail sales associates being handled these days to ensure that retailers are properly and effectively presenting their services to customers? 

CH: Training is an ongoing journey, and we work closely with our retailers throughout our partnership to integrate Synchrony products and processes into their overall training strategies, with a focus on the benefits to consumers. We offer holistic training services, meeting our partners where they need us, by conducting face-to-face trainings with employees and offering an online portal with virtual gamified trainings – whether it’s for new employees or as a refresh for long-time associates.  

DS: What are the biggest challenges your industry faces in the consumer technology and appliance spaces this year, and how are you addressing them? And what are the biggest benefits retailers can realize, when working with you to address consumer needs? 

CH: More consumers are relying on credit to purchase the items they want and need, and Synchrony offers a variety of flexible payment options. Consumers can shop anywhere, so having a financing program like ours available drives sales and brand loyalty by offering consumers greater buying power and convenient financing. 

VS: In the current inflationary environment combined with higher rates, consumers are faced with uncertainty leading to cautious spending. The economic environment coupled with the prior supply-chain challenges are resulting in our retailers having to focus on managing cash flow and inventory levels. Now is the time for retailers to have a business cycle tested floorplan or inventory financing lender. The right floorplan lender can help improve cash flow and liquidity through extended repayment terms that are often subsidized by the manufacturers (OEMs) and distributors. With inventory financing, retailers can optimize their capital allocation from reduced working capital requirements and have the right inventory on-hand to meet consumer needs. 

DS: What is the outlook for your business for the rest of 2023? And what kind of above-and-beyond assistance can retailers count on you for, moving into the end of this year and into next year? 

VS: In 2023, we continue to recalibrate as our industry adjusts to its new normal following record growth. 

However, this is not new for us as Wells Fargo Distribution Finance has helped retailers weather various economic environments over the years; we’ve been a market leader providing inventory finance solutions since 1953. 

Through inventory finance, retailers can keep their businesses running smoothly by utilizing interest-free* financing with extended terms for display and stocking programs with leading manufacturers, easing cash flow demands during peak collection cycles and enhancing credit capacity to help meet working capital needs with lower borrowing costs. Through Wells Fargo, our customers have access to industry experts, best-in-class customer service and 24/7 online account management and analytical tools. Beyond inventory financing, Wells Fargo offers a broad range of products and services including treasury management**, equipment financing, 

asset-based lending, cash-flow lending and financial risk products to position businesses for growth and success. 

*Subject to qualification, change in program terms and credit approval. Interest-free financing is contingent on participation and payment by manufacturer. Please see your financing agreement (required for all dealers) for all terms and conditions. Nothing contained herein is, or shall be relied upon, as a promise, representation or commitment to provide financing or interest-free financing. This program is available only to customers located in the United States. 

**Deposit products offered by Wells Fargo Bank, N.A. Member FDIC