As Western nations start the gradual return to enterprise as traditional, lenders and retailers might want to put in place credit score applications that may meet the demand of customers who’re prepared to start out spending once more however who’ve possible been confronted with a interval of economic uncertainty.

America declared a state of nationwide emergency on Friday, March 13, with every state deciding its personal diploma of lockdown as a consequence of COVID-19[female[feminine. The retail landscape has transformed since the start of self-isolation measures and continues to evolve with each day social distancing remains in place. With a significant initial shift to online shopping after store closings and a significant number of job losses, now is a critical time for credit institutions and retailers to think about what consumers are likely to need after the shutdown. end of self-isolation and physical stores. reopen. It was in reaction to the 2008 financial crisis that fintech installment loan companies gained popularity with millennials concerned about avoiding credit card debt. While it is uncertain whether COVID-19 will trigger a full recession similar to that which occurred in 2008, sufficient economic uncertainty has been created to suggest that the funding space must expand to meet the challenges. consumer needs.

Reduced income during COVID-19

Unemployment figures in the United States have risen by 22 million in just 4 weeks, others may have seen their wages fall, the self-employed and small business owners with declining incomes. By the end of March, more than 80% of freelancers surveyed said they have already lost thousands of dollars in salaries to COVID-19, a number that will have increased as people continue to cut back on their goods and services. Consumers may have used their savings to be able to meet mortgage payments and rent. While hope remains that most jobs can return to normal once restrictions are lifted and the economy slowly recovers, financing options will be a critical issue when consumers can shop again. freely.

E-commerce sales have increased

Following the closure of physical stores, there was an immediate shift to online commerce. E-commerce sales increased by 40% in the United States after the declaration of a state of emergency, boosting verticals such as toys, sporting goods and camping. Even baby boomers, who were previously averse to online shopping, have no other choice.

While some retailers have benefited from self-isolation measures, others are in difficulty. Online sales of clothing and accessories showed a 50.5% decrease from February to March. the sales of expensive items, in particular, have declined because consumers are unsure of their financial situation.

People will want to modernize furniture and technology

During this extended period in their home, consumers will have given a lot of thought to an idealized view of their surroundings. They will have used their furniture more extensively than before, sofas that were only used on weekends and dining tables suddenly needed for family meals. They will be looking to replace outdated furniture and technology that might have frustrated them while being at home all day. Additionally, people may be looking to book a vacation or event for summer 2021 when it would be safer to do so. Consumers delayed these purchases while they were still in crisis, including thefts, home appliances and technological devices. When asked if they plan to purchase the items they have put on hold, 36% of American internet users said they were waiting for the epidemic to subside, either locally or internationally.

What to expect after COVID-19

We can only speculate on how consumer behavior will adjust once the lockdowns are lifted, but imagine that consumers will enjoy the freedom to be able to go to malls and shop again for their leisure. . It is likely that there will be a significant increase in sales of big ticket items to offset the decline during a state of crisis. Research already suggests that many consumers will either want to start spending normally or spend even more extravagantly than before. Banks and retailers will have to walk a fine line to ensure that consumers are not burdened with loans they cannot repay while still being able to provide financial assistance to those who just need it. buy to be more manageable at the present time.

Lenders must ensure that appropriate financing is available for retailers

Lenders need to work with retailers to ensure consumers have enough choice for in-store and online financing, without resorting to co-branded credit cards. Without a clear repayment plan and potentially high interest rates, these cards could be damaging to consumers emerging from a financial crisis. If lenders and retailers already offer installment loans, they should addition of a “ line of credit ” option, which would allow customers to make individual purchases over time and only refund the amount spent in monthly payments.

Bottom line – What to expect

As the economy slowly begins to return to normal, consumers will spend more, making up for expensive and non-essential items that were not purchased during the uncertain foreclosure situation. Funding programs will be essential for consumers emerging from this crisis, leading merchants to frantically search for solutions in-store and online. The winners of this business will be lenders who offer competitive loan programs that can be implemented quickly and easily to meet this demand.