Do you take cash?

You’ve heard a lot of slogans from credit card companies over the years. But it might be time to get ready for some counter-point campaigns, coming from none other than The Consumer. “Erasing high-interest debt: Priceless.” Or, “I can leave home without it.” And perhaps, “debt-free is everywhere you want to be.”

Even if you haven’t been a casualty of the recent credit melt-down, you are almost certainly aware of it, and know someone who is affected. For the past several years, a lot of people have over-indulged in signature loans, interest-only mortgages, or too many of the dozens of credit card offers received in the mail every month. Well now, with the (balloon) payment coming due, consumers are highly likely to re-think their use of credit.

Consumers—not to mention an entire global economy—have been shaken by the cost of the buy-now-pay-later philosophy, and the tightening of the entire credit system. For some, it will take years to dig their way out of debt. For others, resolution will come more quickly, but at the expense of foreclosure, repossession or bankruptcy, actions which will leave their mark on a credit history for some time to come.

Implications: If you sell durable goods or high-end products (either as a manufacturer, distributor or retailer), you may have profited from helping consumers arrange financing for the purchase of your products. In what ways can you continue to present financing options to qualified consumers (probably not everyone), in a way that they regain comfort with the idea of owning now, and paying later? Or, just as the consumer has been given incentives to use credit (“Open an [XYZ] account and get 15% off today’s purchase”), can you profit from giving customers some form of discount or value-added premium for paying with cash?
Many consumers are finding favor with the idea of paying down debt… and returning to a mentality of “saving up” for major purchases. Have you thought about how you’ll survive and thrive among those spenders?

Mike Anderson