Offer finance for luxury fashion brands

Introduction to Offering Finance for Luxury Fashion Brands

Luxury fashion brands have long been associated with exclusivity, elegance, and high price points. From designer handbags to bespoke clothing, these items represent more than just fashion; they are symbols of status and personal expression. However, the premium prices of these products can be a barrier for many potential customers. Offering finance options is an effective way for luxury fashion brands to make their products more accessible, increase sales, and grow their customer base.

In this article, we will explore the benefits of offering finance for luxury fashion brands, the types of finance options available, and how partnering with a retail finance broker like Kandoo can help brands implement these options seamlessly.

Why Offer Finance for Luxury Fashion?

1. Make Luxury More Accessible

Luxury fashion items often come with a significant price tag, and while many consumers aspire to own these high-end products, the cost can be prohibitive. Offering finance solutions allows customers to spread the cost over a period of time, making it easier for them to afford luxury items without having to make a large upfront payment. This can make luxury fashion more accessible to a wider range of customers who may not have previously considered purchasing due to budget constraints.

2. Increase Sales and Average Order Value

One of the most significant benefits of offering finance options is the potential to increase sales. When customers know they can spread the cost of their purchase over several months, they are more likely to make a purchase. Additionally, finance options can encourage customers to spend more, leading to an increase in the average order value (AOV). For example, a customer who may have initially planned to buy one item could be persuaded to purchase additional products if they can finance the entire order.

3. Attract New Customers

Luxury fashion brands often target affluent customers, but offering finance can help attract a broader audience. Consumers who may have been hesitant to engage with a luxury brand due to price can now consider making a purchase, knowing they have the option to spread the cost. By expanding the potential customer base, brands can increase their market reach and grow their customer loyalty.

4. Boost Customer Loyalty

Offering finance options can enhance customer loyalty. When customers feel that a brand is making it easier for them to purchase high-quality products, they are more likely to return for future purchases. Additionally, customers who use finance options tend to make repeat purchases, as they are already familiar with the process and appreciate the flexibility it offers.

5. Stay Competitive

The retail landscape is increasingly competitive, and luxury fashion brands need to stay ahead of the curve. Many high-end retailers, both online and offline, are already offering finance solutions, and those that don’t risk falling behind. By offering finance, luxury fashion brands can ensure they remain competitive and meet the evolving needs of their customers.

Types of Finance Options for Luxury Fashion Brands

There are several types of finance options that luxury fashion brands can offer their customers. Each option has its own benefits, and the choice will depend on the brand’s specific goals and customer preferences.

1. Interest-Free Credit (0% APR)

Interest-free credit is one of the most popular finance options for luxury fashion brands. It allows customers to spread the cost of their purchase over a set period, typically 6 to 12 months, without incurring any interest charges. This option is particularly attractive to customers as it gives them the flexibility to pay in instalments without the added cost of interest.

Interest-free credit is a great way to encourage customers to make larger purchases, as they know they can pay for the item over time without any additional financial burden. It also helps luxury fashion brands differentiate themselves from competitors that may not offer such attractive financing terms.

2. Buy Now, Pay Later (BNPL)

Buy Now, Pay Later (BNPL) has gained significant popularity in recent years, especially among younger consumers. This option allows customers to make a purchase and defer payment for a set period, usually 30 days or more. After the deferral period, customers can either pay the full amount or choose to spread the cost over several months.

BNPL is particularly appealing for luxury fashion brands targeting younger, tech-savvy consumers who may not have the immediate funds to make a purchase but are confident they can pay later. By offering BNPL, luxury brands can tap into a growing market of consumers who prefer flexible payment options.

3. Instalment Plans with Interest (Standard Credit)

For customers who prefer longer-term payment plans, instalment plans with interest are a viable option. These plans allow customers to spread the cost of their purchase over an extended period, such as 12 to 36 months, with interest applied to the total amount. While this option involves additional costs for the customer, it provides them with the convenience of making smaller, manageable payments over a longer period.

This type of finance option is ideal for customers who want the flexibility of longer payment terms and are willing to pay interest for the convenience. Luxury fashion brands can benefit from offering this option as it caters to customers who prioritise flexibility over immediate savings.

4. Store Credit Cards

Many luxury fashion brands offer their own store-branded credit cards, which allow customers to finance their purchases and earn rewards or exclusive benefits. Store credit cards typically offer flexible payment terms, including interest-free periods or instalment plans with interest. Additionally, customers may earn points or discounts for future purchases, encouraging repeat business.

Store credit cards are an excellent way for luxury brands to build customer loyalty and encourage higher spending, as customers are incentivised to use the card for all their purchases within the brand’s ecosystem.

How Kandoo Can Help Luxury Fashion Brands

Kandoo is a UK-based retail finance broker that specialises in providing flexible and accessible finance solutions for retailers, including luxury fashion brands. By partnering with Kandoo, luxury fashion brands can offer a range of finance options to their customers, helping to boost sales and improve the overall shopping experience.

1. Tailored Finance Solutions

Kandoo understands that every brand is unique, and their finance solutions are tailored to meet the specific needs of each retailer. Whether a brand is looking to offer interest-free credit, BNPL, or instalment plans with interest, Kandoo can help design a finance solution that aligns with the brand’s goals and customer preferences.

2. Seamless Integration

One of the key advantages of working with Kandoo is the seamless integration of finance options into the brand’s existing sales process. Kandoo’s platform is designed to work smoothly with both online and in-store sales channels, making it easy for customers to access finance options at the point of purchase. This seamless integration helps luxury fashion brands maintain a consistent and high-quality shopping experience while offering flexible payment solutions.

3. Compliance and Regulation

Offering finance options in the UK requires compliance with various regulations, including those set by the Financial Conduct Authority (FCA). Kandoo is fully FCA-authorised and ensures that all finance solutions provided are compliant with UK regulations. This allows luxury fashion brands to focus on their core business without worrying about the complexities of regulatory compliance.

4. Customer Support and Education

Kandoo provides comprehensive customer support to ensure that both retailers and their customers have a smooth experience when using finance options. From helping customers understand the terms of their finance agreement to providing guidance on repayments, Kandoo’s support team is there to assist at every step of the way. This level of support enhances the customer experience and helps build trust between the brand and its customers.

5. Flexibility for All Customers

Kandoo works with a wide range of finance providers, ensuring that customers with different financial profiles can access finance solutions. This flexibility is especially important for luxury fashion brands, as it allows them to cater to a diverse customer base, including those who may not have access to traditional credit options.

How to Implement Finance Options for Your Luxury Fashion Brand

Implementing finance options for your luxury fashion brand doesn’t have to be complicated. By partnering with a retail finance broker like Kandoo, brands can easily integrate flexible payment solutions into their sales process. Here are some steps to get started:

1. Assess Customer Needs

Before choosing a finance solution, it’s essential to understand the needs and preferences of your customers. Are they looking for interest-free credit, longer-term instalment plans, or BNPL options? Conducting customer surveys or analysing purchase data can provide valuable insights into which finance options will be most appealing.

2. Choose the Right Finance Partner

Partnering with a reputable retail finance broker like Kandoo is crucial for the success of your finance programme. Kandoo offers tailored finance solutions, seamless integration, and expert support, making it an ideal partner for luxury fashion brands.

3. Promote Finance Options

Once you’ve implemented finance options, it’s essential to promote them effectively. Ensure that customers are aware of the finance options available by featuring them prominently on your website, in-store displays, and marketing materials. Clear communication about the benefits of finance, such as interest-free credit or flexible payment plans, can encourage customers to take advantage of these options.

4. Monitor and Optimise

After implementing finance options, it’s essential to monitor their performance regularly. Track key metrics such as sales growth, average order value, and customer feedback to assess the impact of finance options on your business. Use this data to optimise your finance offerings and ensure they continue to meet the needs of your customers.

Conclusion

Offering finance options is a powerful way for luxury fashion brands to make their products more accessible, increase sales, and build customer loyalty. By providing flexible payment solutions such as interest-free credit, BNPL, and instalment plans, luxury brands can attract a broader customer base and stay competitive in an evolving retail landscape.

Partnering with a retail finance broker like Kandoo can simplify the process of offering finance, ensuring seamless integration, regulatory compliance, and excellent customer support. With the right finance solutions in place, luxury fashion brands can unlock new opportunities for growth and success.