New retail trend: zero rates

As the hire purchase novelty has worn off, retailers are trying to find new ways to keep the consumers coming. The latest trend in this regard points to zero interest rate instalments, as the big sales must be maintained at all costs, for home appliances, furniture and cars.

Cora (retail), Dacia (cars), Elvila (furniture) and Flanco (home appliances) have opted for hire purchase systems that charge no interest in order to be different from their direct competitors and attract consumers.

The instalments or the zero interest lending were successfully used by carmakers in the US several years ago to breathe life into sales amid severe recession on the auto market. The development of this system on the Romanian market is due to the Credisson company, established as a spin-off of Flanco and set to handle the latter’s lending operations. In fact, three of the companies promoting zero interest crediting systems are now running these contracts through Credisson.

Zero interest instalments are a natural phase of the consumer credit, players in the field say. “We introduced instalments with a grace period, the equal fixed instalment system (…) and now that we have entered a new development stage, we have a new special offer developed together with Credisson,” says Marius Ghenea, Flanco network general manager. The Romanian retailer has two products included in this offer at the moment, a Whirlpool washing machine and a Philips TV set.

The representatives of furniture maker and retailer Elvila verify this trend. “We started promoting this zero interest instalment system on November 15 and will continue to do so until Easter. This is a very important promotion method for us. The interest for the products included in this promotion falls upon the producer. The duration of the contract is one year and the instalments are fixed. The monthly instalment is calculated by dividing the total price of the product by 12,” Elvila’s marketing manager Mihaela Toba explains.

The first company to have promoted this system was the Cora hypermarket.
ionut.bonoiu@zf.ro ; georgiana.stavarache@zf.ro