By Kerri Becker
For many Americans the holidays are synonymous with large amounts of impulsive spending and, as a result, large amounts of debt. For that reason, manufacturers are offering holiday promotions as part of their private label credit programs to provide customers the option of extending their purchase payments over time. Using these offers, dealers can thus build customer relationships, share information about available products and increase their business, according to financial experts.

With a long-term payment alternative, consumers are more likely to afford the flooring that fits within their budget. “A deferred interest term enables them to pay off their holiday purchases before having to cover the cost of flooring,” said Greg Pittman, vice president of GE Money’s Sales Finance unit, a national and independent private label credit provider.

In the same vein, during the holidays more people take interest in starting new home projects, adds Pittman. As a result of higher consumer spending, the programs deliver ticket sales that are 30% to 40% higher than bank cards and cash.

According to Mike McAllister, marketing vice president of Beaulieu of America, the company has always offered an interest reduction package during a two-week holiday period. On average, he’s seen ticket prices as much as four times higher than if the consumer pays cash.

Mohawk is another manufacturer which similarly offers “12-month, no pay, no interest” credit promotions to independent retailers, said Mike Zoellner, Mohawk’s marketing services vice president.

Each cardholder receives a card with the Mohawk and store name imprints. “By gathering a group of dealers together we can negotiate with GE to secure discount rates, which increase store traffic and boost sales,” Zoellner said.

Blane Haywood, director of retail marketing for Shaw, agrees. “These incentives are excellent tools that our retailers have become accustomed to using to keep products flowing.”

For the past six to eight years, Shaw has been showcasing the promotions during its winter conventions, adds Haywood. In partnership with CitiFinancial Retail Services, dealers can purchase inventory now but defer payments until spring.

Along with increasing retail business, the programs provide individual dealer incentives as well, McAllister noted, such as Visa Gift Cards based on application submission numbers.

Special promotions are created based on several factors. According to Catherine Wilson, vice president of marketing for CitiFinancial, such features include a retailer’s promotion length and what programs his competition is using.

“The sales depend on the type and term of promotion and how well the sales are advertised,” she added.

Retailers and manufacturers differ on whether the economy plays a role in the programs’ effectiveness. According to Zoellner, it does not have a large effect, asserting “customers who use private label credit the most are, interestingly enough, those who can afford to pay without it.”

On the other hand, retailer Steve Joss of Vertical Connection Carpet One in Columbia, Md., claims the state of the economy today is “very flat” and thus his expectations are not as high as in previous years.

At the same time, Gary Macelli of S&G Discount Carpet, San Jose, Calif., believes year-round promotions compensate for when business is soft.

On the whole, a “buy now, pay later” alternative offers clients a more flexible payment approach during the holiday spending craze, regardless of their financial burdens.

“I provide customers with credit financing options at the beginning of my presentation as opposed to at the end, so I’m not initially judging if they can afford the purchase or not,” Macelli remarked.