Why does a retailer give goods to customers on credit ?
Answers
While cash is king in the retail world, most businesses take multiple methods of payment, including credit and checks. Some retailers may even want to offer store credit, also known as direct credit, to their customers. Using store credit means that you’re offering the credit, and not going to a bank or credit card provider. There are benefits — and drawbacks — to offering store credit, so before you move forward with the offer, be sure you look at how it will affect your store.
There are numerous benefits to offering store credit in any type of retail store. Store credit can be a great financial incentive for customers, especially if you want to stand out from your competitors. Customers who can purchase on credit are more likely to make higher purchases, therefore increasing your sales. Once you start offering credit, you’ll likely attract new people to your store, and they might also tell their friends, giving you good word of mouth. Not to mention, when you offer credit, it gives the store looks the appearance of a robust, sound business since you have people coming in and making big purchases. If your customers can shop on credit, then they’ll choose you over stores that don’t offer credit, especially if they have an established account with you.
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Ratailers give goods on credit to the consumer because their main aim is to retain the consumers.
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