Tackling increasing vulnerability in the consumer industries

With costs on commodity products spiralling, more consumers are finding themselves in vulnerable positions, often having signed up for buy now pay later schemes. How can retailers better support the vulnerable?

There has been an increase in the number of retailers offering the option to purchase now but pay down the line for high value goods. These include consumer electronics brands, but also other sectors as diverse as aviation, with ‘fly now pay later’, and motoring, for essential products such as tyres.

All this despite the Financial Conduct Authority’s Woolard review warning that buy now pay later (BNPL) comes with a “significant potential for consumer harm”. Elsewhere, the Citizens Advice Bureau has previously reported that one in every 10 BNPL customers is being chased by bailiffs and debt collectors as they face “under-the-radar debt”, and the National Debt Helpline has pages on its website devoted to the risks of BNPL.

Inflation has recently hit double digits and a 40-year high: research from debt charity StepChange has revealed that the number of people finding it hard to keep up with bills and credit commitments has doubled since the start of the pandemic, and that one in three UK households is now struggling. StepChange found that 6.4 million adults are feeling the pressure of debt and that this has negatively impacted mental health, relationships and the ability to work; the charity also revealed in research with Barclays that 86% of retailers said they experienced a surge in demand since the beginning of the year.

And yet, some organisations are offering consumers the chance to spread costs, but there doesn’t appear to be a limit on the number of products they can purchase. Apple, meanwhile, is introducing its own BNPL scheme named Apple Pay Later. The electronics giant wants to drive consumers to change their products more frequently, but it will however first do a credit check on the customer – albeit only a ‘soft one’.

The result of all this is that we are certain to see more vulnerable customers – so what can brands do to help those who need it the most?

One way a brand can help is to better support its call-centre staff with technology that helps tune them into what the customer is really saying by ‘listening emotionally’ – after all, nearly 40% of a person’s attitude is conveyed vocally through tone and inflection. Or organisations could better understand their customers’ sentiment by analysing what they are saying about them on social media with social listening technology. Or they could pivot their strategy to be one of ‘the leadership of kindness’ – this includes better educating customers who are in arrears; identifying the vulnerable early; being flexible with methods of contact; and treating each customer as an individual.

Thankfully, measures are also being put in place by the powers that be. The Government recently announced that millions will be better protected through strengthening regulation of interest-free BNPL credit agreements. This includes lenders being required to ensure loans are affordable and amendments to the current rules to make sure that advertisements are fair, clear and not misleading. The Government will also expand rules to cover other forms of unsecured short-term credit that pose similar risks to consumers.

But in these tough times, retail companies themselves have a huge part to play in trying to stop things getting even worse. Brands must support their customers at all times, but especially when they are at their most vulnerable – only then do we have any hope of improving their situations.