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Untapped Gold Mine: How Genesis Credit is Regaining Retail Ground with the Forgotten Consumer

Quit leaving sales on the table. 

On today’s episode, Ed Haluska, Chief Commercial Officer for Genesis Credit joins Mark Kinsley and Mark Quinn to discuss the forgotten consumer. In the world of financing, people are segmented into different camps based on their credit scores and often times, consumers with middle tier credit scores are being denied financing options just because life happened. This is area of financing is where Genesis Credit steps in.

Listen in as Ed discusses his background, the passion and mission of Genesis Credit, how consumer behavior is changing in volatile times and how you can quit losing sales due to less than perfect credit scores. 

FULL TRANSCRIPTION

Mark Kinsley 

Hello, hello. Hello, Mark Kinsley, we have Ed Haluska on the show today. Can you believe it?

Mark Quinn 

I know I was gonna say you look great, but not nearly as good as Ed, the Chief Commercial Officer for Genesis, and he’s in Chattanooga, Tennessee Ed, like, move your head down. I want to see that Choo Choo Train buying Yeah, there you go. Chattanooga.

Mark Kinsley 

I need a sound effect. Trip. Why

Mark Quinn 

are you ready? Nevermind, I can’t do a train. And thanks for being on the show. Appreciate it. Glad to have you here.

Ed Haluska 

Thanks for having me. That’s um, it’s my pleasure.

Mark Quinn 

You bet. Hey, listen, we want to jump right into it. Because what you guys are doing is so important. The consumer finance piece for our industry is so big. It’s what really drives as an engine driving a lot of sales, obviously, big ticket furniture, mattresses, and finance solutions are a big part of that. You guys have seen a massive shift. Have you not in consumer buying behaviour. Talk to us a little bit about that, in what people listening to this show? Really need to understand.

Ed Haluska 

Yeah, I mean, I think as we go towards into, you know, closing out the third quarter and going into the fourth quarter of this year. You know, it’s been a tough year all around. One of the things that we’re watching very closely and I think all of the retailers we work with are watching is is really Dorsey wins. You know, volume in the industry overall is down this year has performed much differently than 2020 or 2021. And so there’s a lot of folks who I think are out there trying to figure out what’s next. And so in the macro environment with raising economic rates, and all of the things happening out in our world today, I think there’s a lot of uncertainty and it’s it’s portraying itself in in the consumer Hang behaviour, which overall, I think there’s less consumption today than there’s been over the last 24 months.

Mark Kinsley 

Alright, let’s get into that real quickly. So less consumption, you’re paying attention to door swings, and you’re paying attention to door swings, because when those are down, you need bigger tickets in order to meet your revenue goals. So take us into that you got a timid consumer coming into the coming into a retail store, for example? What are you seeing happening with retailers to to capture that business? And what are some of the strategies that they’re deploying that you’ve noticed?

Ed Haluska 

Yeah, you know, I mean, today? You know, that’s a great question, because I think, as we look across, you know, the consumer finance portfolios, everybody seems to be down in terms of overall volume. And so I think that’s potentially mark, one of the single biggest questions in the industry is, with the cost of goods increased, with the interest rates increased with people trying to figure out how to pay for groceries, how to put gas in their car to get to work, you know, what money is left over for them to buy a couch or mattress or sofa. And I don’t know that any one has articulated a good response to that just yet.

Mark Quinn 

You know, you made a comment before the show in you just kind of referred to it right. So with inflation, people are really focused on the what they have to have. And then all the aspirational purchases I, we’ve talked about it before on this show ad late in terms of importance of marketing, right. So if you build value in your products, and you make the products that you sell important to the consumer, instead of something that they don’t necessarily need, so raise it up, build more value in those things, then you’ll move up higher on that list. Because if you’re stuck at the bottom of the list, especially now, you’re you’re gonna be in big trouble. Is that kind of how you see it?

Ed Haluska 

I do I do. And I think, you know, I classically over the years have broken the world into into two buckets, wants and needs, and, and those things that are considered needs perform more strongly in in challenging economic times, then, as you said, the aspirational consumption, and you know, selfishly working for consumer finance company, you know, our job is to, to interject that ability to buy and use financing to, to bridge a gap that may exist because of times like today.

Mark Kinsley 

And and I think we’re getting into a conversation that is so critical for retailers to understand, which is you have people that in the credit world, I think it’s referred to as potentially near prime. So you have your Prime customers who are credit worthy at the highest level, and then you have people are near prime? Well, that’s a big swath of Americans who represent a lot of dollars who are having to make hard decisions, like you said, they’re forced ranking the needs at the very top, and then the wants fall underneath that. And so as a Furniture and Mattress retailer, talk to us, talk to the retail community, about these near Prime customers, give us some give us some data around that give us some perspective on serving that giant portion of the population. Sure, sure.

Ed Haluska 

You know, so when we talk about the near prime community, I always I always use a phrase life having happens along the way, right. And so the profile of the consumer for last 24 months, maybe it was a little artificially inflated, maybe it was a little artificially insulated. And as we’ve come into 2022, and, and some of the headwinds that are presenting themselves both now and and in the future, some of the consumers can’t do or don’t act like they were acting before. So maybe that prime consumer lost the job, maybe that prime consumer got a divorce, you know, the things that happen to all of us during life, and that may have changed their ability to perform as their former credit profile suggests. So as we go into both this year and going forward, you know, that near prime consumer probably still believes that they’re a prime consumer. But if they get declined from a prime lender, then the question is, is how do they perceive their ability to be financed? What are they willing to accept from a financing offer? And that’s where a group like like Genesis comes in. We allow folks who for whatever reason, good bad or indifferent weren’t able to get financing from A prime lender to be able to still get very acceptable and reasonable lending from us without having to go to a higher rate, higher interest rate cost, and different types of lenders that that don’t fit our same profile.

Mark Kinsley 

Is there a financial impact to these near Prime customers? Who are offered a solution? Let’s say that doesn’t match up with where they are?

Ed Haluska 

Yeah, I think I think where that mostly will manifest itself, at the highest level, is whether they’re going to make a purchase. So as the retailer thinks about the financial solutions that they’re going to provide to their consumers, you know, there’s always the concept of, am I giving Marc, the right type of credit? Because if I’m not, he may not buy, am I giving Sally the right type of credit, because if I’m not, they may buy and they may default, there’s a lot of different paths you could go down to. But as you look at a full financial solution, or strategy for a retailer, making sure you’re getting the right financing to your consumer basis is critically important. So

Mark Quinn 

there’s so many different ways that retailers can go about providing the solutions. Can you talk us through a little bit like, you know, what is it that the retailers that you’re you’re working with today, inside the the furniture, mattress appliance industries? Like what are they telling you? Like? Why is it that Genesis is such a better solution for them?

Ed Haluska 

Well, I mean, I think we’re, we’ve been in this industry for over 20 years, and experience does matter. We’ve seen up cycles, we’ve seen down cycles, we have a really solid Capitol stack. And so we’re not going anywhere. And we intend to be here for a long while. And, you know, if you use the customer experience as your TrueNorth, as we do, we’re trying to make sure that that consumers getting what they need, when they need it at a reasonable price. And we’re not the solution for everyone. But in these economic times as some of the macro economic headwinds happen, I think that we’re a very good solution for a lot of folks who may not qualify for Prime financing anymore.

Mark Kinsley 

This is called second look, financing. That’s the term I’ve heard. What Okay, for people that don’t know, what does that actually mean, break, break it down in terms of how it’s tiered and what it means.

Ed Haluska 

Yep. So there’s a whole community of financial institutions, mostly banks, that are what are referred to as prime lenders. And Prime is a is a reference back to the FICO hierarchy. FICO stands for Fair Isaac Corporation. And so all of us have a credit score from one of the three big bureaus. And so usually, what you’ll find is that a prime consumer is is normally around 700, up to the top of the spectrum 850. And then, when you think about a second theory, or a second look consumer near prime, you would probably see that person being in the 700, to you know, 550 700 to 580. And then there’s a whole other community of, of service providers called tertiary, tertiary standing for third level, and they provide consumers financing, that is on the riskier side. So to say it a different way, you have what’s called Super prime, the best credit scores the country, then you have prime, underneath prime, you have what’s called near prime, and usually non prime, and then sub prime. And so at Genesis, we like to cater to the folks, we mostly stay near prime prime and near prime, and there are some folks in the lower levels who also qualify based on their application.

Mark Kinsley 

And so for the near Prime customer, there’s there are situations I’ve heard where they could get approved as a prime customer, but they’re going to have a very low credit line. So they don’t have as much buying power, for example, so that retailers not going to have as big of a ticket. And then if they don’t get primary approval, a lot of times they have to resort to these higher interest payment plans. And that’s going to be higher monthly premiums. And it can lower their future buying power. So there’s a lot of dynamics here at play the retailer needs to think about so that there’s a match. What else did I miss there in terms of summarising thinking about that person for where they are?

Ed Haluska 

Yeah, no, I think I think you said it. Well Mark, when you really think about it, and again, in the pandemic in the last, you know, 24 months. I think that you saw very low default rates with very low interest rates. We all went out and bought whatever we wanted, whenever we wanted, we had lots of cash, the government was kind enough to give us more cash. And so you know, quite frankly, in some respects, although COVID in the pandemic was awful, from a buying and a consumption standpoint, there was a tonne of consumption that took place. And as we roll into 2022, and you think about those pieces that have changed, you know, the the prime lender who probably extended and loosened up their credit may be saying, well, maybe I shouldn’t be lending there, I’ve got to be more prudent in going down the spectrum. The tertiary lender, who probably loosened up and was going up and down, probably is rethinking their strategy. And so for a group like Genesis, where we sit in the middle of those two, we’ve got the ability to really rationalise for folks who say, Yes, I’m a prime customer, I’m not going to pay X, or, Hey, the prime lender only gave me Y. And I really need y times two or three, I need a different solution. And so we can play both of those places and expand an accordion as needed.

Mark Kinsley 

We were talking with, we’re talking with Ed Liska, the Chief Commercial Officer with Genesis credit, and you’re filling in some gaps in in thinking, I know for a lot of retailers, and a lot of people in this industry, especially as we head into what feels like Uncharted Waters, but also at the same time, these unchartered waters feel a little bit more like pre pandemic times. So it’s good to kind of know that we’ve gone through this, this doughnut hole of uncertainty in life and in business. And now here on the other side, okay, these conditions are not completely unprecedented. And it’s, it’s time to get back to, you know, understanding the consumer in their current state of behaviour, because that’s gonna allow us to just serve them better. Quinn, where does your head go around how this relates to the retailer in terms of using credit using near prime using the strategies in this thinking that Ed is talking about, and deploying that on the sales floor?

Mark Quinn 

Yeah, I think what is so important is that the retailers out there have a good solid solution, where they’re getting high approval rates, the user interface is simple. The people that you know, are falling in the prime and moving into subprime, that there’s solutions for them. And I think, you know, hearing Ed talk about what they do, and their ability to serve as people that just make, like, it’s all about the customer experience, right? I mean, when they come in, I mean, if you get denied credit, or, you know, if things have been a little tougher for you, that’s not easy stuff to deal with people get take that stuff very personally, and it really sounds like some of this stuff you guys are doing, will really help retailers keep those consumers connected to the business.

Ed Haluska 

I mean, that’s, that’s our desire. You know, I usually refer to myself as an operator. So I will, I’ll do a credit app, I’ll go to the store, I like to spend time on the floor. And you said something extremely important is that consumer when they apply for credit, it’s extremely personal to them. And no one likes to be told no, and nobody likes to be told no, in front of a group of people. So again, going back to that, that customer experience, you know, a great customer experience, in conjunction with exactly what you want to buy, and it’s available in stock and you can walk out is really a home run, and then you start deconstructing those at home run into smaller wins, if you don’t have the pieces to the puzzle.

Mark Quinn 

So you know, we talk a lot about purpose that I’m gonna I’m gonna keep you on a similar track here. So when you made a decision to join Genesis, you did it because of something right. So tell us a little bit about the people you’re working with there? Why why you’re part of that business and tell us a little bit about purpose, right? Like, what’s the purpose in it for you guys? And and how you look at that business? I think we heard a little bit about that in your last answer, but take us a little deeper there.

Ed Haluska 

Yeah, you know, I mean, it the reason I came to Genesis is because I think there is a tremendous need out there. And I think it’ll continue to grow for that recognition of the near prime consumer. You know, a lot of people have a lot of guesses where this this industry and where our economy will go over the next 24 months. I think we’ve got the opportunity to provide a rock solid product and a rock solid solution. We allow for a lot of customization. And at the end of the day, we’re just trying to meet the consumer where they need to be met. At the end of the day, We all get up and go to work because we want to make a good buck. I’m no different than anybody else. But doing it was something that you’re really proud of, is kind of fun. It’s actually a lot more than kind of fun. It’s really fun. And so that’s my my deal is, you know, I think that we’ve gotten a tremendous organisation, we have a really tremendous product. And when you work with folks like myself and the team that we’ve assembled, I think you’ll see that, you know, we’re just down to earth rock solid people who want to provide a rock solid product.

Mark Kinsley 

And one of the things that Quinn and I talk about behind the scenes is, okay, we wish the industry would move in x direction, you know, and for us, you know, in the sleep business, for so long, we really want to make sure the industry is positioning sleep as the foundation of good health, with the pillars of fitness and nutrition and mental wellness, sitting on top of that foundation against sleep. So in the halls of Genesis, you know, in the Zoom calls in the hallways, in the private conversations, are there times when you feel like you’re kind of slamming your head against the wall as a group and saying, Why is nobody talking about this, this would make such a huge difference in people’s businesses. What are those things that bubble up?

Ed Haluska 

That’s a big, big question. Good question. Yeah, a very good question. You know, I think at the end of the day, you know, one thing that I’m I’m watching is, is retailer health, financial health, you know, we went from no inventory to now you hear that inventory is back, and it’s coming in droves. But it’s coming at a time where you’re not seeing as many door swings. So folks are getting loaded up with inventory that they purchased X number of months ago, and prices have increased. And so, you know, we transition to promotional furniture, and in the lack thereof, it that 499 sofa is no longer there. So what are you gonna do for that consumer? And so I really think, you know, door swings are not the end all be all. But I mean, you’ve got a lot of retailers across the country who are trying to figure out their own financial health, and how can they continue forward? How can they sell more of their inventory? How can they absorb the cost of goods sold that they’ve eaten over the last 18 months? And I’m not going to be so one sided to say financing helps at all? It doesn’t? That’s that’s, that’s not correct. But I think we’ve provided a valuable product to at least help them increase same store sales, drive volume, and I think that will lead to more health to the retailers, especially on the small and midsize size.

Mark Quinn 

And you know, something he said made me think here a second, like, you know, Kinsley, something else we talked about is two ways to do business, right, you can drive them into your store. So traffic door swings is important. But the other side of it is sell more to the people in your building. Right? And that’s way less expensive, because you’re not having the cost of acquisition, the marketing, the all of that. And so, but that’s what you do, you you you give that consumer more spending power so that the retailer can max out the visit. So it’s an interesting, I hadn’t thought of it really that way before. But I mean, is that pretty much sum sum up a lot of the benefit? Right?

Ed Haluska 

Yeah, I mean, whether it’s a new transaction, right, with a new customer or a subsequent transaction with existing customers, both are incredibly important. And what you’d normally see in a lot of healthy businesses, not all, not all, but I mean, if you’re able to drive that 30 to 40%, repeat transactions in your financing portfolio, that’s a healthy profile, and it will really help you keep on increasing your same store sales.

Mark Kinsley 

And I have a question because Quinn just made me think about transactions. And a lot of times people think when you give them a good and they give you money, then it’s over. And we are trying to encourage retailers and RSA and retail managers to understand that the sale is the beginning of the relationship, in relation to credit. Are there ways that credit can help manage that relationship or reintroduce opportunities to interface with that customer? Sure, sure.

Ed Haluska 

I think any financial partner you’re working with should have a fulsome marketing and remarketing programme to help the retailer and so our core product being a revolving line of credit on a credit card that gives you the function right you can go back and make subsequent purchases if you haven’t exhausted your line, and then you know to you Use a an economic term, you know, to have that invisible hand, you know, come back and have your partner marketing to your consumers, letting them know they have additional dollars, letting them know they can come back to ABC store to make a subsequent purchase. You know, that’s the type of relationship you really want to foster.

Mark Kinsley 

Yeah, I mean, if you think about it, in its simplest terms, if you see that somebody buys a dining room table, and they didn’t buy chairs, you know, you go, Hey, you have enough money to buy the chairs as well. And we have these new chairs that we just got in stock. So like you said, there’s the invisible hand, there’s also the opportunity to mine your existing customer information and connect that to the credit piece. So that then as an organisation, you know, your partners at Genesis credit, and you as ABC retailer, can go out serve those customers be the one that they turn to when they have the need, remind them that that you’re there and be top of mind and be top of mind from a from a standpoint of service, to their specific needs. It’s a very relevant message to them, instead of something that spray and pray. And I bet there’s all kinds of opportunities to mine your existing data like that and work with your credit data.

Ed Haluska 

Yeah, I mean, I think you’re correct. But we also have to remember, I really don’t know a retailer out there that we that we work with, or anybody in the industry. Everybody’s still facing shortages of staff. I mean, it’s still, again, that term macro, it’s not just interest rates, it’s just not the cost of goods. But you know, I don’t know if you’ve tried to hire somebody recently. But it is extremely challenging. And so as long as that function stays problematic, and you are trying that you have to pay more to get a person, it’s hard to find good people, and they’re quitting more than they’ve ever quit. You know, that creates just a whole different dynamic of trying to say, and by the way, after we’re overpaying you you really don’t want to be here. Are you really going to market great to our customers? Everybody can answer that for themselves. Some do, but I don’t think it’s a consistent pattern.

Mark Kinsley 

Yeah, and this goes back to culture and creating purpose in the business. And that definitely flows from the top all the way down. Great, great reminders, indeed. Great reminders. Hey, Ed Hulu ski is the Chief Commercial Officer with Genesis credit. You have an amazing team. We’ve gotten to know some of the folks from your team. And so thank you for for helping retailers helping us understand how credit interfaces with this changing consumer. And I have to say something before we get out of here. Happy birthday to your son. He is nine years old today. What do you want to give

Mark Quinn 

a birthday that’s what I

Ed Haluska 

want to know. My son is currently engulfed in Pokemon. So his sister was kind enough to get him one of those books where you can put all your Pokemon cards and you can trade with his buddies and then his beyond that passion. He is a fanatical soccer player. So we got him while he was in yard net. So he’s, he’s a pretty happy camper today.

Mark Quinn 

This is another book you could get him I think he would love it. It’s called come back to bed. It was written by Mark Kinsley Mark Quinn and I think it would be a great bedtime story for him. It will put him right to sleep guaranteed.

Ed Haluska 

Listen, I pick you up on it and no tequila needed, right?

Mark Quinn 

I’m gonna tell you our executive producer, Yo, Adrian loves these little shot classes. So the official beverage of the DIS Marcos podcast is tequila tequila shot glasses. But for nine year olds, her little boy Finn has turned these into dipping cups, so you could chip in them and arrange dressing and you got it all figured out.

Mark Kinsley 

She actually came home one day and the kids had the dose Marco shot glasses filled with ketchup and different condiments and they said Mom, thank you for getting us these dipping glasses.

Ed Haluska 

That’s awesome. That’s awesome.

Mark Quinn 

Didn’t she say why did you take my tequila glass? Oh, wait for me. That’s there. Now.

Ed Haluska 

I just thought she was gonna go straight to the bottle. But that’s a different story. Right?

Mark Kinsley 

Well, happy birthday to your son. And it feels it feels like a birthday to us whenever we get to meet great people like you. And you’re awesome. Thanks for being on the show. How can people get in touch with you?

Ed Haluska 

You know, you can either call or easier to email. I’m on LinkedIn, email, and Hulu SCA at Genesis agenesis dash fs.com. And I’m sure anybody could contact us the DOS show and get my information

Mark Kinsley 

as well. We will be happy to do that. You can go over to fam dot news and we have our podium number at the very bottom right you can just text us if you want to get in touch with Ed, if you have any follow up questions. If you have ideas for a show. We always want to hear from you. And we’re happy to help you get connected to anybody that’s ever been on the show. Especially ed ed, thank you so much. Please pass along our thanks to the folks at Jim So it’s been great having you on the show.

Ed Haluska 

Thank you so much.

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