Rent-to-own News

Rent-to-own News - Higher income customers discover RTO option

February 5, 2009

The consumer credit crunch may be turning some higher-income buyers into renters, according to a report in the Dallas Morning News.

Rent-A-Center officials say the recession is leading more customers with higher incomes into the company's stores, which rent and sell appliances, consumer electronics and furniture to customers who often lack credit.

Both Rent-A-Center and competitor Aaron Rents raised their earnings outlook for 2009.

As job losses mount, analysts say more people with average household incomes -- $20,000 to $50,000 -- will be kicked out of traditional methods of financing and will seek alternative financing mechanisms such as those offered by rent-to-own stores.

"We continue to see higher-income consumers relative to average income levels of a few years ago, most likely driven by the credit-tightening," Mitchell E. Fadel, Rent-A-Center president and chief operating officer told the Dallas Morning News.

"Among consumer categories, rent-to-own is one of the few with "some earnings momentum"," said Laura Champine, managing director at Cowen and Co. "Aaron Rents said they're seeing a consumer that's been turned down at Best Buy or Sears but still has to replace a broken refrigerator or TV."

That consumer may be a better risk than rent-to-own stores have traditionally attracted and that may be contributing to Rent-A-Center's six-year-low delinquency rate, she said.

Even so, the core consumer of rent-to-own is actually a stable demographic, analysts say, typically characterized as non-homeowners with few assets.

As other retailers warn of disappearing earnings, Rent-A-Center reported better-than-expected year-end results this week.

Its customers gravitated to lower-priced items, but deliveries were up, "which gives credence to the argument that the rent-to-own industry is picking up customers as a result of the difficult credit environment," said Arvind Bhatia, an analyst at Sterne, Agee & Leach Inc. who covers Rent-A-Center.

mevans@rtohq.org

About APRO
The Association of Progressive Rental Organizations is the official voice of the rent-to-own industry and the most accurate and trustworthy source of rent-to-own news in the industry. Founded in 1980, APRO is the national, nonprofit trade association advocating and representing the rent-to-own industry before the U.S. Congress, state legislatures, courts, media and the public.

For more information, visit www.rtohq.org.

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RTOHQ: The Magazine
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APRO's new, mobile-ready magazine is now available in addition to our print edition. The digital format provides the same informative content as our printed magazine, but also offers tools to make the reading experience more enriching. Access the table of contents page with one click or tap. Get additional information from advertisers by clicking on the links in their ads. The interface is easy to navigate and requires no special app—read our magazine on your computer, digital table or smartphone. Click here to access the digital version of RTOHQ: The Magazine November-December 2011.

Marketing Matters

This year marks the launch of a marketing campaign initiated by APRO to build the rent-to-own customer base. It will be a multi-year endeavor employing multiple strategies. In this and upcoming issues of our magazine, we will address the many facets of marketing that affect our industry.

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Future issues of APRO's magazine will be available in this same new format. Click here to access past issues that are not yet archived in the new interface.

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