Rent-to-Own

The Digital Divide: Computers as Opportunity for RTO Dealers by Elizabeth Winn

APROfile: Mamie Harper — The RTO Advocate by Katie Garza

Tech Knowledge: The Latest and Greatest in the Computer World by Ellison Crider

 

 

 

 

 

THE DIGITAL DIVIDE

With the surge in Internet usage during the past five years, computer rentals have been a rising star on the rent-to-own horizon. Industry statistics show a growth in computer rentals from 0.8 percent of BOR in 1997 to 4.2 percent of BOR in 2001, representing a growth of 425 percent in a four-year period. No other product category comes close.

The 2001 Rental-Purchase Industry Survey indicates computer rentals now exceed rentals of VCRs, living room tables, dining room furniture, decorative accessories, recliners, home entertainment centers and stoves. Computer rentals are now gaining on refrigerators as a percentage of BOR industrywide. These numbers should be starting to get dealers’ attention.

When did all this begin? Jump back in time for a moment to the late 1970s in California. One of the rental industry’s frontier-busting pioneers, Barry Gambini, saw potential in this newfangled “personal computer” called the Commodore 64, a veritable icon of computing power that armed the user with word processing and an electronic spreadsheet. Gambini opened the doors on CompuRent, a pilot storefront. After 18 months, with technological advances moving faster than a speeding bullet, Gambini determined that the computer environment wasn’t yet stable enough for rental markets. That was then.

Soon after this foray into computers, the advent of another maverick machine, the VCR, came about. Eager to ride the tide of interest in popular, new products, Gambini was the first rental dealer to rent VCRs. His customers rented the hefty Sony Movie Machine and a four-movie weekend package and away they’d go.VCRs went on to be a cornerstone of BOR for years.

Renting innovative products in time with the times is great when the turns are there and consumer interest is high. Rental customers want what everyone else has, although they can’t always access products when they first hit the market. When new products come out in the tech realm, who gets there first? The geeks and the “early adopters” who have to have the latest feature, are usually first. Next comes the upper middle-class who want the latest gadget, toy, status symbol. After that, middle-class America takes a look.

By now the price has dropped somewhat and the product has some visibility in the marketplace. It has proven to be a desirable and necessary thing to survive and, let’s face it, if the Joneses have it, everyone’s gotta have it. As more and more consumers buy in, it becomes downright necessary to plug into technology to keep up the pace in business, at home and at school. However, there are always those consumers who do not quite arrive on the scene. Zoom to the present and meet a newly defined and significant segment of our Information Age society—the Digital Divide.

What and who is the Digital Divide?

The Digital Divide represents consumers who haven’t yet plugged into computers and the Internet due to lack of money, credit, education, physical access, confidence or just plain lack of interest. As the rest of the world speeds forward on the Information Superhighway, those already on the side of the road are getting left further behind. This lack of access translates to decreased opportunity to take part in our information-based economy.

As of September 2001, 168.6 million Americans are becoming increasingly dependent upon the communication, education, training, shopping and entertainment opportunities provided by the Internet.While these folks are getting ahead in a society already fractured by socioeconomic inequities, the gap widens, thus, the divide. What can this mean for rent-to-own?

More customers. The rental industry’s customer base has remained stagnant for the past three years at three million customers. Some Digital Divide customers are already walking into rental stores. They are rental customers without the Internet. A significant base of new customers lies within the Digital Divide and can be reached with the right direct marketing message. Dealers who are not reaching them are missing an important opportunity. Digital Dividers are ready to embrace the Internet. They are starting to feel the effects of being left behind or left out. Yet, the lack of Internet and/or computer access due largely to cost, credit restrictions and fundamental lack of understanding of computers has kept many in this large group of consumers at bay with few or no options.

A study by the U.S. Department of Commerce cites that between 1998 and 2000, growth in households acquiring a computer for the first time or coming online was most dramatic among African-Americans and Hispanics, consumers bringing in under $35,000 annually and those with a high school education or less. Hispanic households with computers grew by 32.2 percent from 1998 to 2000 while African-American households with computers grew by 40.5 percent. During this three-year period, Internet access among African-Americans more than doubled at 110 percent and Hispanic access almost doubled at 87 percent. Internet access increased in households within the $15,000–$24,999 income bracket by 93.6 percent. Americans coming online with less than a high school education increased by a whopping 134 percent.

Even with growth in access rates well above the national average rate of 58.4 percent, there is plenty of room to grow with more than 100 million Americans currently not online. African-Americans and Hispanics are still far behind Caucasians and Asians with access to computers, especially at home. Currently, 70 percent of “Black and Brown America” is not connected, according to former Assistant Secretary of Commerce Larry Irving. This is a wide open market on the move, but it is a market with specific needs.

Meeting the needs of the Digital Divide customer

Income and education levels of most Digital Divide customers demand the least complicated, least expensive and least frustrating experience in computer and Internet acquisition. They are motivated by four main things: easy access, low cost, online communication with friends and family and Internet content that is relevant to enhancing the quality of their lives.

First off, easy access means just that. It means no hassles in signing up for Internet service. This includes trying to compare what each service offers, whether a major or a local ISP, and then usually needing a credit card to pay for monthly service. Keeping up with yet another payment is discouraging to some. The days of free unlimited Internet are gone. Many potential customers have not gone online because of perceived expense, credit restrictions and lack of knowledge on how to get online. Making Internet access as simple as possible is key to getting customers to come in and rent hardware. Bundling Internet service with hardware is an approach whose time has come.

Second, cost is a another consideration when attracting the Digital Divide customer. Presently, an average weekly rental rate on computers runs about $28 (based on the lowest weekly rates of $19.99 and the highest of $39.99). Adding Internet service, which averages $22 per month, on top of a monthly average expense ($28 multiplied by 4.3 weeks per month equals $120), the customer is looking at an average of $142 per month to get a computer and to get online. This is a stretch for the Digital Divide customer, considering that the most dramatic expansion rate of 93.6 percent is occurring in income brackets below $25,000 where only 28 percent of homes have a computer and 19 percent are currently online. A lower weekly rate is more suited for acceptance by this newly entering customer base. This is in tune with what these customers really need—fewer bells and whistles for less money.

Third, getting online to communicate with friends and family is attracting Digital Dividers to the Internet. E-mail remains the No. 1 online activity among users at 84.8 percent, information searching at 59 percent, checking news, weather and sports at 46 percent and shopping and bill paying up to 33.6 percent.

Developments in instant messaging (IM), the increasingly popular online chat tool, have also sparked growth in Internet usage.While it has taken nearly a decade for e-mail to be fully embraced, most analysts believe it will take half that time for IM to become a way of life. Instant Messaging has virtually replaced phone chat among many teenagers and has literally begun to change the way people are doing business. It is estimated that by 2005, IM will surpass e-mail as the primary online communications tool.

Finally, meaningful content is extremely important to Digital Dividers coming online. Access alone will not bridge the divide. To attract and keep anyone on the Internet, regardless of their cyber-sophistication, useful content is as important as hardware and Internet connections. For at least 50 million Americans—roughly 20 percent of the population—one or more content-related barriers stand between them and the benefits offered by the Internet.

Quality content attracts customers

Four specific barriers to quality content for Digital Dividers are lack of local information, literacy barriers, language barriers and lack of cultural diversity. Over and over, Digital Dividers remark that practical information about their local community is what they want most in the way of content. This includes information on local entry-level job listings, affordable local housing rentals and foreclosures, local transportation, child care, local government agencies, health care, educational opportunities, recreation and family events.

Low-literacy is a significant barrier, but one of the most motivating reasons for Digital Dividers to come online now. Forty-four million American adults do not have the reading and writing skills necessary for functioning in everyday life. Appropriate online content for limited- literacy Americans raises literacy levels as well as employment levels, saving business and taxpayers considerable dollars. American businesses lose $60 billion in productivity every year due to employees’ basic lack of skills. Preparation for high school GED online is vastly appealing to those needing to improve their earning potential. Language barriers on the Internet affect an estimated 32 million Americans. Approximately 87 percent of documents on the Internet are written in English. Non-English-speaking users want three things: online translation tools, online courses to improve English language skills and more information in their native language, especially about government efforts that affect them such as Medicare, taxes, voting and immigration rulings.

Cultural gathering places on the Internet hold strong attraction for Digital Dividers who want to maintain connections to their culture though they may be distanced. “Lowincome groups don’t have enough cultural spaces they can call their own; they need more environments dedicated to this,” says Tamara Sturak, program director of The Interactive University of California, Berkeley.

Availability of desirable content and navigation assistance to get to it is the powerful magnet that will attract and keep this worthy and advancing market. Moreover, playing a part in bridging the Digital Divide in this country is a noble endeavor that would raise the bar in the public relations efforts for the rental industry.

As the Internet evolves, content development initiatives are spawning all over the country. Marketing partnerships are currently being developed for rental dealers to serve better this promising, emerging market and begin to grow a new, solid customer base while contributing to bridging the digital divide. This is a new twist in ISP delivery that is easily provided with the purpose of building loyalty within a customer base by providing quality, relevant content and link information targeted to rental customer needs and interests.

Keeping it simple

Those dealers who are already renting hardware know that it can be a profitable, albeit labyrinthine, endeavor. Some dealers who have tried to rent computers felt that they had to spend too much time and money to make a profit and got out. Many other dealers, however, have figured out how to do it to make it the fastest growing category in rentals. One common thread that dealers across the board want, however, is less hassle. Less maintenance, less idle inventory, easier set-up requiring less employee time, better warranties and service support and a higher stick rate are a few items on the wish list for this product category. And then there’s that matter of finding new customers.

Fortunately, at a time when a virtual tsunami of emerging late adopters to the Internet is swelling, the folks in the back rooms are aware and responding to the call. For some time now, the computer industry has been on a fast track with a focus on speed and storage. What has become apparent is that most home users don’t use the maximum capacity of today’s rocket-powered machines.

The tide of obsolescence has not made consumers happy when they are made to feel their investment is no good, that they are behind and must upgrade to a new machine to be able to run new software. This also plays havoc with inventories. It’s the game of hype and it has gone on for a long time.

Software companies have supported hardware manufacturers by distributing the new version game and consumers have followed blindly along. Most of us have been a puppet in this scenario.

The PC industry has never needed new sales more than it does now. The industry is in its first decline since 1986. In the first full week after the terrorist attacks, retail PC sales were down nearly 50 percent from the same period a year ago, according to industry analysts. Prices continue to fall even as features improve.

In the past, the industry has pushed new features and capabilities—digital music, photography, gaming, more powerful software— as primary selling points. But massive advances in power and capabilities are lost on the average consumer and don’t matter a whit to the newbies coming on board from the Digital Divide. They want e-mail and lifeenhancing information which simply doesn’t require 1 gigahertz of processing power or 256 megabytes of memory.

When technology reaches the point where it satisfies basic needs, improvements in technology lose their glamour. Customers seek efficiency, reliability, low cost and convenience. The entire nature of a product can change in a mature market. Late adopters are more conservative. They have waited for the technologies to mature, to prove themselves and to provide value for their money, value without hassle. Late adopters are the vast majority and far outnumber the early adopters—those who are enchanted by technology.

The PC industry has been through a period of enormous growth with profits reaching almost a fever pitch. New technologies have been hurled at the customer at a rate faster than even the early adopters can absorb. Suppliers must be aware of adapting to a mature market and an evolving customer base. Function- based devices geared to user abilities and preferences have arrived. In the inimitable words of Bob Dylan, “the times, they are a changin’.”

The big picture

American policy makers and opinion leaders are beginning to turn their attention to the untapped market potential in the low-income areas of the country where much of the Digital Divide resides. According to estimates, the inner-city portions of America represent more than $300 billion in retail purchasing power.Much of this is untapped, despite the ready customer base, because of a gap in information about retail choices and options.

Although some questions arise whether the Internet will become a priority for underserved Americans on limited budgets, the example of cable television suggests that as long as the product is seen as valuable, price alone does not dictate a market for media products.

Studies show 56 percent of low-income families have a cable subscription, typically paying about $28 per month for basic service and additional monthly fees for premium service. The potential exists for far greater adoption of the Internet with access to valuable content relevant to enhancing daily lives. Yet financial and credit restrictions still make it difficult for a large segment of the Divide to join in.

Timing is everything. The arrival of late adopters to the Internet comes on the heels of a three-year drought in rental customer growth. Dealers have an extraordinary opportunity to tap into what is fast becoming a needs-driven market. Attracting these customers requires thinking about their specific needs. Departure from standard procedure by simplifying hardware offerings, targeting marketing efforts, bundling Internet service and forming partnerships with content managers will not only address existing logistical problems in computer rentals, it will serve the rental industry well by establishing a permanent and perpetual new level of customer. Meeting the challenge of ushering in the new rental customer will require new ways of thinking and willingness to try new methods. The potential of this ready market warrants stepping up to the plate. Batter up?

Elizabeth Winn is vice president of marketing at iQ Systems. Her e-mail address is etwinn@hotmail.com.

 

THE RTO ADVOCATE SPREADING THE WORD FROM WEST TEXAS TO WASHINGTON

There was a time when Mamie Harper spent her days working in a restaurant, dealing with customers who ate every morsel on their plates and then brazenly demanded a refund because they weren’t satisfied with their meals. As the food and beverage manager for a country club in a small Texas town, Harper felt stifled; she knew she wanted more out of life, but the opportunities in the restaurant industry were discouraging.

“The food business is tough,” Harper says. “I wanted to have my own business, but I saw very quickly that you’re only as good as the last meal you served and nobody really wants to finance a restaurant.”

So Harper began looking around for other career opportunities. One of her sisters, who worked for a local ColorTyme franchisee, suggested that Harper get into the rent-to-own business. A couple of phone calls and an interview later, Harper was hired as the store manager for a new ColorTyme franchise in Beeville, TX.

Right away I felt that rent-to-own would be a good business to invest in long term,” Harper says. “I liked the fact that we were actually helping customers and building relationships. I started realizing that I not only knew the customers who came into the store, but I also knew their children too.Many times I saw them more often than my own relatives. There was a big bond there.”

A few years later, she became a regional store manager under Tom Chorn, another ColorTyme franchisee down in south Texas. “He told me that if I helped him achieve a certain level of success, when the time came, he would help me get into my own store or we would form a partnership,” she says. That opportunity arose only two years later when ColorTyme approached Chorn about taking over a store in the Texas/Mexico border town of El Paso.

“Geographically, it wasn’t a good move for Tom,” she says. So, true to his word, Chorn stepped up for his protégé and recommended that the offer be given to Harper, who speaks both English and Spanish. “The offer was no money down, just take over the payments. So I thought, ‘What do I have to lose?’”

With bigger dreams on the horizon, Harper drove out to El Paso. “It took me the first three years, six days a week, 12 to 14 hours a day, before I got to a point where I felt things were stable,” says Harper, who, one year after moving to El Paso, incorporated her business as M Rentals—“M” for Mamie, of course. And later, in 1995, when the original ColorTyme franchise agreement expired, Harper (whose maiden name is Salazar) personalized her store as well—renaming it Fiesta Rent-to-Own because she “wanted it to be more Hispanic-friendly.”

It had taken an abundance of hard work and patience, but,much to Harper’s satisfaction, she now officially owned a business.

WOMEN, WASHINGTON AND THE WEST WING

Never one to sit idle,Harper’s professional interests eventually spread far beyond the border town of El Paso. A true believer in the power of small business in America, she became an advocate for the Small Business Administration, promoting its educational and outreach programs and even hosting a monthly one-hour television show on small business issues.

Harper also joined forces with a civic group, El Paso Women in Business, to recruit more women into the rent-to-own industry and the business world in general. This year, the group will host its first international conference, which will include women from as far away as Chihuahua and Mexico City. Harper recently traveled down to Guadalajara on behalf of El Paso Women in Business to meet with José Fox, brother and personal aide to Mexican President Vicenté Fox, to garner his support in promoting the unprecedented international event.

“I want to make a dramatic push this year to encourage rental companies and groups to introduce more women to this business because it really is a perfect match,” she says. “Women can be very diplomatic in the collections part of our business, which is a good part of it, and it’s also the unique skills they bring to marketing, store presentation and customer relations. I think we’ve got to get over that myth that women can’t deliver furniture.”

Harper also has shown her enthusiasm for the industry on the national level. She is serving a second term as secretary on the Association of Progressive Rental Organizations’ board of directors and is in her fourth year as chairwoman of APRO’s political action committee (APRO-PAC)—a position that suits her well. Since her involvement, Harper has increased the fundraising totals from $30,000 in 1997 to $125,000 in 2001. Her secret? Education and perseverance.

“In the past, when people would ask me to donate money to APRO-PAC, it was always a mystery to me about how it really worked and why we should give money,” says Harper. “When I took over this position, my thoughts were that I was going to take the mystery out of it. If you can educate people about why you’re doing it and why they should give and get them to commit just one time, they’re more likely to keep on giving.”

According to Harper, PAC money goes directly to the federal legislators who have shown support for rent-toown industry causes—for instance, Rep. Walter Jones, R-N.C., and Rep. James Maloney, D-Conn., the cosponsors of HR 1701, the Consumer Rental Purchase Agreement Act.

“We’re very careful about who we give our money to,” she says. “Even though $125,000 is substantially more than we started out with, it’s still not much in the bigger scheme of things. There are so many people out there who we want to support, particularly the federal legislators of the states in which we don’t have [pro-RTO] bills.”

Harper says that she and APROPAC co-chair Lyn Leach, who has been instrumental in helping her reach potential donors through phone call campaigns, are prepared to top $125,000 in 2002. “I would be really thrilled if we could raise $150,000,” she says, adding that they will continue to target vendors whose livelihoods depend on the success of RTO businesses. “We’ve just scratched the surface on that segment.”

Harper’s ardent support for RTO business issues has made her a natural spokesperson for the industry. Her debut in the spotlight in 1993 was no small production. Harper was selected again in 2001 by APRO board members to testify in a hearing before the federal subcommittee of financial institutions and consumer credit, an organization established under the U.S.House of Representatives’ Banking and Financial Services Committee.Her mission: to educate federal legislators on the finer points of RTO business transactions.

“A big part of my testimony was just simply explaining what we do and getting them to understand that, at any time, the customer can return the merchandise for any reason or no reason and that they are not incurring debt,” she says. “You have to understand; eight years ago we weren’t as readily recognized or accepted. People didn’t really know about us and what information they did have about us was mostly inaccurate.”

Harper says that much of this “bad information” originated from campaigns launched by the late Rep. Henry B. Gonzalez, D-Texas. “He derailed any in-roads we had made to educate people about rent-to-own. Unfortunately, at that time, there had been some bad apples, let us say, and they had been doing transactions that the Association did not condone.And with that kind of information, [Gonzalez] just decided that the whole barrel was full of bad apples.”

The forecast for the RTO industry might have looked stormy at that first Washington hearing, but Harper’s most recent encounter in the nation’s Capitol proved more encouraging. This past July, Dr. Lawrence Lindsey, assistant for economic affairs, invited Harper and five other chief business executives to the West Wing of the White House for a roundtable discussion on the current state of America’s industries—from the large conglomerates to the smaller mom-and-pops. Although she didn’t meet with President Bush, who had left for London earlier that morning,Harper and the other roundtable participants were given a tour of the White House and presented with official White House lapel pins.

“I was in awe of the company I was in,” says Harper. “There was Glenn Epstein, president and CEO of Intermagnetics General Corp.; Dr. Vance Coffman, chairman of the board and CEO of Lockheed Martin Corp.; J. Carter Beese, president of Riggs Capital Partners and former commissioner of the Securities and Exchange Commission; Thomas Acheson, president and chairman of the board for Tameron Automotive Group; Robert Kurz, president and CEO of Keystone Shipping Co.; and then me!”

According to Harper, the participants were allotted 10 minutes each at the beginning of the meeting to share their views. Harper said that she was able to touch on several points regarding the rent-to-own industry, HR 1701 and general small-business concerns. “My participation in the roundtable discussion was timely because I had just testified the week before [with James Byrd of Byrd’s TV in Florence, SC] on HR 1701,” she says. “I asked the Administration to consider the consumer benefits of this industry-supported bill and quoted industry statistics on the number of customers involved in rental-purchase transactions. I also stressed the renewed consumer protections that were included in the legislation, because we had really beefed those up in response to some of the consumer advocates.”

Harper says the feedback she received from her fellow colleagues was much different than her experience at the subcommittee hearing in 1993. “First of all, everyone knew about rentto- own, including Dr. Lindsey. And I thought, ‘Wow, we’ve come a long way in eight years,’” says Harper. “The questions they asked were educated questions. They specifically asked me about APR [annual percentage rate] disclosure and that was my opportunity to explain that APR is a component of debt and because our customers never incur debt, APR is not applicable.

“I was encouraged by their responses to the information I provided and have since talked to several of the participants on different business issues,” she says.

BACK ON THE HOMEFRONT

Harper’s pilgrimages to Washington and her experiences as the APRO-PAC committee chairwoman have inspired her to go back to college and pursue a bachelor’s degree in political science. She is enrolled at the University of Texas at El Paso and plans to graduate in three years.

“Obviously, I’m there with a bunch of youngsters, but I feel good because I know why I’m there and I’m really doing it for myself,” she says.

And pro-RTO legislation isn’t Harper’s only political platform. She’s also passionate about educating the Hispanic community on Republican interests and increasing the number of citizens who participate in the election process.At press time,Harper was running for chairperson of the Republican National Hispanic Assembly, an organization that reaches out to Hispanic voters. (The election had been delayed due to the terrorist attacks on Sept. 11.)

“I would be happy, of course, if [Hispanic citizens] voted Republican, but really, I’d be just as thrilled if I could get more of them out to vote,” she says.

Harper says that when she reaches the end of her career, she would like to think that she was a positive contributor to the RTO industry and to women in business.

“I would like to be remembered as someone who helped educate the nation about what rent-to-own is all about and who encouraged more female participation in our industry,” she says. “And I’d like to think that I let every dealer—no matter how large or how small—know that they were an integral part of the RTO process.

“That is particularly true when it comes to APRO-PAC,” Harper says. “Only with everyone’s cooperation will we ever really be successful in our legislative efforts.”

From meetings with Mexican leaders to roundtable discussions in the West Wing, Harper’s career already speaks for itself.With ambitions bigger than her home state of Texas, this RTO leader is bound to realize her dreams.

Katie Garza is a free-lance writer.

 

TECHNOLOGY KNOWLEDGE
BY ELLISON CRIDER

And it’s been a happy marriage as there are so many things to count and keep track of in an RTO business. For example, inventory, contracts, customers, products, parts, cash flow, skips, stolens, loaners and units in for repair are all essential measuring devices that determine a store’s performance.

Computerization has played a critical role in the rapid expansion and success of the industry as it has made stores more efficient, paved the way for bigger stores, more BOR per employee per square foot and, overall, increased the level of efficiency. b For most stores, being “computerized” means using one of the off-the-shelf software programs developed specifically to control the inventory, accounts and customer records of rental purchase stores, while some other companies have spent dearly to develop their own programs.b Regardless of how a store is computerized, improvements in technology continue to progress at a rapid speed and the cost to acquire and implement technology is coming down. This article will briefly explore some of those new technologies that rental-purchase companies could use to improve their productivity and efficiency.

Bar coding and wireless technology increases efficiency

One of the “new” technologies that has been around for years is the concept of bar-coding merchandise. A bar-coding system is an effective, popular tool with other industries to transmit data to a computer system and permits faster,more accurate data entry, better tracking and reduced inventory costs, yet most furniture manufacturers have yet to apply bar codes to their products.

Even though it has been available for a long time, rental-purchase dealers have been slow to take advantage of bar coding. A wide range of businesses are now experiencing savings through the use of bar codes, primarily through reductions in working hours spent in gathering and recording data. More and more rental dealers are adopting the concept of bar coding rental products and using it to track inventory efficiently and accurately, some with wireless inventory tracking devices.

Wireless is another prevalent buzzword in the computing world today. There are many ways in which wireless technology can be used in RTO. Among those are wireless data collection, in which a portable reader is used to check inventory instead of printing out and manually marking that printout. Using a portable reader, dealers can scan in the inventory, download it to the computer system and then run a program that instantly reconciles the inventory in the system against the inventory that was downloaded to the reader. After the reconciliation, an exception list prints out telling the user what items are missing, what is in the store that should not be and any other discrepancies. Combined with bar coding technology, the tracking, transferring and checking inventory is quicker and more efficient.

One company that has been using bar coding and wireless tracking devices for more than eight years is Express Rent & Own based in Tacoma,WA.

“We can take and totally reconcile a complete inventory in our stores in four hours,” says Ron Hollyoke, the company’s owner. “There is no mistake as to what each item we rent is. Serial numbers are taken off the bar code on the merchandise and entered directly into the agreement. There is not much reconciliation of inventory—it is either on an agreement or in the store. You know what happened to it! We also use the bar code label to price the merchandise. I don’t understand why more people don’t bar code their merchandise.”

Wireless networking

Another use of wireless technology is wireless networking. Wireless networking has several benefits For example, a dealer can have a number of workstations that can be simply picked up and moved anywhere within the location, eliminating a wired connection to the main computer. On a busy Saturday, a store manager can move a workstation from the back to the front of the store without having to disconnect wires. Another example is the account manager who is issued a portable device such as a Palm Pilot with a wireless cell phone card installed. This account manager can now call the home office PC and verify a customer’s account history, access the correct payment amount or even record a payment while in the field. This can lead to easier tracking of field receipts and address a host of other problems that rental-purchase dealers encounter when trying to keep track of account managers and delivery people.

Say goodbye to dot matrix printers

The bad news for dot matrix printers is that another innovation is slowly beginning to take hold in the rental-purchase business—laser printing of documents, primarily agreements. There are three main advantages of dumping your old dot matrix printers. Legally, a dealer is protected because every agreement will print computer-calculated numbers without an alignment problem. Also, there is no need to keep an inventory of pre-printed agreements on hand at every location, thus saving on storage and printing costs. Finally, a laser document projects a very professional image for businesses that use them.

“Laser printing of the entire rental agreement as opposed to making the printer in the store fill in the blanks will avoid the kinds of misalignment problems we see recurring in a number of rental companies,” says APRO General Counsel Ed Winn III. “These alignment problems have resulted in at least one class-action lawsuit that I am aware of and that settled, finally, for several million dollars.”

Laser printing is also being used to print other forms used everyday in the business. Some examples are rental order forms, price tags, pick-up forms, daily cash reports, petty cash receipts and vehicle inspection forms. The main advantage of doing this is to eliminate storage and to have these forms available on demand.

Data warehousing = profit

Data warehousing is also taking hold in the rental-purchase industry. This is a concept where data from a dealer’s current software program is transmitted to an open database compliant (ODBC) program like Microsoft Access, Excel and Crystal Reports. Inevitably, businesses will want to look at information in their system in ways not allowed by their current in-house systems. What data warehousing allows these businesses to do is organize data into an easily understandable form such as graphs and charts. Ultimately, dealers who take advantage of these analysis options find hidden profit opportunities not noticed in a store’s daily routine.

Another use for mining data is to provide marketing companies with information on customers and accounts so that they can then take that data and use it for target marketing. Tom Weirich, sales manager for Central File, a direct-mail marketer who caters to the rental industry, uses this data to create preferred customer mailing lists. “This maximizes the opportunity available to the user to target a specific audience and ensure the best return on marketing dollars spent. The bottom line is achieving maximum results in direct mail marketing,” says Weirich.

And what about the Internet?

No technology update would be complete without some mention of how the Internet figures into the equation. Many rental-purchase companies already have Web sites that promote their companies and the products they offer.

In addition to a company establishing and maintaining a presence on the Web, there are other practical uses for the Internet. For example, Sam’s Furniture of Ft. Worth, TX, allows its customers to make rental payments through its Web site using a credit card or checking account. This system has been in place for just a few months, but Herb Weisblatt, president of Sam’s, says that “a surprising number of customers make their payments using this convenient method and they like it.” Also, a few companies like Aaron’s Rental Purchase are allowing prospective customers to enter order information into its Web site and then have that information transmitted to the nearest location for approval and follow-up.

Some companies are using Internet-based technology to connect their stores together to one central data depository. One such example is Rent Rite Rental Purchase, a 50-store company based in Boca Raton, FL. Rent Rite uses a TCP/IP platform to connect all of its stores to a central home office system. The advantages of this form of communication are real time communication and data sharing. For example, any store can take a payment for any other store and all stores in a geographical area can share inventory, thus allowing for more efficiency throughout the company.

Rent Rite also uses an Intranet in its operation.What is an Intranet? According to www.intrack.com, “An Intranet is the use of Internet technologies within an organization [or company] to achieve better results than the conventional means of data access and transfer. Intranets help in cutting costs and provide easy and fast accessibility of day-to-day information.”

An Intranet can work with the Internet but not viceversa. It is a good way to get messages out to employees and other important clients using Internet technology while not opening up a company’s communications to the outside world. An Intranet will cut costs while increasing staff productivity. Information is power in today’s economy. The benefits of incorporating an Intranet into an organization are far reaching and many have not even been discovered.

What does the future hold?

Like a speeding, unstoppable locomotive, technology continues to develop at a rapid pace. If past experience holds true, the rental-purchase industry will take a while to catch up. It is, however, worth looking at one new technology starting to catch on—mobile computing.

Mobile computing will become more and more prevalent as time goes on. As previously discussed, wireless technology is growing at a rapid pace. Mobile commerce is any transaction with a monetary value that is conducted via a mobile wireless telecommunications network (i.e. Palm Pilots, mobile phones and pagers). Mobile commerce is most commonly referred to as mCommerce, Mobile Electronic Commerce or Wireless Electronic Commerce. While the business models for mCommerce were derived in the United States, Europe has adopted a definite lead in usage and application development.

One aspect of mCommerce is wireless Internet.Wireless Internet, or “wireless.net,” is generally thought of as wireless access to the Internet, which also includes the extension of a company’s software application or data to mobile devices. The wireless.net concept extends the possible functions of a software program by enhancing customer satisfaction and delivering value-added services to consumers. The following examples are several wireless. net applications:

• Business to Consumer (B2C): Yahoo, eBay, portals, messaging. This application allows a business to keep customers informed of company news, business information (e.g. sales and discounts) and allows customers to purchase online.
• Business to Business (B2B): digital marketplace, procurement, supply chain, fee-based subscription services. This application allows businesses to wirelessly communicate with suppliers and distributors.
• Business to Worker (B2W): enterprise, e-mail, Intranet, operational applications (field services, sales force automation). This application allows for easy distribution of internal company information, electronic distribution of pay stubs and remote training.

Unlike the traditional desktop Internet environment, where users can browse through thousands of pages, the wireless Internet is currently limited to text data for the following reasons:

• Wireless networks currently lack the bandwidth to effectively transmit graphics-rich images.
• The small screens of mobile phones and hand-held devices are only sufficient to display text data.
• Wireless devices have limited computing power.

Doing business in new ways Regardless of how technology develops, the basics of rental-purchase, rent and collect, will always be the same, but as rental-purchase dealers accept and adopt new technologies to assist in renting products and collecting payments, increased profit opportunities emerge from increased efficiencies.

Ellison Crider was hired by Rental and Sales Software Systems (RSSS) in 1990 to market a software program designed to completely control rental-purchase stores and home offices. Crider is currently vice president of marketing for RSSS and can be reached at 800/334-5224, ext. 2119 or by e-mail at ellison@rsss.com.