RTO heavyweight makes retail inroads with “RAC Acceptance” program
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| Keith Smith of Rent-A-Center, describes the RAC Acceptance program to single store retailer Mo Halawani of XOOM. |
Rent to Own and retail are not strange bedfellows.
Rent to own literally rose from the ashes of a denied credit sale under the guidance of Ernie Talley in the 1960’s. Many of today’s most successful rent to own dealers began in retail. Many continue to employ both retail and RTO successfully in their business model.
Now the nation’s largest rent-to-own company is hoping to streamline the hybrid by offering RTO to customers not approved for traditional retail financing — in the store and on the spot.
Rent-A-Center’s thoroughly field-tested program, RAC Acceptance, debuted Monday at the Nationwide PrimeTime! Conference and Buying Show in Las Vegas where more than 3,300 are in attendance for the buying group’s second largest show ever.
"If our Nationwide retailers could convert 25 percent of their turndowns to sales, that would equate to billions in additional revenue for our members and vendor partners," said James MacAlpine, executive director of Nationwide’s RTO channel in a conference publication. "Some of these customers are making their way to traditional RTO stores, but most are not."
RAC Acceptance program is not the first rent to own crossover program offered to Nationwide retailers. Another program, whynotleaseit.com, is an online process that helps declined retail customers acquire the products they need through RTO.
What makes RAC Acceptance different is the in-store RAC Acceptance co-worker Rent-A-Center provides to help smooth the transition from financing disappointment to rental satisfaction.
According to Keith Smith, director of business development for Rent-A-Center, the program works best for companies experiencing 60 to 70 financing application denials per month.
From the point the application is declined, the customer is handed over to the RAC Acceptance salesperson who fits them with a rent to own contract on a furniture set, appliance or television of their choice from the retailer’s inventory.
Since rent to own agreements do not incur debt, no credit check is needed and all applicants who meet the basic criteria are approved.
"We then buy the product for a discounted price, the retailer handles the delivery and after 72 hours, Rent-A-Center does all the work for the remainder of the contract including service," Smith said. "We also believe in diversification of the (RTO) model and this fits that perfectly."
The program is currently in place in 92 locations in 12 states and Puerto Rico. Rent-A-Center joined RentDirect late last year.
"We are looking to expand our RAC Acceptance footprint," Smith said.
MacAlpine said the set up is a win for the rent to own industry, the retail sector, — which has been pummeled over the last year as a result of the credit crunch — vendors and the customer.
"All of these programs are good for our retail dealers because they expose more customers to the rental/lease-purchase transaction," MacAlpine said. "They are good for our vendors because they allow all of us to move more products. They are good for our retail members because they help them capture more sales."
Nationwide Marketing Group — a mega buying group whose members generate a combined $12 billion in sales annually — concludes its buying show and conference in Las Vegas Tuesday.