When Radio Rentals introduced the concept of Rent-Try-Buy in 2002 it went a long way toward removing the stigma previously associated with rent-to-rent.
Peter Krideras

Peter Krideras, National Marketing and Merchandise Manager for Australian rent-to-own company Radio Rentals.

So how does rent-to-own work in Australia?



Krideras: The typical agreement is either 18 or 36 months in length, with an option to purchase the merchandise at the end of the agreement. After 18 months the customer has an option to purchase the item and after 36 months the customer can purchase the item for $1.



Do most customers choose to progress to ownership?



Krideras: Between 50% and 60% of customers go to term and exercise their option to buy. Customers can return the merchandise before their term is up, but there are early payment penalties for doing so.



What is the legislative climate like in Australia for RTO dealers?



Krideras: Primarily there is a national legislation that we’re under but there are also some different state legislatures that vary the way we can transact with individual customers. Overall, we’re covered by the one national code. At the moment, it’s a very, very positive environment to conduct business.



When Radio Rentals introduced the concept of Rent-Try-Buy in 2002 it went a long way toward removing the stigma previously associated with rent-to-rent. At the moment, and I’ll borrow from our current tagline, there’s a bit of a “Rental Revolution” in Australia. A lot of non-traditional organizations, including our major retail competitors, are looking at offering rental programs. People are talking about rental again.



What sort of merchandise do you rent?



Krideras: We’re typically a domestic appliance renter. We offer nearly anything for the home including A/V equipment, and a complete range of white goods. We re-introduced furniture during April 2006 after taking a several-year break and furniture now represents between 20 and 30% of our business. Computers are also a big part of our business and it’s fair to say that treadmills are one of the top-five SKU’s for us each month.



Our best brands include NEC Australia for flat panel televisions; Acer Australia for computers; Electrolux for laundry equipment; Mitsubishi Australia for refrigeration; and most of our furniture comes from companies in New Zealand.



How many agreements do you average per store?



Krideras: The typical store averages 3,000 units on rent but some stores have in excess of 5,000 units on rent.



Do you have to service a large area to reach such a high volume of agreements?



Krideras: In metropolitan markets our delivery areas are very concentrated, but in our regional centers we could be driving up to 100 kilometers (about 62 miles) from the store to make deliveries.



So what is the typical demographic profile of an Australian rental customer?



Krideras: At this stage it’s still pretty broad. We have tried to communicate the message to as many people as possible that renting is an alternative way to acquire things for their home. It’s basically us trying to tell as many people as possible about Rent-Try-Buy.



The best medium for us to get this message out proves to be television. The more we’re on television, the more people we can reach. But we also try to mail out our catalogs to as many people as possible. We have a good arrangement so it’s not as expensive as you might think to mail catalogs to all the people within 100 kilometers of a certain store.



How are collections handled?



Krideras: For us, we try to mitigate the collection issue up front. We’re very diligent in the way we assess customers. We have our customer scorecard (application) which is very thorough and we hope in most cases will address any problems we might have down the track.



How do customers make their payments?



Krideras: We have two options right now. Customers can make fortnightly (biweekly) or monthly repayments. And all our payments are made via electronic debit. We definitely prefer electronic payments. We don’t have customers coming into the stores to make their payments as I understand you do here.



Do you have any plans for expansion?



Krideras: In Tasmania, one of our smaller states, we are looking at trialing (testing) a finance proposition to offer unsecured loans to potential customers who for whatever reason returned merchandise to Radio Rentals. This would allow them to go on holiday, pay some debts, service their car, et cetera.



Is RTO Online as widely read in Australia as we’ve heard?



Krideras: A lot of key management in our organization have RTO Online on their computers every morning. We definitely refer to it regularly.

___

RTO Magazine is the leading rent to own industry print publication.