SPSS - News Room

News Release

January 5, 2009

Retailers ignoring consumer debt time bomb, industry survey reveals

~ Research shows over a third of retailers do not check customers’ debt history ~

Many retailers are failing to protect themselves from the threat of bad debt, according to a Vanson Bourne survey¹, conducted on behalf of SPSS Inc., the leading provider of Predictive Analytics software and solutions. The survey was conducted to assess industry attitudes toward customer debt in the current troubled economic climate. It found that 36 per cent of retailers questioned are leaving themselves vulnerable by not proactively checking customers’ debt history or credit records.

At this time of year, retailers especially need to understand their customers’ financial commitments. The holiday season can put a substantial strain on consumers’ finances, retailers need to proactively identify customers who are unable to pay off their debts. The economic downturn is further increasing the risk of bad dept and arrears².

The survey also found that 68 per cent of retailers are currently prioritising cutting operational costs over increasing revenues and profits. Only 7 per cent of the respondents indicated they are actually focusing on improving the collections of outstanding debt, over other business demands.

Predictive Analytics software, which analyses customer data for business decision making, enables organisations to identify the risk potential associated with existing and prospective customers. It can accurately assess the credit-worthiness of customers, so that the risk exposure for the company can be minimised.

“Although savings do need to be made, the retail industry must ensure that it continues to invest in new technology which can ensure long-term financial stability,” said Haydn Lewis, vice president EMEA at SPSS. “Acquiring customers today who can’t pay back their debts in the future is a fast way for a company to build up large negative equity. Not screening people to find out if they have a history of debt is a short-sighted and risky strategy.”

Vanson Bourne survey conducted on behalf of SPSS Inc., sampled 100 CIOs, IT directors and senior management staff, at companies with more than 1000 employees

The Council of Mortgage Lenders (CML) has recently announced that the number of households more than three months behind with their repayments would reach 500,000 in 2009 (Announced December 18, 2008)