Rent-to-buy retail: UK market profile and forecast

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Published: November 2012
Pages: 42
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Description

About this report

In this report we review the UK rent-to-buy, or hire purchase, retail market. We quantify the market size, historical growth rates and levels of industry profitability while reviewing key factors behind these figures.

We also carry out an in-depth analysis of the relevant drivers of industry growth – in particular the macroeconomic environment and supplier trends – setting out historical trends and available forecasts. Our forecast for industry growth is based on this analysis of historical trends and growth drivers.

What are the objectives of this market report?

Rent-to-buy is a fast-growing segment of retailing in the UK, expanding to take up some of the increasing degree of slack on the high street. These retailers are frequently criticised for imposing a combination of credit terms and insurances which leads to items being significantly more expensive than via other channels. However, for many consumers, they increasingly make it possible for them to obtain goods which would not otherwise be accessible. This report aims to explore these views. It also considers the factors which have driven the high rates of growth that the sector has experienced and sets our views on how likely it is to continue in the future.

We believe that, in order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information. The aim of this report is to provide this.

It is intended for:
– Operators of rent-to-buy retail businesses themselves
– Investors in these businesses
– Retail property-owners, developers and landlords
– Market regulators and policymakers
– Banks, analysts, consultants and other parties with interests in the sector

What are the sources and methodology?

This report is based on:
– Interviews with senior-level contacts across the high-cost credit market
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant market drivers
– Financial analysis of the accounts of companies in the industry.

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

Market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.

Summary

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Contents

Market overview - 7
- Description
- Market characteristics and trends
- Value drivers
- Regulation
- Alternatives to rent-to-buy
- US comparison
- Borrowing costs
- Customers

Market size and growth - 19
- Stores
- Franchising
- Revenue per store
- US and betting shops comparisons

Market drivers - 20
- Discussion of market drivers
- Drivers and their impact:
- Macroeconomic indicators
- Access to banks
- Consumer credit and lending

Competitive landscape - 31
- Leading companies
- Caversham / BrightHouse
- Prefect Home
- Buy As You View
- Comparison of performance

Forecasts - 36
- Driver forecasts
- Real GDP and inflation
- Unemployment
- Household disposable income
- Store growth
- Market forecast
- Risks to the forecast

Rent-to-buy company profiles - 42
- Caversham / BrightHouse
- Prefect Home
- Buy As You View

Appendix - 45

List of charts (UK Rent-to-Buy Market Report)

1.UK & US rent-to-buy stores per million adults (18+)
2.UK and US rent-to-buy revenue per adult (18+)
3.High cost credit types APR / %
4.Total amounts paid including principal / £
5.Reasons for taking out agreement / %
6.Historical UK rent-to-buy market size / £m
7.UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
8.Historical number of unemployed and part time employed / (‘000)
9.Historical number of new debt solutions per year / ('000)
10.UK student loan total outstanding balance / £bn
11.UK real median income and gross household disposable income annual growth rates / % annual change
12.Historical UK number of bank branches
13.European countries number of bank branches per million people
14.European countries bank branches CAGR (1999-2010) / %
15.UK outstanding consumer credit / £m
16.Loan-to-deposit ratios at major UK banks / %
17.Number of credit cards in issue / m, end of year
18.Percentage of gross lending not repaid / %, year average
19.Historical UK rent-to-buy market size / £m
20.Leading UK rent-to-buy providers market share / £m
21.Rent-to-buy - Historical no. of stores by year
22.Revenue growth rates of leading rent-to-buy providers - CAGR %
23.Latest pre-tax profit margins of leading rent-to-buy providers / %
24.Latest revenue per employee for rent-to-buy providers / £'000
25.UK nominal GDP, inflation (GDP deflator) and real GDP / % annual changes
26.Forecast number of unemployed and historical part time employed / (‘000)
27.UK real household disposable and median income / % annual change
28.Rent-to-buy - Forecast no. of stores by year
29.Forecast UK rent-to-buy market size / £m
30.BrightHouse Ltd. summary financials
31.Buy As You View Holdings Ltd. summary financials
32.Perfect Home Holdings Ltd. summary financials

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