Credit practices of clothing retailers in Stillwater, Oklahoma

Abstract

Scope and Method of Study: This study examines the credit practices of clothing retailers in Stillwater, Oklahoma. It considers the importance of credit to the retailers, the types of programs offered, and their individual approaches to the role that credit should play in their respective retailing efforts. It also examines the effect of a potentially large college student clientele upon the credit programs at the subject stores. All data was collected by personally interviewing the manager of each store using a semi-structured questionnaire. The study is primarily of an exploratory nature which presents a broad survey of the overall credit operations and does not try to analyze any one area in depth. Also, no attempt is made to present a quantitative analysis of the success or efficiency of any of the credit operations.

Findings and Conclusions: Credit plays a very important role in the selling efforts of clothing retailers in Stillwater. All but one of the subject stores offer credit services, with credit sales accounting for an average of forty-two per cent of the total sales per store. There is a wide variation in the extent to which credit is used at each store because approximately one-third of them promote credit very aggressively, while the remaining retailers offer it only as a necessary customer service, but do not encourage its use. Both the credit granting policies and the collection policies are very liberal in almost every case, yet the losses from bad debts seem to be very low, although payments are a little slow. The apparent reason for this is that the clientele being dealt with is of a very high caliber. College students have very little effect on any of the credit programs in spite of their large numbers because the majority of merchants feel that their credit needs and paying habits are very similar to those of the adult credit customers. Although no major problems were uncovered, all but the three largest stores seem to operate their credit programs on luck and intuition, with very few management controls being used.