How do these companies make their money.

[Bugsy]

The TV is now inundated with the furniture stores offering huge discounts on leather suites etc.

What I cannot understand is how do they actually make any money.

They sell a suite heavily discounted=limited profit on the sale.

They sell a suite, no deposit and nothing to pay for one year = no income for one year on the sale.

After one year the customer starts paying a four year NO interest credit agreement=no interest to the credit company.

How do they survive?

or am I missing something.

[Clair]

I was wondering about this just last week and I have come to the conclusion that they must make their money from the credit agreements.

if their customers don't need to pay on purchase or delivery, they're unlikely to set  aside the amount every month to pay up in 4 years time and when the 4 years are up, they have to start a monthly repayment schedule, for which the shops charge a pretty steep rate of interest, or the customer gets hooked into buying another suite whilst the first oen is still being paid for...

These shops increase the number of ads and offers at a time of year when people are "overspent" and when the only way they'll spend more is if they see it "a bargain". The quality of the goods doesn't come into it...

[BJSLIV]

How do they survive?

Ok so they sell a three seater leather settee for £495.

 I suppose the key question must be; how much does it cost to buy said settee in China and then get it shipped to the UK?

[Bugsy]

[quote user="BJSLIV"]

How do they survive?

Ok so they sell a three seater leather settee for £495.

 [/quote]

But with no money from the sale for 12 months.

I certainly couldn't have run my garage on that basis....................[8-)] 

[Anton Redman]

They sell the debt at a discount to the finance company who hopes to make some interest from the people who are too broke to make the payment schedule but not so broke they cannot pay atall.