Conn's Working Rebrand as It Looks to Reach Upscale Customers for Growth

Conn’s HomePlus is rebranding as part of a three-year strategy to grow its e-commerce business, enlarge its retail footprint and expand its reach to upscale customers, said executives on the company’s virtual investor day meeting Thursday. It’s in the “research and discovery” phase of the rebranding project, with an update expected in six months, said Chandra Holt, former chief merchandising officer at Walmart who joined Conn's as CEO in August.

The retailer hopes to bump e-commerce revenue from 6% of total receipts in Q3 of FY ’22 to 20% in FY '25 as part of an overall revenue target of $2 billion-$2.2 billion in three years. Revenue for FY ’20, ended Jan. 31, was $1.2 billion. E-commerce is seen making up 55% of revenue growth through FY '25, retail 30%.

Announcing a “new era” at Conn’s, Holt said the retail landscape has evolved and customers’ preferences have changed, leading the company to expand beyond its “financial access” customers, who rely on Conn’s portfolio of credit options, to a second customer segment, which she identified as the “fast and reliable” consumer.

Conn’s white-glove delivery service -- initially put in place “to protect our investment on the credit side” of the business -- is key to boosting conversion of high-ticket credit purchases, Holt said. In addition, the retailer’s in-home product repair service “protects payments” for products purchased for the life of the loan. Both services are important to luring upscale customers who want items they’re looking for to be in stock and delivered quickly, and for repairs to be done locally, she said.

Core financial access customers comprise 62% of Conn’s business, said Holt, with the remainder in the fast and reliable segment. Sales for the latter have grown 21% over the past year, twice as fast as the core financial access customer, she said. Financial access remains important to the company, but “it needs to sit within a broader customer-centric framework” that meets needs outside of financial ones, she said.

Conn’s plans to offer a wider assortment of products at varying price points to attract the fast and reliable segment, while giving more options to the core group, she said. Current revenue mix is 82% from retail, 18% from credit programs, she said. CE is 16% of the revenue mix, computers 6%.

Conn's has a goal to grow e-commerce sales to over $300 million by FY ’25; Holt sees a market opportunity of more than $500 million. Over 25 million visitors go to the Conn’s website each year; average order value is over $930. The biggest opportunity is in conversion rate, she said. Conversion rates of 22 basis points are “well below industry norms,” she said, saying the goal is 150 basis points. Conn's hopes to achieve 50% conversion improvement via a broader range of products and price points, including special order products, she said.

President-Retail Rodney Lastinger said Conn’s hopes to grow its addressable market through higher end goods. In appliances, Conn’s focuses mainly on “better/best” in the category. Over the next year it will expand assortment into premium and special-order products, which will “deepen vendor relationships,” he said. Appliance vendors include GE, LG and Samsung. In coming quarters, it will add GE’s Cafe and LG’s Studio and Samsung’s Decor premium lines, he said. The company competes in the "good" segment in CE, said the accompanying presentation.

Conn's also plans to expand private-label branding beyond the current Dreamspot mattress brand to storage furniture and upholstery over the next few quarters. It will add “other categories where it makes sense,” Lastinger said.

Executives referenced Conn’s unified commerce strategy that will integrate the e-commerce business with stores next year. Employees on Conn’s commission structure are “highly incentivized” to meet customers’ needs, Lastinger said, and that will improve with in-home sales and service that allow associates to service and sell through digital and brick-and-mortar channels.

In an increasingly digital retail environment, Conn’s will emphasize its local presence, where employees are able to engage with customers, Lastinger said. That includes “advocating and supporting for our customers if and when they encounter a service problem after the purchase,” he said. Some 95% of customers' in-home repairs are done by Conn’s employees.

In the unified retail model, customer support will come from call centers and digital channels 24/7, Lastinger said, and customers will be able to choose their contact. “If the customer wants to schedule a delivery, schedule service, make a return or solve a problem with one point of contact, they can,” he said: “They can go back to the person they trusted to make the purchase from in the first place.”

Conn’s operates 157 stores in 15 states. Lastinger referenced a “potential customer in every city, state and ZIP Code across the country.” It hopes to take advantage of store reductions by other retailers: “As competitors have stopped expanding and have closed locations, we are continually looking for opportunities,” he said. The retailer has added an average nine stores per year over the past decade.

Last year, Conn’s began testing smaller 20,000-square-foot stores vs. the traditional 40,000-square-foot layouts. Lastinger cited cost efficiencies, including lower capital to get up and running and higher sales per square foot, which will allow the chain to open in more rural and urban markets in the future. Conn’s stores are concentrated in the South and West, and the company operates in eight of the 10 states experiencing the highest population growth, he said.

In Conn’s credit segment, cash and customer credit card sales, 20% of the business, is trending “well up” vs. two years ago, said Chief Credit Officer TJ Fenton. Conn’s private-labeled credit card business is flat at 18% of the credit business; in-house financing, 51% of business, is lower than two years ago; lease-to-own is trending up at 9% of the credit segment. The three store-offered credit options remain core to the business, Fenton said.