There is a new opportunity with customers who are seeing for the first time the value of a credit-free-life.
Bob Bloom, CEO, ColorTyme

Photo/RTO Online

Bob Bloom, president and CEO, ColorTyme

Interesting times with interesting opportunities - That's how ColorTyme CEO Bob Bloom describes the current state of the rent-to-own industry. RTO Online interviewed Bloom at this week's 2009 ColorTyme Summer Retreat in Jackson Hole, Wyoming. The Retreat wraps tonight with a farewell dinner. See 323 photos from the Retreat.

See video interview with Bob Bloom, CEO of ColorTyme. See all 11 interviews below.

"At one end of the spectrum, customers at the lower end of the income-scale which have traditionally been the bread and butter of rent to own, are struggling," Bloom observed. "But at the same time there is a new opportunity with customers who have traditionally not accepted rent to own - coming in and seeing for the first time the value of a credit-free-life." Bloom said this new generation of consumers is more affluent, requires a higher level of service and more personal attention.

Some industry vets predicted that the struggling economy would result in a massive expansion of the rent-to-own customer base. Others believe that high unemployment and other factors would cause lower income consumers to drop-out of the demo while credit-constrained higher-income consumers moved in. There is no hard evidence to support either theory.

Based on his experience, Bloom believes that any positive effects on the rent-to-own business will be seen in the long term. "The bottom drops out faster than the top drops down," Bloom said. "But I also believe that the top will stay longer than they have in the past."

The company's custom wheel and tire division, RimTyme, has been less affected by the economy than ColorTyme. "The customer is younger and more affluent. Our cash sales have stayed very strong. The product seems to stay on rent longer and has much higher rate of EPO (Early Pay Out)."

Bloom said that RimTyme is a perfect fit for the 30 year old rental-purchase company. "Its a different customer but it remains a traditional rent to own transaction which is where we have our expertise."

RimTyme now operates 24 franchise and corporate locations and is in a planned analysis period. "Were spending the year analyzing the business," Bloom said. "At the end of this year we'll make a determination on what our plans are for the future."

Rent-to-Own Industry Legislative Efforts

Bloom predicts headway in the House of Representatives but struggles in the Senate for the long-awaited Consumer Rental Purchase Agreement Act - federal legislation that would define rent-to-own as a lease in and standardize consumer protections in all states. "Based on my experience, I think that that we'll get a bill passed in the House. We'll probably have trouble getting a bill passed in the Senate."

See The Rental Purchase Act De-Mystified by RTO Magazine, the rent-to-own industry's leading trade publication.

Bloom believes the industry is telling its story better than before. He says the message of flexibility provided by the rent to own transaction "has never resonated more with the general public. Its fantastic to see that this effort of 18 years is bearing some fruit."

"Our customers have always understood that there is economic value in our transaction, but now I think everybody is starting to see that." Which is why, Bloom points out, that middle to upper income Americans are "...coming onto our stores for the first time and seeing that the transaction has some great economic value."

The stability of the RTO industry is also attracting interest from investors weary of weak returns. "Were starting to see more and more investors with relatively large amounts of income coming into the industry."

There has been increased interest from traditional retailers in placing rent-to-own kiosks on their showroom floors to try and capture additional share from credit-constrained consumer - a system pioneered by ColorTyme parent company Rent-A-Center (NASDAQ:RCII).

In a typical kiosk system, a rent-to-own company partners with a retailer and places a desk, or kiosk, inside the retail location. When a customer is denied traditional credit, they are offered a rent-to-own or leasing option. If the customer decides to lease, the product is purchased by the rent-to-own company right off the showroom floor.

Bloom believes the rush to open rent-to-own kiosks in retail stores may be premature. "It's fraught with risks," he said. "Were going to look at it, but were going to go slow."

While ColorTyme will seek out and research kiosk opportunities, Bloom says the real opportunities are in the existing, proven models. "I believe the bigger opportunity is to attract that customer through our marketing and not to pay a retailer a substantial markup for their inventory that we can buy at probably a better price than they can."

RTO Online broadcast 11 video interviews with ColorTyme franchisees and executives his week. All videos are available on RTO Online and the Rent-to-Own industry YouTube Channel. All videos were also announced via RTO Twitter.

Videos available now:

Video Interviews from the 2009 ColorTyme Summer Retreat
Bob Bloom ColorTyme	Tim Hogan RimTyme	Mark Childers ColorTyme	Bruce Emory ColorTyme
Lewis Garcia ColorTyme	Ron Koller ColorTyme	Tim Kelly ColorTyme	Tom Glagowski ColorTyme
Zach Routh Steve Dami ColorTyme	Larry Hill ColorTyme	Mike and Lisa Gavidia ColorTyme