Suppliers are vital to the success of our business, as the right product at the right price delivered on time, is the difference between good and great customer service.
Peter Krideras, General Manager of Marketing & Merchandise, Thorn Australia Pty Ltd.

Photo RTO Online

Peter Krideras, National Marketing and Merchandise Manager for Australian rent-to-own company Radio Rentals. Krideras was featured in the September, 2007 issue of RTO Magazine, the rent-to-own industry's leading trade magazine.

Radio Rentals was featured in the September 2008 issue of Australia's Best. Radio Rentals is Australia's largest rent-to-own company with 65 stores and over 400 employees.

Peter Krideras, General Manager of Marketing & Merchandise, Thorn Australia Pty Ltd., parent company of Radio Rentals, told Australia's Best that vendor partnerships are critical to the company's model. "Suppliers are vital to the success of our business, as the right product at the right price delivered on time, is the difference between good and great customer service."

Radio Rentals opened in 1937 and until recently was rent-to-rent only. The company entered the rent-to-own sector in 2002 with the introduction of rent-try-buy (RTB). By May of this year, 36 month RTB contracts accounted for 34% of Radio's rental revenue. RTB also eliminated the customer churn inherent in rent-to-rent and reversed a steady decline in Radio Rental's customer-count. In 2007, the company reported a keep-rate of over 40% for 36 month RTB customers.

Radio's RTB agreements are 18 or 36 month rental contracts with an option to buy a similar product after 36 months for $1. Alternatively, the customer can make an offer to purchase the product being rented at the end of the rental term which the company can either accept or deny.

The company also offers Rent, Try, Buy Plus which is similar to the 18 month RTB, except the customer pays a premium for the ability to return the product any time after 6 months by paying an early termination fee. RTB Plus customers can reinstate the rental at any time during the following 12 months.

Automated debits account for 65% of Radio Rentals' revenue. In May of this year, the company reported past-due agreements were tracking 15% below 2007 levels primarily due to its decision to make automated ACH payments mandatory on all agreements.

Radio Rentals will enter the crowded retail arena this fall with the launch of BigBrownBox.com.au.

RTO Online interviewed Peter Krideras in 2007 (see video). Excerpts below:

Do most Radio Rentals customers progress to ownership?
Krideras: Between 50% and 60% of customers go to term and exercise their option to buy. Customers can return the merchandise before their term is up, but there are early payment penalties for doing so.

What is the legislative climate like in Australia for RTO dealers?
Krideras: Primarily there is a national legislation that we're under but there are also some different state legislatures that vary the way we can transact with individual customers. Overall, we're covered by the one national code. At the moment, it's a very, very positive environment to conduct business.

When Radio Rentals introduced the concept of Rent-Try-Buy in 2002 it went a long way toward removing the stigma previously associated with rent-to-rent. At the moment, and I'll borrow from our current tagline, there's a bit of a "Rental Revolution" in Australia. A lot of non-traditional organizations, including our major retail competitors, are looking at offering rental programs. People are talking about rental again.

What sort of merchandise do you rent?
Krideras: We're typically a domestic appliance renter. We offer nearly anything for the home including A/V equipment, and a complete range of white goods. We re-introduced furniture in April 2006 after taking a several-year break and furniture now represents between 20 and 30% of our business. Computers are also a big part of our business and it's fair to say that treadmills are one of the top-five SKU's for us each month.

Our best brands include NEC Australia for flat panel televisions; Acer Australia for computers; Electrolux for laundry equipment; Mitsubishi Australia for refrigeration; and most of our furniture comes from companies in New Zealand.

How many agreements do you average per store?
Krideras: The typical store averages 3,000 units on rent but some stores have in excess of 5,000 units on rent.

Do you have to service a large area to reach such a high volume of agreements?
Krideras: In metropolitan markets our delivery areas are very concentrated, but in our regional centers we could be driving up to 100 kilometers (about 62 miles) from the store to make deliveries.

How are collections handled?
Krideras: For us, we try to mitigate the collection issue up front. We're very diligent in the way we assess customers. We have our customer scorecard (application) which is very thorough and we hope in most cases will address any problems we might have down the track.

Is RTO Online as widely read in Australia as we've heard?
Krideras: A lot of key management in our organization have RTO Online on their computers every morning.