Retail equipment finance

How do retailers finance shopfitting and equipment?

Independent retailers and small chains typically use hire purchase for durable fixtures and refrigeration kept for the life of the shop unit, and lease EPOS and other technology that is refreshed as payment and stock systems evolve. A shop fit-out is usually a large one-off cost concentrated around opening or a lease renewal, and retail margins rarely leave enough spare cash to fund it outright, which is why financing is the norm even for well-established retailers.

Buyers are independent retailers and small chains, most often fitting out a new shop or refreshing an existing one around a lease renewal or a rebrand. A shop fit-out, covering shelving, refrigeration, EPOS and security, is a large one-off cost concentrated into a short period around opening, and retail margins on day-to-day trading rarely generate enough spare cash to cover that kind of lump sum without drawing down working capital the business needs elsewhere.

Hire purchase suits durable fixtures and refrigeration kept for the life of the shop unit, since this equipment is generally standard commercial kit that does not date quickly and a retailer wants to own it outright rather than refresh it repeatedly. Leasing is a better fit for EPOS and other technology, which is refreshed more often as payment methods, stock systems and reporting requirements evolve, and where a retailer benefits from staying current rather than running an increasingly outdated till system.

Standard retail refrigeration and shelving has a reasonable used market, since this is common commercial equipment used across many types of retailer, which gives lenders comfortable security. Bespoke shopfitting, built to a specific unit's layout and branding, has little value once removed from that unit, so it is financed more on the strength of the retailer's trading record than on the fittings themselves. This is why two retailers spending the same amount on a fit-out can be offered noticeably different terms depending on how much of that spend sits in bespoke joinery.

The mistake we see most often is financing an entire fit-out as a single item, when it is really several different assets with quite different working lives, some of which, like refrigeration, suit a longer finance term, and others, like EPOS technology, suit a shorter one matched to how often that equipment realistically needs refreshing. Asking a broker to split the facility by asset type, rather than accepting one blended term, usually produces a better overall structure.

People also ask