With U.S. banks seeing the savings rate hit a historic 33 percent in April, COVID-19 has fundamentally reordered financial priorities for people and businesses. Yet despite the new frugality, pent-up consumer demand – especially for nonessential items like apparel and jewelry – is already starting to materialize. How people pay is what’s changing in 2020.
As PYMNTS’ June 2020 Buy Now, Pay Later Tracker®, done in collaboration with Afterpay, notes, “[COVID disruptions have] led many to defer payments on large-ticket items such as household goods and furniture. One installment payment app saw a record year-over-year high on April 5, when app-enabled purchasing volumes at specialty home furnishing stores was 111 percent higher than the year prior.”
The June 2020 Buy Now, Pay Later Tracker® notes that “…transaction volumes at furniture stores were up 61 percent, while home and garden items rose 26 percent among Generation Z consumers, 5 percent among millennials and 2 percent among Generation X consumers during the week ending April 11.” With those trendlines, players in the sector are wasting no time.
Swedish FinTech and buy now, pay later (BNPL) firm Klarna is jumping on the market opportunity, with upgrades like a new mobile app that “…gives users access to exclusive deals and drops, the ability to create and share wish lists with friends and family, and the ability to shop anywhere online and pay in four, interest-free installments,” according to a statement.
“Klarna’s new product features and brand campaign come at a time [when] the company has seen significant recent growth in the U.S., where it now counts nearly eight million customers and 4,200 retail partners, including leading names such as H&M, Sephora, The North Face, Timberland and Abercrombie & Fitch,” per the statement. This news comes after Klarna announced the U.S. launch of Vibe, a new loyalty rewards program for the BNPL space, which rewards purchases made through the new Klarna mobile app.
BNPL has emerged as a major force in commerce (both physical and online) in the past four years, as new players and business models emerged to update the old layaway concept.
In PYMNTS’ Provider Ranking of Alternative Credit Apps, Klarna has held the No. 1 chart position since the ranking’s inception. Other top BNPL apps in PYMNTS’ Provider Ranking of Alternative Credit Apps are holding their ground as well, with strong players FuturePay steady at No. 2, Affirm at No. 3, Afterpay at No. 4 and QuadPay at No. 5.