Millennials are known for delaying things—student loans, marriage, homeownership—and now, they’re getting the chance to put off payments at some of their favorite retailers.
Seem too good to be true? It’s not. A growing number of retailers is strategizing ways to get consumers to make bigger, more frequent purchases. And they’re quickly learning that the best way to do that is by giving shoppers—largely made up of millennials—more control of their finances.
Enter services like Afterpay, Affirm and Klarna, fintech’s solution for hesitant buyers. Using these alternative payment methods, consumers can elect to pay in full up front or make incremental payments over a designated period of time.
For retailers, they all provide a similar benefit: returning customers that make bigger purchases with zero risk on the retailer’s end. The services pay the retailer in full the moment the transaction is made, and delinquent payments are settled with the consumer.
And millennials—many of whom started their first jobs shortly after the 2008 Great Recession and are likely still paying off student loans—are the prime target for these services.
The idea of a secure service automatically taking out small payments over a period of time is commonplace—after all, it is the age of subscription services and auto-pay technology. But despite millennials’ faith in services like these, many remain skeptical of credit card debt. Affirm’s research consistently shows that two-thirds of millennials avoid credit cards and instead opt for simple and transparent payment options that offer flexibility.
While these methods can help all retail categories, premium denim has a lot to gain. For starters, it’s a larger investment than other apparel items, and finding perfectly fitting jeans is harder than finding, say, a perfectly fitting sweater. By lessening consumers’ financial burden, denim brands are easing the risk of purchase and in return, gaining more of their customers’ loyalty.
Wren + Glory, which adopted Affirm after learning its average price point of $350 for its hand-painted denim garments was an obstacle for some consumers, saw an uptick in engagement shortly thereafter. “
“We found there were many customers who wanted our product, but couldn’t afford it,” Gloria Bijou, Wren + Glory’s co-founder and designer, said. “We decided this would be a nice option to have, and we’ve seen many customers using this payment option. Affirm gives our customers an option to spread out their payment, which makes the purchase easier for them.”
And the numbers prove it’s a winning strategy. Affirm’s research shows on average, merchants see a 92 percent increase in average order value and a 20 percent lift in conversion.
Other retailers are seeing similar success. Brands such as Urban Outfitters, American Eagle, Asos and Denimrush all use alternative payment methods to encourage shoppers to take control of their finances. Just this week, Good American announced its adoption of Klarna and promoted the news with a national Open Casting campaign held in partnership with IMG Models.