The days of saving up religiously for big-ticket splurges might be coming to a close as new payment options help consumers skip the scrimping and get their hands on coveted goods sooner than ever.
Swedish fintech unicorn Klarna polled 1,000 consumers to understand their shopping behaviors and gauge how flexible payment options impact spending. As of now, more than one-fifth (23 percent) of shoppers scrounges for a number of months in order to afford pricey purchases, and that rises when looking at the 16-to-24-year-olds of Gen Z (35 percent) and millennials (30 percent). This should come as little surprise as many in these age groups are still in high school, living the low-income college student life or burdened with loans while entering the workforce for the first.
Installment payment plans like Klarna’s “Slice it” option could help bring luxury price points within reach, shoppers said. Just less than a quarter (24 percent) agreed that splitting a major purchase into four equal payments would help them to acquire more high-end goods than they typically could afford. Another group believes flexibility with paying positively influences spending, as 21 percent indicated that paying by installments would lead to larger order values.
Impressionable young Gen Zers stood out as the most trend-conscious among Klarna’s respondents. Thirty-seven percent of these consumers describe affording the hottest new styles as a “struggle,” well ahead of the 22 percent of all consumers who feel the same way. Social media and high-profile personalities hold considerable influence over the teen and early 20s crowd. The instant gratification generation is spurred to purchase when something catches their eye on social platforms (26 percent) and another 25 percent will pull the trigger on an item that’s trending and at risk of selling out.
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Gen Z’s frequent spending patterns could be linked to the need to remain on top of fast-moving trends. They purchase an average of 18 times a year online, and 23 percent shop as often as one to three times each month. For comparison, millennials said they purchase 14 times a year and boomers shop eight times annually.
In line with their tech-centric lifestyles, members of Gen Z expect more out their online shopping experiences. Asked about future-looking tech, 40 percent said they’d like retailers to incorporate augmented or virtual reality features so they could better visual how they’d look in garments, ahead of the 24 percent of all consumers interested in such technology. Practical and user-friendly tools like smart mirrors that offer product recommendations would resonate with 26 percent of those polled by Klarna.
Fit tech stood out as another hot area; nearly half (49 percent) said retailers should have a way to capture their measurements so they have confidence that their purchase will fit as intended. And some consumers no longer want to remain in the dark about where their dollars are going. More than one-fifth (21 percent) said they’d like to track and trace supply chains so they can confirm a product’s origin and the ethics and sustainability behind its production.
Klarna’s research confirms that people still prefer to experience a product hands-on (46 percent) before committing to a purchase, which is why many reserve their big-ticket buys for an in-store setting. Another 29 percent admitted to webrooming behavior: browsing products online but ultimately visiting a store to complete the transaction.
In fact, consumers noted the benefits of each channel. They said the “human” experience of brick-and-mortar shopping can’t be duplicated online (73 percent) but half appreciate the digital personalization that dishes out coupons and discounts online, in addition to the overall convenience of e-commerce. More than one third of all respondents are eager to see a human element online, specifically the ability to chat directly with a brand rep who can satisfy their queries before purchasing.