As the economy continues to stall amid the ongoing pandemic, retailers seem to be offering customers a buy now, pay later alternative to purchase commodities.
Saks Fifth Avenue, Amazon and Target are just some of the notable retailers offering the purchase option. Layaway programs offer customers the ability to pay for items over a period of time without any added interest.
“The millennials and Gen Z generation saw their parents go through an immense amount of hardship [during the financial crisis] where the American consumer was over-leveraged,” Rafe Petkovic, chief revenue officer of Columbus, told NBC News. “Today’s consumers are certainly wising up, and that has been a significant acceleration in the market opportunity here today.”
As the pandemic continues to reshape the online retail industry some experts believe that layaway purchases will become a staple for all stores in the near future.
“I think this will be as ubiquitous as free shipping,” Brad Lindenberg, co-CEO of Quadpay, told NBC. “Every site, I think within a matter of a couple of years, will have an option to pay in installments.”
Prior to the pandemic, consumers were already shifting their spending habits and moving towards layaway shopping and similar programs, with younger customers taking out quick loans from Affirm, Afterpay, Klarna and Quadpay in order to make purchases, and the companies all reported a spike in app downloads over the course of the year and the official start of holiday shopping.
Klarna reported an increase of 106% in app downloads from last year and five times more transactions over the Black Friday weekend, while Affirm saw a 163% and 200% growth respectively in home fitness and home office sales. Afterpay also saw a 186% increase in sales over Black Friday weekend.
While the pandemic rages some experts believe that consumers will continue to change their spending habits.
“Though the current recession’s initial three months of consumer debt and credit data paint a positive picture of consumer finances, unemployment has spiked to historic highs in 2020,” the bureau reported. “As income declines and stimulus aid continues to lapse, consumers’ finances may change as people seek ways to cover their expenses,” a report by Experian stated.