The UK’s rainy summer put a dampener on retail sales in July and shop floors filled with sundresses and sandals lost out to the Great British Summer that never was. UK Retailers are already contending with record inflation, rising interest rates and costly utility bills, so it’s no surprise that this data is concerning for the sector.
Every cloud has a silver lining though, and the KPMG and BRC July sales report shows that while bikini sales dropped, other goods made gains. For online shopping, furniture topped the growth leaderboard, up from 7th place in June, while health and beauty also recorded strong performances.
While times are tricky, retailers still stand to benefit and grow, as shoppers are clearly still spending with the businesses that are providing the right products and services.
For budget-conscious, tech-powered shoppers, this is where strategic fintech partnerships come in – particularly when it comes to payments. As consumer choices become increasingly motivated by a desire for flexible spending, these relationships are becoming critical drivers of growth.
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Flexible payment options are increasingly driving consumer spending
The observation that younger generations’ attitudes towards spending differ deeply from their parents’ is now commonplace. Having seen their parents struggle with credit card debt in the wake of the 2008 global financial crash, they have a marked preference for paying with debit cards. This is one factor linked to the popularity of Buy Now, Pay Later (BNPL) among millennials and Gen Zs.
It appears though, that older generations are also valuing the flexibility and simplicity of the BNPL offering.
Of all BNPL users over 55, nearly a fifth used BNPL for the first time within the last 12 months, making them the fastest growing age group in the sector. Last year alone saw a growth of 286% and 20% for Gen X and Boomer use of Clearpay respectively.
As older shoppers catch up with their younger counterparts, BNPL’s popularity as a payment option has jumped. BNPL made up 16.5% of all UK ecommerce spend in May 2023, marking a steady increase from January’s already considerable 12%. Retailers targeting an older consumer profile can now also use innovative payment options such as BNPL to appeal to their customer base.
As customers seek greater control over their budgeting, consumers are factoring flexible payment options into their shopping decisions. BNPL’s offer of allowing shoppers to split payments over a few weeks, without incurring interest, has made it an especially popular option for those looking to use debit cards instead of accruing long-term debt via credit cards.
Improving in-store experience to reflect customer preference
Customers continue to value the in-store shopping experience. While bricks and mortar has always been an essential part of retail, there was a time when many feared that e-commerce’s efficiency and convenience would spell the end of real-life shopping.
However, the disparities between the two aren’t quite so blurred anymore, with fintech serving as part of this critical bridge.
Forward-thinking payment companies are enabling customers to have the flexible payment experiences they use online, in the physical world too. In-store BNPL has become increasingly popular in 2023. MAC, Jo Malone London, Urban Outfitters and Anthropologie are just some of the retailers already offering BNPL in store.
The fact that high street UK retailers are utilising the technology in their stores indicates it’s here to stay – it’s imperative that all market players, including independent retailers, have access to these game-changing tools to offer customers consistent shopping journeys, whether that’s in-store or online. Strategic omni-channel fintech tools can be critical in helping them remain competitive.
Last year, Clearpay launched a partnership with Square. This allows millions of Square sellers in the UK to offer BNPL in store, and provide a streamlined payment journey that gives customers flexibility and choice when it comes to paying for purchases.
Fintech is only one part of the puzzle. The release of last month’s retail data gives all of us an important opportunity to take stock of the challenges retailers are currently facing, and focus on how different industries can collaborate to help them flourish.
Whether we engage with UK stores as consumers, suppliers or trusted partners, there’s always more we can be doing to support the Great British retail sector – whether or not the sun’s shining.
