Would buy now and pay later?

If you too have dreamed of buying a pair of Bottega Veneta boots before going back to a reality made of bills, rent and other expenses as unwelcome as they are necessary, then you may have found the solution to your problems. Like many other markets, the fashion market has also discovered instalment payments, a reality that in the last year, also due to the pandemic and the phenomenon of revenge shopping, has seen the success of services such as Klarna and Affirm, capable of relying on the buying habits of those who are willing to spend more in the face of the possibility of paying within weeks, even months or years. 

In reality, these are just some of the services that in the last year have decided to offer buyers the possibility of using the buy-now-pay-later option, trying to bring young customers closer to a type of shopping that until recently before they could only have dreamed of. But for firms like Klarna there is not only the world of luxury but also fast-fashion and large chains that have decided to enter into commercial agreements with the Swedish company: from Nike to Sephora, up to H&M, The North Face and adidas. Klarna is not the only service that can count on exclusive agreements with brands and retailers.  During the pandemic, Afterpay signed an agreement with Asos, one of the companies that have seen their earnings growth over the last year, as well as with the beauty brand Drunk Elephant and American Eagle. While this type of service aims to attract Millennials and Gen Z, historically distant from the use of a credit card, on the other hand, brands and companies hope that the prospect of an instalment payment can incentivize buyers to spend more. But if on the one hand young customers can be attracted by colourful graphics and by partnerships with fashion magazines such as Cosmopolitan, on the other hand, they will have to be convinced to embrace a service capable of offering the instalment on good such as design sneakers. 

Klarna has even decided to involve A$AP Rocky, former investor and future CEO for one day of the Swedish company, while Afterpay is starting to think big, planning not only the opening of some physical retailer but also to expand to other fields that go beyond shopping. One above all: healthcare. “The US is really just scratching the surface of what’s possible in the market,” founder Nick Molnar told BoF. “In Australia, Afterpay is available for airline tickets and the dentist’s office.” The challenge is to change the buying habits of an entire generation, historically less rich than its parents and therefore more prudent in spending and in their own economic choices. To break into the hearts of its future customers, services such as Affirm also offer financial advice of different types, explaining through colourful videos full of drawings how to identify the most economically difficult months by educating us on a prudent expense in an attempt to convince us that that pair of Bottega boots don't cost that much.