Forget luxury goods, US shoppers are now using buy-now-pay-later services to pay for groceries
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- New data shows that US shoppers are increasingly using buy-now-pay-later services to buy groceries.
- Services like Klarna, Afterpay, and Affirm were previously used for pricier, non-essential items.
- Consumers are switching up their grocery shopping habits because of soaring food prices.
US shoppers are using buy-now-pay-later services to shop for groceries as the cost of living crisis rages on.
According to new data from Adobe Analytics, which analyzes consumer spending online and tracks over one trillion visits to US sites — in the first two months of 2023, groceries' share of the spending done via BNPL services grew by 40%. In contrast, BNPL usage for apparel products grew by 8% and fell by 14% for electronics.
Buy-now-pay-later companies like Klarna, Afterpay, and Affirm emerged in the 2010s and rose to prominence as a way to enable users to make purchases online and spread the cost over a series of payments.
Historically, these services have been used as a way to cover the cost of non-essential or pricier items – like luxury goods, for example. They have raised concerns among critics and regulators who say they encourage young people to spend beyond their means and get into debt.
But according to Adobe, the way BNPL is being used is changing. While the number of online purchases made using BNPL services grew in the last two months, revenue fell by 19% year-over-year — indicating that customers are using these services for cheaper items.
"The rise of Buy Now Pay Later usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways," Vivek Pandya, a lead analyst at Adobe Digital Insights said in a statement Wednesday.
A spokesperson for Klarna did not comment on whether it has seen an uptick in its users using BNPL for grocery shopping when contacted by Insider. However, they reiterated Pandya's point, adding that buying on credit can be a good way for customers to make savings by buying non-perishable items in bulk.
Insider also reached out to Afterpay and Affirm for further comment, but didn't immediately hear back.
Food inflation has reached record highs in the US over the past year, and shoppers have been switching up their grocery shopping routines in response. This includes cutting back on non-essential items, trading down from pricier products to store own brands, shopping at cheaper chains, and now, using BNPL services in different ways.
Discount chains that sell groceries have been well-positioned to capitalize on this. One TikToker showed that it's possible to eat a varied diet and live off $35 of Dollar Tree groceries for a week, for example.
According to a recent report from Coresight Research, Dollar Tree and Dollar General slipped into the top five list of retailers from which consumers bought food in 2022.