Consumer Insights Newsletter #004
How Are Consumers Talking About Buy Now Pay Later Credit in the Cost of Living Crisis?
Sarah Ball
Sarah's 19 years of experience in the media analysis industry hold her in good stead for her role leading on research methodology development. She was an early innovator in social media insights work and is responsible for data sourcing and tool selection.
CONTEXT
In recent months, as the cost of living crisis started to bite, Iceland, B&M and Deliveroo all added ‘Buy Now, Pay Later’ options (BNPL) to pay for goods. They join hundreds of retailers offering consumers a way to pay in instalments, through the likes of Klarna, ClearPay, Paypal Credit and Laybuy; in fact, there has been a 59% increase in retailers working with Klarna alone in 2022. We took a look at conversations on social media to understand who is using BNPL, what are they using it for, and their feelings about it.
AUDIENCE:
Who is talking about using Buy Now, Pay Later?
Our analysis of people who either talked about using BNPL or interacted with customer service functions of BNPL companies on Twitter, found that 79% were under the age of 35. Though this sounds young, it is not much younger than the baseline UK Twitter audience (+3pp). This group of users had a slightly higher proportion of female users than the baseline for the UK (51.49%, baseline +3pp).
Unsurprisingly given the topic in question, behavioural and personality profiling indicated that people using BNPL were more prone to spur of the moment purchases than the average UK user (+16pp) and a key personality trait was hedonism (+11pp vs. average UK user). These traits make the users less inclined to defer gratification by saving up before making a purchase.
Segmentation of the Twitter users by their common interests revealed four key segments. Celebrity Style Seekers and Bargain Hunters were female-dominated segments, with the former slightly younger with the greatest proportion of people in the 18-24 age category. Both female-dominated segments had a high affinity with online clothing brands ASOS, Pretty Little Things and BooHoo, though the Bargain Hunting Babes also had an interest in high street brands B&M, Superdrug, New Look and JD Sport and Aldi. The Bargain Hunters supplemented their income by sharing referral codes for new users of BNPL providers such as ClearPay and Klarna. Celebrity Style Seekers had a high affinity for celebrity culture, following the Kardashians and Rhianna, and UK reality TV stars such as those from Geordie Shore and Love Island.
The only male-dominated segment - Sports Mad - were united by their common interest in sports, particularly football, and also had a keen interest in gaming. The final segment, News, Politics & Society Obsessives were mixed in gender and united by an interest in following and discussing political and societal issues.
INSIGHT:
What are consumers using BNPL for?
The vast majority of discussion was about using BNPL for things that are nice-to-have, rather than essentials; the latest fashion, must-attend events, and newly released games and gadgets.
“I think a clothes haul via Klarna is in order”: 58% of people discussing their BNPL purchases referred to clothes, shoes and accessories, with Celeb Style Seekers the most likely to discuss this category (68% of posts about BNPL purchases) and Sports Mad the least likely, though it still accounted for 47% of their purchase-related posts. Some talked about the advantages of using BNPL to place a large order for clothing online, with the intention of returning much of the order and keeping one or two things that looked good, as it didn’t require a large initial layout.
“Being able to Klarna concert tickets is going to be the death of me”: Event tickets were the second most discussed category, account for almost a fifth of posts for three of the segments, but just 8% of posts from Bargain Hunting Babes. People were generally thankful to be able to spread out payments for expensive tickets, but some expressed that it was ‘painful’ to still be paying for an event after it had ‘been and gone.’
“Go to Curry’s, buy now pay later, and just splash the cash”: The News, Politics & Society Obsessives and Sports Mad segments talked most frequently about using BNPL for tech, electronics and gaming purchases (16% of posts each), with Celeb Style Seekers the least likely to talk about this category (3% of posts). Discussion revolved around using BNPL options to purchase new releases more quickly, as well as turning to credit to replace urgently needed items, particularly laptops.
“December was an expensive month - I’ll be needing Klarna for my weekly food shop!”: Positively, we found that few people talked about using BNPL for daily essentials such as food and energy bills (2% of posts overall), despite such options increasing via retailers such as Iceland and new credit formats such as Zilch.
INSIGHT:
How do consumers feel about BNPL?
“Thank God Klarna exists”: Many BNPL users expressed how they were thankful for having access to such services, particularly at points when budgets come under extra pressure. Key moments for BPNL consumers included snapping up in demand concert and festival tickets at short notice, stocking up on gifts for Christmas and family birthdays, and updating wardrobes ahead of holidays and events. “When you have your kids birthdays coming up in the same month then @JDOfficial do a sale. Thank God for @Klarna.”
"I forget it’s real money when I buy it for a third of the price”: Users commonly talked about how they enjoyed making purchases with BNPL until the payments were due. They discussed how purchases seemed cheaper due to the initial smaller payment, even though they cost the same overall as paying via debit card. Users shared GIFS and memes about the feeling of receiving texts and emails requesting payment and talked angrily about being ‘chased’ to pay instalments: “f**k off, I don’t need your negativity in my life.”
“Need to ditch the ASOS & Klarna addiction”: Some talked about using BNPL as an addiction, mentioning the initial euphoria of purchasing followed by feelings of regret as payments kicked in. While some joked about their ‘addiction’, a small number shared stories of getting into serious debt after heavy use of BNPL: “Really need to get a grip on my finances but I’m addicted to Clearpay.”
There are concerns discussed online about the potential for people to slip into debt as day-to-day costs continue to rise over the next year. The greatest worry exists over people turning to BNPL to buy daily essentials and entering a cycle of debt that is hard to get out of. Our analysis indicates that at the moment, the majority of purchases (at least, those talked about online) are for ‘nice-to-haves’ rather than the weekly food shop; however, this warrants careful monitoring as the cost of living crisis deepens.
“I think a clothes haul via Klarna is in order”
“Being able to Klarna concert tickets is going to be the death of me”
"I forget it’s real money when I buy it for a third of the price”
“Really need to get a grip on my finances but I’m addicted to Clearpay.”