The loss of brick-and-mortar revenue streams has many footwear players relying more heavily on a variety of financial instruments to shore up business.
Financial solutions providers such as Klarna said it has seen a spike in demand, particularly for brands and retailers seeking to offer their consumers pay-in-installments options and other budgeting tools.
“We’ve seen a dramatic increase in customers using our ‘buy now, pay in 30 days’ option; you just remove another barrier to a purchase,” said David Sykes, head of Klarna U.S. “What we’re trying to do is work with our partners to accelerate the rate at which they can actually just start deploying.”
As customers opt to spend less on nonessential purchases, Klarna has found that consumers are still buying a similar number of items as before the coronavirus outbreak. Executives said that data suggests a high total cost is the barrier to purchases, which installment plans can help remove. One major retailer has been able to move its scheduled implementation date from the third quarter of 2020 to this month, reported Klarna.
The company is also using its app and push notification system to highlight any discounting or special offers that its retail partners introduce. By expanding the reach of this marketing, Klarna said it aims to increase the customer base for its partners.
Meanwhile, Brex is offering its users — primarily brands and e-commerce companies seeking to minimize cash burn — a series of corporate cards designed to offer the most relevant benefits, whether it is a start-up or enterprise company.
As stay-at-home orders rolled out across the U.S. in March, Brex noticed that its existing rewards program for start-up users was no longer seeing much activity in popular categories: travel and dining out. As users needed more financial support, they were receiving less value from the product — a trend that continued into April.
“We started to think about what we could do to help our customers to adapt to this new reality and continue to see value from Brex,” said Marco Mahrus, VP of payments at Brex. “Let’s go to where Brex is operating from. Based on what we’re having to do, it’s a lot of collaboration with remote software and food delivery.”
That idea is reflected in Brex’s user spending. While there has been a 63% decrease in travel and dining out spending, there has been an equal increase in remote software and food delivery spend. By adding new categories to the program, Brex customers are now able to continue to earn rewards, while adapting their financial priorities; about 10% of the user base has adopted the new system so far.
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