Timberland is the latest footwear brand to partner with “buy now, pay later” solution Klarna and provide installment payment plans to its customers. The deal reflects a growing interest from consumers in the outdoor market and footwear more broadly, according to Klarna customer activity.
This partnership comes at a key time for Timberland, as the weather is warming up and consumers are returning to exercising and exploring the outdoors. Meanwhile, during the coronavirus outbreak, the brand was forced to close 40 stores internationally earlier this year and has been selling solely on e-commerce channels since then.
As more brands explore the direct-to-consumer channel, payment plans and “buy now, pay later” options can provide an improved customer experience, particularly on mobile. And merchants who partner with Klarna can also benefit from the exposure to new consumers, through Klarna’s app.
Additionally, Klarna’s payment solutions are available to deploy in-store as well as online, so Timberland will be able to take advantage of that when it chooses to reopen its own stores.
“We’ve worked hard on creating a brand that resonates with the mobile-first generation, with pop culture, with everything that’s happening around us,” said David Sandström, CMO at Klarna. “This is something that’s Timberland has done for many years, so that synergy is very important to us and to them as well.”
Now is a popular time for shoes: Klarna reported that daily U.S. spending at footwear stores during the week ending May 23 has increased by 24%, compared with an average week this year prior to COVID-19. This is thought to be a combined result of consumers receiving stimulus checks and the recent relaxation of shelter-in-place orders, which means shoppers are starting to get out more and need shoes to do so.
Based on Klarna transaction activity, Sandström has also observed that there seems to be a new shift toward “treat yourself” spending, as consumers continue to navigate lockdown and other restrictions. The company estimated that spending in the last two weeks was near to holiday season levels.
Looking ahead, Sandström anticipates that the shift toward paying through installment plans or other services will increase. Millennials and now Gen Zers have been turning away from credit cards and traditional lending for some years now. And as with many digital innovations, the COVID-19 pandemic seems to have accelerated the rate of change as opposed to creating something new.
“People are going to reevaluate things connected to their spending, to their finances, to their shopping,” said Sandström. “What I think we will see is that credit cards and traditional ways of shopping are outdated, that this crisis has put a spotlight on emerging ways to elevate your shopping and find smarter, more consumer-friendly ways of paying.”