As inflationary pressures persist, consumers are getting more creative about how to pay for items they need--including groceries.
According to media company Vericast, 32% of consumers are looking for ways to finance their purchases and delay payments. A study also found that three in five people surveyed have used a buy now, pay later (BNPL) option at checkout to finance a purchase, said Vericast.
BNPL companies such as Zip, Klarna, Afterpay and Sezzle allow customers to “pay in four”—make four extended payments for purchases. Typically this option has been utilized more by consumers when making big-ticket purchases. But not anymore, the research found.
Increasingly, consumers are opting to pay for their groceries with BNPL options. Zip can be used at stores such as Walmart, Albertsons and Kroger, as well as Target, which also accepts Sezzle as a payment option, allowing consumers to spread out the cost of a shopping trip over time.
WGB spoke with Philippe Bottine, North America CEO of retail solutions provider SES-imagotag, more about this growing consumer trend.
“Whether purchasing items in-store or online, buy now, pay later (BNPL) offers consumers the option to pay for relatively costly items in equal installments as opposed to all at once. While consumers are familiar with payment plans for expensive products like cars and homes, this method can be utilized on anything from TVs and exercise equipment to groceries,” Bottine said.
Bottine said that with the cost of groceries increasing significantly due to pandemic disruptions and inflation, consumers are looking at alternative payment methods like BNPL to make costly grocery bills seem like less of a shock to the wallet.
“In 2022, from January to October, the Bureau of Labor Statistics saw groceries become 12.4% more expensive than previous years,” he said. And while grocery chain membership plans are definitely a lucrative option as well, explained Bottine, BNPL offers a quick plan with no membership payment. “When a consumer decides to purchase an item using BNPL, a BNPL company will work with the consumer to set up an account, conduct a soft credit inquiry and discuss payment details. Once the details are approved by both parties, the first payment will be paid upon purchase of the item.”
Bottine said that he anticipates that the popularity of BNPL will be dictated by the cost of groceries going into 2023. “While costs right now for groceries are high and the demand for BNPL is present, I’d imagine that when costs decrease, so will the use of BNPL," he said. "Not to say that it will go away, but it will become just an alternative payment option.”
Take curbside pickup, for example. He explained, “during the early months of the pandemic, curbside pickup was a great alternative for shopping in-store. But as vaccines and boosters became readily available and mask mandates were decreased, curbside pickup was no longer necessary but many big box retailers still have the option.”
The top BNPL company providers based in the U.S. are Four, Splitit and Zip, said Bottine. “These providers not only operate at several big box retailers and grocery chains, but also offer flexible payment options on nearly any purchase,” he said.