“Wellness brands have emerged on top,” said David Sykes, head of Klarna in the United States.
Personal care (which includes cosmetics), ath-leisure and sleep are three categories that are “overperforming” during COVID-19 in the U.S., shared Sykes during Beauty Inc’s virtual Wellness Summit. Each sector will continue to accelerate in the long term as consumers change their behavior, he added.
“While overall spending is down, individual spending in these particular categories is actually up,” said Sykes.
Gen Z is leading in the increase of total personal-care spending at 32 percent, according to Sykes. Millennials then follow at an increase of 16 percent, while Gen X has increased its spending 10 percent.
The Swedish fintech firm, which offers financial services online, has about 12 million active users on its app and works with close to 200,000 retailers globally, including Nike and Sephora. With 85 million total shoppers, Klarna processes more than one million transactions a day. In the U.S., the bank has 1.5 million monthly active users among its 8 million consumers total and works with more than 4,000 retailers.
In the early days of the pandemic, there was the “stock-up” period, when spending on groceries was up 225 percent, shared Sykes. Quickly that transitioned into consumers “settling in,” with spending on video games rising 180 percent and electronics at 60 percent. Then came a phase focused on athletic equipment; running shoes were up 105 percent.
Ath-leisure “has unequivocally been one of the most successful categories through the COVID-19 period,” continued Sykes. The sleep category, too, has “dramatically outperformed.” Of the about 2 million wish list items that consumers have selected on the app, luxury pajamas are at the top.
“And lastly, we saw this fourth phase, which we’re still seeing the impact of,” added Sykes. “It’s sort of a combination of the stimulus impact of the checks that were sent out to consumers, but also, we’re seeing some real pent-up demand from consumers who haven’t been able to spend as they normally would over the past sort of 90 days.” It’s high spending that’s normally seen during Black Friday, Cyber Monday or the period before Christmas, he shared.
Studying these phases has brought to light the “acceleration” of four key shopping trends: the use of video conferencing, in-store pickup, contactless payments and buy now, pay later.
While the trends were growing before the pandemic, “what we’ve seen is that COVID-19 and the lockdown has dramatically accelerated the uptake,” Sykes emphasized. “What’s interesting is we believe these trends will continue into the future.”
The company is working to offer consumers the ability to “buy now” and “pay in 30 days.” Users would be able to try items at home with the option of returning in that timeframe.
Sykes projected that more retailers will be adapting the concept: “Customers are changing how they interact with a physical store as they take into mind their personal health and safety. We think giving consumers more flexibility around things like returns will be important and a trend that will continue.”