Images by Cayce Clifford

Back in 2008 while I was on vacation in New York, news of the financial crisis hit. It was then that I realized how much Millennials — myself included — were going to be impacted, changing the way we shop and buy.

The generation that saw their parents lose their jobs and savings during the financial crisis has redefined purchasing behavior including renting versus owning, and buying with current monies versus future monies. Millennials want to be more financially responsible and spend money they currently have in terms of shopping.

Millennials are the most educated generation in U.S. history, but this has come at a high cost as student debt climbs, now 44 percent higher than credit card debt. Approximately 44 million Americans owe $1.48 trillion in student loan debt. The shift of credit card to student debt demonstrates the value of education over material things. Experiences, non-ownership, travel and living life has replaced the need for mass ownership.

Millennials have grown up in an environment where they never experienced extended periods of high unemployment. Entering the workforce at the perfect moment, when technology was advancing at an unparalleled rate they were early adopters of groundbreaking technologies and became a highly demanded resource. The experiences fostered a confident entrepreneurial spirit, and the need to be constantly challenged. They want to understand their own value add and, ultimately, want to make a difference in the world.

By 2025, it’s projected that Millennials will earn half of all income in the U.S. Retailers who want to grab the market share from the revenue pool need to invest in solutions and technologies that allow for alternative payment measures to this debt-averse generation. Similar to brands, payment methods should keep the shopper at the center of the equation and make spending transparent, simple and easy to use, but most importantly, keep the customer out of debt.

Creating a Cultlike Following

Purchases made with debit cards have doubled as compared to credit cards. Retailers and brands understand the dynamics of the shopping journey and the importance of providing a seamless experience.

Some brands have even created a cultlike followings by offering unique, limited-supply products like Supreme. Or brands that boast a clear brand identity and personality that speak directly and personally to customers like Glossier. Understanding how to connect and harness this Millennial heart and mind, coupled with the aversion that Millennials have toward debt, begs the question if the payment segment of the industry is lagging behind both retailers and shoppers. 

The Role of Payments

Regardless of how attractive a brand may be, Millennials’ aversion to accruing more debt dramatically impacts the purchase decisions. Millennials do not want to take out a loan to buy a dress or a shirt, no matter how much they might love it — they just want to feel better about buying it.

Retailers such as Urban Outfitters, Sephora and MAC Cosmetics have shown a growing interest in adopting payment platforms that allow shoppers to split their payments into several interest-free installments. By shifting the financial economics in favor of the customer, these retailers are speaking directly to Millennials’ lifestyle preferences and credit aversion. Furthermore, by immediately offering Millennials the items they love, interest-free, retailers are driving higher sales, increasing visit frequency and strengthening their personal connection with a group of powerful, vocal consumers.

Tapping Into the Millennial Psyche

Instantly gratifying, convenient and simple to use, payment solutions that provide options to buy now, pay over time, interest free are filling a need with today’s shoppers. The benefit and service of these convenient payment plans have created a cult following with customers. Retailers have also benefited with higher average order values, better conversion and deeper loyalty. Retailers and brands become the hero by providing product to their target market without the burden of debt.

As retailers and brands desire to capture the hearts, minds and wallets of the rising Millennial generation, understanding what drives the decision-making is critical. Whether it’s connecting through a social cause, giving a voice in the development of a product or empowering shoppers with alternative payments that won’t add to the massive debt load, retailers and brands who engage with Millennials on their terms will earn their loyalty for years to come.

Nick Molnar is cofounder and chief executive officer of Afterpay, an innovative digital platform that offers interest-free installment plans for online purchases. Named one of Australia’s fastest-growing fin-tech companies by IDC, Afterpay offers a “buy-now, pay-later” service that does not require shoppers to enter into a traditional loan or pay any upfront fees or interest. The company serves more than 1.5 million customers and 14,000-plus retailers and brands in the U.S. and Australia, including Anthropologie, Estée Lauder, Nike, The North Face, Puma, Sephora, Sunglass Hut, Target and Urban Outfitters.

Prior to establishing Afterpay, Molnar launched American online jeweler into Australia under the brand. Earlier in his career, Molnar worked as an investment analyst at venture capital fund M.H. Carnegie & Co., where he was primarily responsible for growth-stage investments. He holds a bachelor’s of commerce degree from the University of Sydney.

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Think Tank: Head’s Up, Eyes Wide Open

Retail is Widening, Not Shrinking

Think Tank: The End of Ownership

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