Gen Z Shoppers Spending Big During Holidays Using Buy Now, Pay Later
- This year, Gen Z shoppers were in full force on Cyber Monday and Black Friday.
- Many of these shoppers plan to use buy now, and pay later services to stretch their funds.
- Although BNPL may seem like a simple way to pay for purchases it is causing young consumers to accumulate debt.
Gen Z shoppers drive holiday spending, but there may be a hidden risk to their willingness to shop.
Despite the predictions of a slow holiday shopping season, shoppers turned out in force on Black Friday and Cyber Monday. According to data from the National Retail Federation, a record 196.7 million US consumers shopped during the five-day holiday shopping period starting on Thanksgiving — and a lot of those shoppers were Gen Zers, CNN reports.
Kristen ClassiZummo from NPD, an analyst in the apparel industry, said that one standout on Black Friday was the large turnout of Gen Z shoppers. “Younger people flooded the mall and treated Black Friday as a social occasion. They came early, with friends, and they came to shop.
While retailers may be happy to see young shoppers in droves, these same consumers are at high-risk of overspending or racking up debt during the holiday shopping season.
The most financial stress will be felt by younger shoppers this year. an August Bankrate surveyThere were 2,415 adults. Nearly four out of four Gen Z and millennial consumers felt pressured to spend more than they are comfortable with during the holidays, compared with only 12% of Gen Xers.
A third of the young shoppers surveyed said that the holidays would be financially difficult and that 32% were worried about going into debt because of holiday shopping. They could either pay off their credit cards over multiple cycles or use a “buy here, pay later” option.
Another survey of 1000 shoppers. conducted by Forbes Advisor and OnePoll,The study found that 64% planned to use BNPL this year, while 70% of those who used them planned to spend more.
Retailers are already seeing a rise in shoppers who prefer to buy now, rather than wait. According to BNPL, 85% of BNPL orders soared during Cyber Week, which is the week between Thanksgiving and Cyber Monday. data from Adobe.
It’s tempting, but it can be dangerous
BNPL services are now a reality especially popular among young consumersBecause they are easy to use and low-stakes, they can offer a simple and low-cost way to pay. However, these services may encourage consumers to borrow more, and they could end up taking out multiple loans, which may make it difficult for them to repay. according to the Consumer Financial Protection Bureau.
Some young shoppers have become BNPL-averse because of their frequent use. rack up thousands of dollars in debtTheir credit scores will plummet. Online bank Oxygen found that more than half of the holiday shoppers made BNPL purchases last year, which they couldn’t repay. CNBC reported.
Marshall Lux is a senior fellow at Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government. told CNBCWhile paying in installments for gifts “means a Merry Christmas”, it can also mean that many people will have a bad credit rating in the end.
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