What: The British department store has opened its second location of The Residence, as it calls its invitation-only culture, events and personal shopping spaces in China.

Why is it important: By all means, Harrods wants to keep in touch with wealthy Chinese consumers.

The new outpost, in Beijing, is located at the The Opposite House hotel, and has its own private restaurant. It plans to offer exclusive products such as haute couture, high jewellery and watches, as well as social events for its local clientele, Harrods said.

The department store has been doubling down on China for some time. In 2019, it held a three-day pop-up The Residence experience in Shanghai, and then set up a permanent version last year. This marked the first time the company had expanded its private shopping service outside of London.

Harrods Opens Second China Outpost 

What: Dotcom's seventh annual survey reveals consumer online behaviour.

Why is it important: The study shows a demand for greener, more sustainable approaches by retailers and brands. Dotcom Distribution said returns were “revealed to significantly impact purchase decisions”, especially when it comes to apparel.

In regard to sustainability, packaging “is key to customer attraction and retention,” the report said, noting that “sustainable packaging was most likely to compel online shoppers to be a return customer (at 42%).” And among environmental factors such as ethical sourcing, fuel efficiency and product ingredients, sustainable packaging was cited as the “most attractive feature” at 45%. Fifty-three percent of respondents also reported being more inclined to purchase from a business that supports initiatives surrounding diversity, racial and social justice.

Dotcom Distribution found that a returns strategy can have a strong impact on customer satisfaction and loyalty. Fifty-five percent of the 1,100 online shoppers polled “won’t even shop with a company that doesn’t offer free returns,” while 86% credit free returns “as the return policy that makes them most likely to shop with a brand.”

Sustainable Packaging, Free Returns Top-of-Mind for Shoppers 

What: CEO Marc Metrick discusses the rationale as well as nuts and bolts of reengineering Saks Fifth Avenue into separate e-commerce and brick-and-mortar companies.

Why is it important: Metrick’s message is that saks.com can get bigger and more profitable faster and serve a larger audience now as a stand-alone company with new financing.

Some insiders saw the split as overly complicated, involving a great deal of administrative detail, and a sign that HBC saw a big future in the dot-com side of the business while diminishing expectations for the stores. Within the industry, there’s been a difference of opinion as to whether the reengineering would benefit the Saks Fifth Avenue brand overall, lead to better experiences for shoppers and position saks.com for an initial public offering, which is a real possibility.

Metrick suggested that orchestrating the split wasn’t as complicated as others have imagined. Hudson’s Bay Co. had already decentralised its shared services structure, enabling its divisions to operate more independently. Metrick said more than 300 agreements were established between the two companies, that saks.com charges fees for the services it provides to SFA, and vice versa, and that the intellectual property is owned by saks.com.

Saks.com’s chief merchandising officer Tracy Margolies handle all the buying and merchandising for saks.com and Saks Fifth Avenue stores. Merchandise planning and allocation for the stores is done by saks.com.Emily Essner, chief marketing officer of saks.com, is in charge all the pricing, promotion and brand image for saks.com and the Saks Fifth Avenue stores. Meanwhile, because SFA is handling such functions and services as buy online, pick up in stores, returns, exchanges and alterations, SFA charges saks.com fees through the operating service agreements. The marketing team at saks.com handles communications to all customers, though style advisers in the stores still engage and communicate directly with their customers.

Customer service doesn’t change. If it’s needed in store, the store team handles it. When customers need support with their online order or experience, they contact the saks.com call centre. Metrick explained how sales associates are compensated. He said if a customer shops at a SFA store and gets helped by a store associate, but makes the purchase online, saks.com gets credit for the transaction. If a customer shops online and gets assisted by an online stylist at saks.com, but then goes to a SFA store to try it on and purchases it there, SFA gets credit for the sale and the store associate gets the commission.

Saks Fifth Avenue’s Playbook on a Split Up 

What: Products are recycled from used clothes that were collected by the department store

Why it is important: A factory breaks apart the fabric so that new clothing can be made from the recycled materials. The overall goal is to achieve closed loops in the fashion sector by adding more sustainable clothing as an offering.

Department store giant launches sustainable clothing

What:  E-commerce increase does not prevent Warby Parker from betting on increasing its retail footprint

Why it is important:  Omnichannel translates, for their customers, into choosing or getting information online, but still coming in stores to discuss with brand specialists and physically try products.

Warby Parker, the sunglasses 11-year-old DTC brand and success story, is planning to aggressively expand its retail footprint with 35 new stores, even though e-commerce, after an initial dip at the beginning of the pandemic, soared.

After a total closure of their store network, which led them to negotiate lease flexibility or percentage rent, they are now looking for expansion, as they realised that stores are crucial in the customer’s journey. Even though online and offline transactions are evenly split, 75% of customers who transact in stores have shopped online.

This means that they use online not only to check practical details such as store opening hours, but they preselect the products they want to see and try when in-store.

Warby Parker Founders Explain Why They Are Adding 35 Stores After Pandemic

What: Online sales grew by +53% in 2020, contributing to an overall positive exercise

Why it is important: Online does not replace offline, but comes as a much-needed complement, both in terms of financial results and customer experience.

2020 was supposed to be a great year for De Bijenkorf, as it was turning 150 this year. The pandemic prevented any celebrations, and total sales fell by -22%, with the 7 stores remaining closed for 13 weeks, including Christmas (offline channel sales fell by -44%).

Even though it is not compensated, online sales helped: the number of visitors grew by +31% and sales by +53%, helping the company to still post a profit (albeit reduced by -75% to EUR 19,4m.

Online growth limits the damage for De Bijenkorf

What: Netflix mixes content and retail by opening an online store selling merchandise from its shows

Why it is important: Keeping culturally relevant is key for IADS members, this is the reason why IADS introduced to some of them the Emily in Paris opportunity with Netflix and Viacom earlier this year.

Netflix launches an online store to sell limited-edition items from its shows (the article mentions Stranger things and Lupin), first in the US and then worldwide. This will be an additional source of revenue for Netflix, which used to sell its products through Target and Walmart in the US so far.

This is another step in mixing content with related merchandise and proposing shoppable entertainment. We believe at IADS that our members should watch this new trend, since it is parallel to, and not replacing, livestream shopping.

Netflix Shopping Is Now a Thing (WWD)

Netflix and shop Online store offers limited-edition merchandise (Fashion Network)

What: Uniqlo opens store in Tokyo’s historic Asakusa district.

Why is it important: The concept highlights and includes other local businesses.

Uniqlo opened the doors of its newest large-format store in the culturally significant neighbourhood of Asakusa. The store follows the concept of “our neighbourhood” and aims to support the area’s local businesses, residents and artisans. Asakusa’s district hosts the workshops and stores of many traditional craftspeople, some of whom Uniqlo featured in various ways inside the store.

The entrance to the store is dominated by a giant paper and wooden lantern, which was created by a local workshop. Uniqlo also collaborated with local businesses: small ceramic plates designed with traditional snack-maker Asakusa Tokiwado will be available for sale, original tea cups will be given to the first 3,000 customers to spend 5,000 yen or more. There are also original UTme! stamps that are only available at the Asakusa store to use in customizing T-shirts and tote bags.

Throughout the store, Uniqlo has highlighted products from local shops, from stationery to skateboards, encouraging customers to explore the neighbourhood in order to purchase such items and discover others.

Uniqlo Opens Store in Tokyo’s Historic Asakusa District 

What: In China, the physical store could make a comeback as a small, locally focused experiential retail proposition in neighbourhoods with authentic character.

What is important: Further to Nike launching small stores, neighbourhood shop trend is getting more and more important in China as a way to engage in a different way with customers. Such stores are opening in neighbourhoods with an atmosphere, but also in smaller fashion commercial districts and retail complexes.

The space can be more about the pleasures of experiential retail — in line with current retail trends — encouraging communication with consumers and interaction about fashion. Rather than standardised product displays, neighbourhood stores place higher significance on creating a sense of affinity between product and customer and nurturing a special atmosphere.

Chinese online women’s fashion retailer Short Sentence opened its first boutique in Shanghai in January, seeking to create a friendly vibe. The new 100-square-metre store aims to project the warmth of a neighbourhood shop with a small garden at the entrance. The store’s layout recalls a workshop space, presented as a gathering place for creative, innovative people.

The concept of a neighbourhood store offering an experience is extending well beyond fashion and furniture. Nio House, described as a “lifestyle sharing space”, has been created by electric automobile manufacturer Nio. A Nio House has a multitude of rooms for exhibitions, dining, reading and discussion. Nio users can also invite friends for a test drive or to participate in themed House activities. Nio House has been developed to bring a stronger sense of community to the Nio brand, which is best known for its family cars. The lifestyle spaces are typically located in urban shopping malls, where families tend to shop.

There’s a certain degree of randomness to these new local stores and it requires retailers to take risks. While mainstream retail districts and shopping centres attract a certain crowd that can be analysed in advance, a neighbourhood shop may attract all kinds of people. It may evolve as more showroom or digital pick-up space than sales unit. Customers visit for the experience rather than with a particular objective, collecting impressions about products in-store, and probably, buying online.

Welcome to China’s new neighbourhood stores 

What: A mall-owner gives away marketing space to local brands and startups created during the pandemic

Why it is important: This is a very efficient way to ride both the increased demand for local consumption, but also to recreate stronger ties with local communities by showing support.

GDR UK, a retail intelligence agency based in London, reported the latest marketing initiative performed by UK-based Westfield shopping centres, the “Side Hustle Heroes initiative.” It provides window space to six local startups, spanning categories from fashion, homeware to beauty, which were created during the Covid-19 lockdown.

Each startup has total freedom and flexibility in terms of windows display and storytelling, which is then reverberated by Westfield through various marketing initiatives.

While Unibail-Rodamco-Westfield promotes this operation as a way to enhance local business, something that 49% of customers request, this is also a very efficient way to weave the mall into the local life, recreating bonds with neighbouring communities.

westfield gives local startups window space in its two london malls

What: The data provides insights on how habits have changed, from preferences to online shopping, social media’s role in e-commerce and increases in the use of digital wallets and flexible payment options.

Why is it important: Consumers want to be in control of how they pay, and they have a desire for seamless digital shopping experiences regardless of which channel they are shopping in. The data also tells us that 70% of consumers are more likely to spend more at a retailer that offers their preferred payment method.

The survey, which looked at responses from more than 3,000 people in the U.S., U.K. and Australia, took place in December 2020.

According to the survey, while a majority of consumers still prefer in-person shopping, 62.5% reported doing most shopping online. Meanwhile, online nearly half of respondents reported they are discovering new products through social media at least once a month and 66.7% said they have made a purchase directly through their mobile phone at least once in the last month.

Both online and in-store, more consumers reported increased use of digital wallets. Overall, use of digital wallets in-store experienced a global increase of 24.5% online and 88.7% for in-store purchases since March 2020 with survey respondents overwhelmingly reporting that they would prefer retailers make digital payment options more available. Preference for using digital wallets in-store increased from 12.1% to 22.8%.

With Australia leading the way, merchants are increasingly adopting buy now, pay later, or BNPL, solutions to grow e-commerce as well. Forty-eight percent of Australian merchants, 20% of U.S. merchants and 11% of U.K. merchants currently offer BNPL options to customers. Merchants with a high average order value — generally USD 70 or more — should consider offering buy now, pay later solutions.

In terms of where consumers are shopping now, the report found shoppers are mainly visiting large retailers or branded e-commerce stores. Of those surveyed, 58.2% said they shop at department stores, hypermarkets or big-box retailers while 31.9% said they purchase directly from the e-commerce stores of their favorite name brands.

PayPal and BigCommerce Highlight Post-COVID-19 Consumer Behaviors 

What:  The IGDS announced a new president for the coming 2 years.

Why it is important:  Reinvention is needed for all of us, including the Department Stores associations themselves. This is what we have been doing at IADS for the last year at an intense pace.

The Intercontinental Group of Department Stores (IGDS) has announced the appointment of André Maeder as the new IGDS President for 2021 – 2023, replacing Simon Susman, Honorary President of Woolworths, who remains IGDS Board Member.

Currently serving as the Kadewe Group CEO, André Maeder has a wide experience in retail and department stores management, having started his career as Chief Retail & Merchandise Officer at Harrods, and having also been the Chief Retail Officer at Karstadt. Maeder also boasts a brand experience as he also worked at S.Oliver and Hugo Boss. He is also a member of the board for Davidoff and Globus department stores.

New IGDS President - IGDS

What:  Two decades after launching its shopping vertical, the search engine giant has become a force in how people shop for clothes.

Why is it important:  Facebook and Instagram are more for brand awareness than getting people to actually convert. With Google, people are looking for specific things.

Google’s shopping function isn’t exactly new. But it was in spring 2020, after the search engine made it (indefinitely) free for brands to list products on its Shopping tab, that the service began to really take off. This drew in many small brands with the promise of appearing on equal footing in searches with bigger rivals. Google Shopping being cheaper than Facebook and Instagram in general, it’s an untapped opportunity for young brands.

For consumers, Google Shopping offers the promise that they can type in a search term and expect to find a comprehensive selection from the site’s enormous database. The site also makes it easier to comparison shop.

In the past year, Google said it saw 80% growth in the number of merchants that use Shopping and a 70% increase in products listed. The tool is helping Google compete with Facebook and especially Amazon, which has gained market share in digital advertising at the search giant’s expense.

Many brands use a combination of free listings and paid ads, which appear on the top panel as the first results but are marked as “ads.” Emme Parsons, a luxury sandal maker, said her return on ads purchased on Google Shopping is nearly 800%, compared with 136% and 30% on Instagram and Facebook, respectively. Larger brands also haven’t been as quick to shift their spending because they have less developed direct-to-consumer channels and prioritise brand awareness marketing over conversions.

Google’s answer to its rivals is its “Shopping Graph,” a database that tracks products, brands and customer reviews. In addition to powering the Shopping search function, Shopping Graph connects with information collected by Google’s other services. Users can now see if a product is available at a specific store location, for instance.

Google is the directory of the internet. Brands say Google Shopping still has its limitations. There are only so many ads that can appear on the site before returns would theoretically start to trail off, while Facebook seems to have a higher ceiling. Instagram also offers more ways to showcase products beyond the standard e-commerce grid. Brands rely on both Google and Facebook. A brand that sees more sales from Google ads might have only acquired those customers thanks to sponsored posts on Instagram.

The Rise of Google Shopping 

What: Sephora and Zalando have signed a long-term strategic partnership starting in Germany in the fourth quarter of this year making Sephora’s entire offer available on Zalando.

Why it’s important: Zalando’s customer experience and e-commerce expertise combined with Sephora’s curated assortment of products will create an unparalleled partnership.

The online platform will be rolled out to other countries in 2022, making the consumer reach immense. At Zalando, three out of five people who buy beauty also shop fashion, and fashion-engaged customers are often highly engaged in beauty. Zalando has 42 million active customers.

Today, Zalando sells more than 13,000 products and 350-plus brands in beauty. Those not in the prestige category will continue to be sold on the platform, just not in the Sephora-related space. Looking ahead, the prestige beauty products sold on Zalando could be tweaked according to geography.

Sephora already moved to aggressive partnership to reach more customers in North America, with its first Sephora in Kohl’s stores due to open in August.

Sephora, Zalando Partner to Sell Prestige Beauty 

What: After announcing Glossier would permanently shutter its stores last summer, the brand plans to open stores globally.

Why is it important: Despite an online business share of 80%, the brand, addressing to Gen Z, wants to cater to their physical experience expectations.

When other beauty retailers reopened their storefronts last summer with modified protocols,  Glossier announced it would be shutting its stores permanently. But quickly, the brand realised that customers wanted stores back. Despite the fact that 80% of Glossier’s sales come from its own website (while traditional beauty retailers see the inverse), the brand’s brick and mortar stores and pop-ups have become destinations.

The company has ambitious retail plans, starting with the opening of three permanent stores during the second half of the year in Seattle, Los Angeles and London. A New York City door will open next year, as well as several more. Glossier plans to tailor every retail space to the city it’s located in.

Glossier Set to Return to Physical Retail, Open Stores Globally 

What: Bob Kupbens, NM's chief product and technology officer, says omnichannel luxury is challenging to execute but his company has a huge opportunity to engage customers in really different ways.

Why is it important : The Neiman Marcus Group is in recovery mode and prepared to be the only multibrand, true omnichannel luxury retailer.

So said Bob Kupbens, the company’s executive vice president, chief product and technology officer, at the Fairchild Media Group Tech Forum, in a discussion on initiatives and challenges at NMG.

Before the pandemic, the Dallas-based luxury retailer rolled out Connect, a digital tool for associates to personalize their communications with customers and communicate the way customers want, through either email, phone calls, or texting. Associates can also send photos and set up in-person appointments. Further helping NMG manage was the fact that the Bergdorf Goodman e-commerce website “did a really significant refresh before the pandemic, and an incredible job of pulling their customers through that period,” said Kupbens.

“Now as people are coming back to stores, we are starting to see strong recovery in traffic and sales. But our vision is less about individual transactions, and individual spaces and individual channels. It’s really about the connected end-to-end experience that spans physical and digital channels.”

With technologies, “We don’t have to be the cutting edge of everything…So when we think of places where we should be cutting edge, it’s about personalization, truly knowing our customers and acting on that. We’ve got some great wins around data science, and [product] recommendations.”

Months ago, NMG revealed plans to spend $85 million to upgrade its supply chain and modernize physical facilities, systems and technologies. “At the core, it’s way more about customer experience,” said Kupbens. “It’s things like faster shipping options, new capabilities, providing insight into inventory availability, reliable delivery estimates. It’s ultimately a key part of providing key services.”

In mid-June, NMG revealed its acquisition of Stylyze, a machine learning SaaS platform for advancing personalization, which has been integrated into NMG’s Connect clienteling tool. NMG also disclosed that it intends to spend more than USD 500 million over the next three years in technology and digital capabilities and partnering with more than 25 “key” technologies such as search and browse, product recommendations, financing, order tracking and returns, promotions, loyalty and ratings and reviews.

Connecting With Customers Through Technology at the Neiman Marcus Group 

What: The new shopping app allowing users to pay at any online retailer in three instalments arrives in the UK.

Why is it important: Klarna’s buy now pay later solution eliminates the need to use a credit card.

Klarna’s in-app shopping experience claims to “cover the whole retail journey, from discovery through purchase and return management”. This new feature allows UK Klarna users to shop at any online retailer, regardless of whether they’re partnered with Klarna or not, eliminating the need to use a credit card. It will also integrate monthly budgets and personal spending limit functionalities for users to set and remain in control of their spending.

Additional features include wish lists and curated content, price drop notifications, thousands of deals, and lists of retailers for users to decide where to buy at the best price.

Sebastian Siemiatkowski, CEO of Klarna said: “We believe that no one should ever have to pay credit card fees or high interest rates. Shoppers now can interact with their favourite retailers without having to leave the Klarna app. Our one stop shop app is the future of shopping”.

Klarna launches new interest free shopping feature

Related Item:

• All you need to know about Buy Now Pay Later

What: Brands are increasingly looking for nimble solutions when it comes to their retail footprint

Why it is important: The appearance of mobile popups is both a threat and an opportunity for department stores: a threat because it gives brands another option not to come to them, and opportunity because it could also be the occasion to monetize dead space.

The new trend of mobile popup stores (as shown at the end of 2020 with Louis Vuitton mobile stores) is expanding, and getting industrialised. Popup Republic, a US-based company, offers to brands, among which Nike or Amazon, to test various locations with a single popup store on wheels.

The advantage is that, while it requires an initial investment roughly similar to a standard store, once the mobile popup store is built, it can allow to test various locations without having to multiply negotiations with landlords and investments.

Brands are increasingly getting nimble and mobile, with various solutions: Gucci in a Milan apartment, Lego in an art gallery in London, Pantone in a café in Monaco or Matchesfashion on a yacht off the Italian coast.

The article takes the example of Cuyana, a LA-based fashion brand, to explain that the investment is worth it, by amassing data on various potential locations to make better store decisions. This project is also presented as a solution for mall owners who want to monetize their dead spaces (parking lots, courtyards, atriums).

Cuyana Fashion Label Takes Traveling Pop-Up Showrooms on the Road 

What: L'Oréal Paris and Sephora have opened stores in Shanghai and Beijing, respectively, both of which offer immersive experiences to customers.

Why is it important: Both retailers are emphasising AI, VR and services to appeal to Chinese customers, already very much used to great customer experiences in the beauty business.

L'Oréal Paris unveiled a 120 sqm store, the first in China using the codes of Signature, the retail concept unveiled by the beauty brand in 2020. The store offers an immersive and omnichannel experience: for instance, customers can take a virtual bike ride through the streets of a Paris postcard and collect points for discounts. A space is dedicated to live chat with influencers, while customers can perform a skin diagnosis via Modiface.

Sephora unveiled a new 480 sqm store and invited Chinese artist Chen Baoyang to create an artwork called Algorithmic Blossom that mixes algorithms and virtual reality. From the façade, flowers bloom on the screens, a visual experience that continues inside the store where customers find themselves surrounded by hundreds of flowers that gradually open as they take the stairs that take them upstairs. The store also introduces the Fragrance Studio where algorithms allow customers to discover the perfumes that best suit them. In addition, this store can be accessible at any time via a dedicated application and a mini WeChat program.

L'Oréal Paris and Sephora deploy immersive retail in China

What:  Alibaba’s subsidiary, Freshippo, is launching 10 Store X hypermarkets in China this year.

Why it is important:  Although seemingly traditional in surface, the hypermarkets opened by Alibaba leverage the use of technology to promote a one to one marketing, in a massified way. This allows to increase the average basked and clearly target affluent Chinese customers and families.

Alibaba is launching a new chain of supermarkets in China called Store X, targeting affluent families, with 2 stores already opened and 8 more to come this year. These stores are larger iteration of Alibaba’s Freshippo stores (approximately twice as large).

The first Store X was opened in Shanghai last October on 18,000 sqm, stocked with 40% of private labels. It became profitable in 2 months, with an average spending of USD 152, and capitalizes on Alibaba’s overall capabilities to pilot ‘hyperlocal retail’, a mix of digital understanding and knowledge of the customer and the possibility to leverage digital capabilities to propose outstanding services such as instant delivery. To that extent, Alibaba claims that this retail proposal is a clear upgrade from the US initial model of hypermarkets, as it relies on a deeply personalized relationship with the customer.

In addition, Store X benefits from the Tmall Global brand offering, therefore proposing a broad access to international brands too.

Alibaba Rolls out Hypermarket Chain ‘Store X’ to Cater to Affluent Urban Families in China 

What: Shoppers Stop reported a Q4 sales drop of 10%.

Why it is important: Despite reporting some recovery through omnichannel sales, the retailer is still seeing impacts of the pandemic on revenue.

Shoppers Stop, which operates 84 department stores in 44 Indian cities, as well as 127 specialty beauty stores for brands including M.A.C, Estée Lauder, Bobbi Brown, Clinique, Smash box and Jo Malone, saw sales largely recover in the fourth quarter of India’s fiscal year, from January to March, declining 10% from the same period a year earlier.

Quarterly sales revenue reached  USD 113 million with EBITDA reaching USD 1.44 million. Omnichannel sales grew by 188% and private brands’ volume grew by 38% in the fourth quarter year-on-year.

Indian Department Store Shoppers Stop Sees Q4 Sales Drop 10% 

What:  A new location in Paris fully dedicated to sustainable fashion

Why it is important:  Sustainability is not an option anymore, for anyone in fashion, to the point of becoming a staple for most customers.

LVMH, Kering, Woolmark and others are backing up this new project, which just opened in Paris 10th arrondissement, and houses 40+ young labels, all united by their sustainable approach, be it in design, creation, production or trade operations.

It will be, once completed, also boasting a vegan restaurant and a jazz club. It is seen as an ecological accelerator for the fashion industry, and has made partnership with other similar ventures, such as Nona source, the LVMH deadstock initiative. This EUR 5m initiative has been designed by Chaix and Morel (who also designed the new Saint Laurent headquarters).

CEO Maeva Bessis points out that this initiative also aims at making executives from more established brands about sustainability, by operating a cool place where things  happen, in addition to nurturing new labels.

France's new fashion incubator La Caserne opens in Paris

LVMH has announced the launch of Nona Source, the first online resale platform for “re-sourcing” exceptional materials from the Group’s Fashion & Leather Goods Maisons. Designed by experts from LVMH via its DARE intrapreneurial program (Disrupt, Act, Risk to be an Entrepreneur), Nona Source supports LVMH’s environmental strategy by rethinking sourcing and supporting the circular economy.

Nona Source offers emerging creatives and brands in Europe access to high-quality fabrics and leathers at competitive prices to encourage creative re-use of materials. Because stocks are located in France, the platform will for the time being deliver within Europe (including the United Kingdom).

LVMH presents Nona Source, the first online resale platform for materials

What: Shopify embraces “Buy Now Pay Later” with Shop Pay Instalments, a custom-made solution powered by Affirm.

Why is it important: Even the smallest business can now offer BNPL solutions to customers.

Affirm built the Shop Pay Instalment solution to be integrated onto Shopify’s Shop Pay platform, which already offers various services to merchants to measure their sales and monitor their operations. It’s also a move by Affirm to gain market share over competitors such as Klarna and Afterpay.

The partnership with Shopify means that hundreds of thousands of additional merchants in the U.S. will provide Affirm’s alternative payment solution to shoppers. Any U.S. merchant newly listing on Shopify is automatically enabled with Shop Pay Instalments.

Affirm officials said that one in four merchants using Shop Pay Instalments during the beta period saw higher sales, some by as much as 50%; that on average, merchants saw 28% fewer abandoned carts and higher transaction values, and that their payment system is faster for consumers since they don’t have to fumble with credit cards.

Affirm hasn’t seen an increase in delinquent payments during the pandemic. The company’s most recent earnings report indicated an approximate 5% allowance to cover estimated delinquencies.

2021 Global Payments Report by Worldpay said buy now, pay later has an under 2% penetration in the U.S. With BNPL solutions on Shopify, the payment option is going mainstream.

Shopify Embraces ‘Buy Now, Pay Later’