Tighter financial conditions in the United States are leading budget-conscious consumers to explore alternative methods to finance their holiday purchases this year.
Due to the global economic slowdown, one in five shoppers plan to use buy-now-pay-later (BNPL) services to purchase gifts this holiday season, according to an online shopping forecast from Adobe Analytics based on a survey of over 1,000 U.S. consumers.
The BNPL payment method is expected to set new records, according to Patrick Brown, vice president of growth marketing and insights at Adobe.
“Despite an unpredictable economic environment, where consumers face several challenges, including rising interest rates, we expect strong e-commerce growth this season on account of record discounts and flexible payment methods,” he said in a statement.
Flexible payment methods have “become increasingly mainstream and will make it easier for shoppers to hit the buy button, especially on mobile devices where over half of online spending will take place,” said Brown.
According to Adobe’s 2023 holiday shopping forecast, BNPL is expected to bring in an estimated $17 billion in online spending between November 1 and December 31, marking a nearly 17% increase year over year totaling $2.5 billion.
Additionally, BNPL spending is forecast to hit $9.3 billion in November, which would make it the biggest month on record.
Overall, BNPL users have spent $46.7 billion this year, a nearly 15% increase and $6 billion more than the same 10-month period in 2022. BNPL growth has primarily been driven by groceries (+37.5%), home/furniture (+25.9%), and apparel (+15%).
With economic pressures beating down on consumers, many shoppers plan to focus on buying essentials, according to Jennifer Silverberg, CEO of SmartCommerce.
“Economic realities are going to have an impact on these holidays,” she said, per The Dallas Morning News. “There’s definitely, undoubtedly, going to be a shift toward more practical gift giving and more practical buying.”
Despite major retailers offering deep holiday sales this year, as previously reported by The Dallas Express, persistent inflation in the United States has caused consumers to practice restraint when shopping.
“Consumers are very price conscious,” said Vivek Pandya, lead analyst for Adobe Digital Insights, per the DMN. “Because of inflation, we’re seeing their debt levels increase and their savings level decrease.”