Macy's and payments company Klarna on Tuesday announced a five-year partnership that will allow Macy's customers to pay in four interest-free installments. Macy's is the only department store in Klarna's portfolio, a spokesperson for the companies said.
Macy's Inc. has also become an investor in Klarna, according to a press release from the companies. A Macy's spokesperson declined to disclose the amount of the investment.
Also on Tuesday, Macy's said it has partnered with DoorDash for same-day delivery through nearly 500 Macy’s stores nationwide, with no minimum order required, according to an emailed press release.
Payment installment plans from the likes of Klarna, Affirm and Afterpay are increasing in popularity as the pandemic and its attendant economic woes temper demand.
"We're excited to embark on a long-term relationship with Klarna that will help us reach wider audiences looking for seamless alternative payment solutions that provide them with financial control and convenience," Macy's Chief Digital Officer Matt Baer said in a statement.
Southern department store Dillard's began offering an Afterpay option, which the companies in a press release last month said helped spur purchases across categories and has sent shoppers to the Dillard's website. The retailer is now among the firm's top retailers in terms of volume, per an emailed press release.
These department stores are joining several other retailers in offering such options. Sephora, Journeys and Rue21 are among previous retailers working with Klarna. In July, Shopify announced installment payments via Affirm.
Buy now, pay later could be especially helpful to a consumer cohort struggling financially. Younger shoppers are especially hard hit these days, including Gen Z consumers who had been expected to enjoy more spending power than when millennials entered the workforce after the Great Recession. Half of the oldest Gen Zers (ages 18 to 23) told the Pew Research Center in March that the pandemic led to job loss or a pay cut for themselves or someone in their household — "significantly higher" than millennials (40%), Gen Xers (36%) or baby boomers (25%). And Pew had previously found that younger consumers were already vulnerable to job loss before the pandemic.
About a fifth of U.S. shoppers had already taken advantage of the option to stagger their payments, with many citing the pandemic as a reason, according to a June report from CouponFollow. With many in that survey also expressing difficulty paying their bills, an installment plan could help coax them to buying more at the holidays.
Klarna said it now has 200,000 retail partners globally, a U.S. consumer network of 9 million and an app with more than 12 million monthly active users globally.