- Of the 60% of consumers who have used some type of installment payment plan in the past 12 months, 34% have done so to purchase groceries
- Clothing and accessories represent the most popular category for installments at 40%
- 73% share of bridge millennials who used installment plans over the past year, topped all other age groups
Citing inflation and economic challenges, one in five shoppers say they are now paying for groceries in installments citing “the ability to manage their spending and credit” as key reasons for paying this way, according to a new report.
The flexibility of these installment plans has helped them become a common strategy within the shopper’s toolkit, according to a report from data and analysis company PYMNTS.
Of the 60% of the consumers who have used some type of installment payment plan in the past 12 months, 34% say they have done so to purchase groceries. Consumer budgets are under pressure right now between cuts to the federal government’s Supplemental Nutrition Assistance Program (SNAP) benefits, the resumption of student loan repayments, and continued inflation, among other financial challenges.
As a result, many shoppers have yet to feel much relief at the supermarket — a survey by the Federal Reserve showed that about one in eight consumers used a “buy now, pay later” service in the last 12 months, up slightly from 10% the year before. As such, Apple, PayPal, and credit card companies like Chase and American Express have also added the service.
Installment payment apps like Klarna, Affirm, and Afterpay offer cash-strapped consumers “immediate liquidity,” said Marco Di Maggio, a professor of business administration at Harvard Business School, who has studied the $309 billion industry, which is projected to grow more than 25% by 2026.
Other key highlights of the PYMNTS report include:
- Six in 10 consumers used installment plans to pay for consumer products in the last 12 months
- Bridge millennials and millennials lead, with 73% and 72%, respectively, making purchases using this method in the past year
- Forty five percent of consumers chose general-purpose credit card installment plans in the last 12 months, outpacing the 37% who used merchant or store card alternatives and the 37% who opted for BNPL
- Forty one percent of consumers who used a plan of any type did so because there was little to no additional cost
Among consumers who have not used any type of installment plan in the last 12 months, 37% cited concerns over potentially overspending, with 24% identifying this as the most important reason to steer clear
The report also noted that as the holiday season approaches, further limiting consumers’ ability to be able to afford basic items, the choices they’ll have to make at the grocery store counter may become even more difficult.