More Than One in Three Consumers Using Buy Now Pay Later Loans for Back-to-School Shopping
New TransUnion retail research finds BNPL is helping parents and students buy books and other necessary supplies
More than one-third of consumers (37%) have already or plan to use Buy Now Pay Later (BNPL) loans for their back-to-school purchases, according to new research from TransUnion’s (NYSE: TRU) retail business. BNPL loans allow consumers to make purchases with deferred or no interest installment loans.
The back-to-school shopping trends research was conducted via an online survey of 1,000 adults in July 2022. A full report of the findings and their implications for retailers are available in the new “TransUnion Back-to-School Shopping” report.
Families are especially hard hit by inflation, and back-to-school shopping represents a significant cost on top of everyday expenses. The ability to spread those payments out over time, interest-free, is a very attractive option to parents and students who are already stretched thin financially.
TransUnion’s analysis found that 55% of consumers expect to spend more on their back-to-school shopping this year, with inflation driving the increase. Consumers also plan on making other adjustments in response to inflation, such as buying fewer and cheaper items. Shifts in spending were more pronounced among students shopping for themselves, compared to parents shopping for their children.
Adjusted Spending Behavior Due to Inflation
Buying Cheaper Versions of Usual Items | Spending More to Buy Usual Items | Buying Less of Some Items | Stopped Buying Some Items | |
Parents Shopping for Their Children | 35% | 36% | 32% | 19% |
Students Shopping for Themselves | 42% | 30% | 38% | 23% |
“Families are especially hard hit by inflation, and back-to-school shopping represents a significant cost on top of everyday expenses,” said Cecilia Seiden, vice president of TransUnion’s retail business. “The ability to spread those payments out over time, interest-free, is a very attractive option to parents and students who are already stretched thin financially.”
TransUnion assists retailers with audience targeting solutions to help them identify which consumers would most likely respond to offers with BNPL financing details. In addition, TransUnion customers can access identity solutions to enable friction-right shopping experiences that balance convenience, efficiency and security.
TransUnion research found that of consumers using BNPL for back-to-school shopping, nearly two-thirds (62%) are doing so to buy books and other items needed for school, while 52% are using it to buy a single expensive item, like a computer, that is needed for school. Millennials are by far the largest group of consumers represented here, with 47% of that generation using BNPL for their back-to-school shopping.
“Tap to pay” and curbside pickup preferred in shopping experience
TransUnion’s research also surveyed consumers about their preferences in shopping experiences, finding nearly 60% use the “tap to pay” (e.g., Apple Pay or Google Pay) option at checkout. The primary reason consumers prefer such a service is that it is faster than swiping or inserting a debit or credit card into a machine.
However, among the 41% who do not use “tap to pay,” 55% said it’s because they don’t see how it is more convenient than using a debit or credit card, and 25% of this group said they don’t trust it to be secure.
Six in 10 (60%) consumers indicated they use curbside pickup, with 40% of that group using it often or always. The vast majority (78%) use curbside pickup to avoid crowds, while nearly half do so either because it is convenient when running errands with their kids or to get their items faster. The survey also found that consumers feel that curbside pickup significantly improves their shopping experience.
How Curbside Pickup Improves the Shopping Experience
Faster and More Efficient | Prefer Online to In-Store Browsing | Feels Safer | Allows Me to Find Broader Variety | |
Gen Z | 43% | 29% | 22% | 15% |
Millennials | 50% | 32% | 24% | 16% |
Gen X | 35% | 27% | 20% | 12% |
Baby Boomers | 35% | 29% | 20% | 12% |
Millennials were the largest group of curbside pickup users (70% vs 60% overall). That generation’s primary reason for not using the service was due to not having a vehicle. Among those who don’t use curbside pickup, 79% simply prefer to shop in stores and 36% prefer home delivery when shopping online.
Broadly, consumers have always expected retailers to provide quality goods at an affordable price – what we’d call a ‘good value.’ However, those expectations have evolved as services like curbside pickup and tap to pay have created better shopping experiences, and more recently as consumers expect retailers and brands to take positions on social and environmental issues. It’s important for retailers to understand the sentiment of their customers and account for that internally and externally.
Shopping gets personal
The survey examined consumer attitudes about how brands position themselves on issues related to environmental sustainability and social inclusivity. Nearly four in 10 shoppers (39%) said a company’s sustainability practices, like having fair-trade and locally sourced products, would at least make them more likely to shop at that retailer, if not be a requirement to shop there.
Similarly, nearly half (46%) indicated that a company’s diversity, equity and inclusion practices would at least make them more likely to shop at that retailer, if not be a requirement to shop there.
When consumers were asked whether they were willing to provide personal information to retailers in order to optimize their shopping experiences, 68% responded that they either don’t mind or actively want retailers to use their personal information to create accurate, personalized shopping recommendations.
“Broadly, consumers have always expected retailers to provide quality goods at an affordable price – what we’d call a ‘good value’,” said Mark Rose, senior director of TransUnion’s retail business. “However, those expectations have evolved as services like curbside pickup and tap to pay have created better shopping experiences, and more recently as consumers expect retailers and brands to take positions on social and environmental issues. It’s important for retailers to understand the sentiment of their customers and account for that internally and externally.”
For more information about the survey findings and their implications for retailers, download the report here.
Click here for details about TransUnion’s Retail solutions, including digital marketing, customer analytics and fraud detection.
RESEARCH METHODOLOGY
This online survey of 1,000 adults was conducted July 21-24, 2022 by TransUnion in partnership with third-party research provider, Dynata. Survey participants included adults 18 years of age and older residing in the United States- who either have a child/children going to school in the Fall of 2022, or are attending school themselves in the fall of 2022. Participants were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices. Survey questions were administered in English. To ensure general population sample representativeness across United States resident demographics, the survey included quotas to balance responses to the census statistics on the dimensions of age, gender and household income. Generations are defined as follows: Gen Z, born 1995-2004; Millennials, born 1980-1994; Gen X, born 1965-1979; and Baby Boomers, born 1944-1964.
About TransUnion (NYSE:TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.® A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.
