Delivered via a global broadcast from the window of London’s department store Selfridges, Afterpay CEO and co-founder Nick Molnar shared his take on potential growth opportunities available to retailers in incorporating Buy Now, Pay Later solutions into physical retail networks, particularly as in-store spend rebounds.
Afterpay has been quick to expand and evolve the way it services its 86,000 merchant partners, from establishing real-time data feedback loops, to connecting customers’ preferred channels and categories.
Below, we share Molnar’s insights from the talk, identifying the business need and opportunity for investment in the physical store network, the emergence of conscious customer acquisition models and the role data can play in connecting channels and improving the shopper experience.
Cross-Channel Connectivity Is a Key Growth Lever
“The omnichannel customer — understanding when a customer is browsing online and buying in-store — is now table stakes. It has to be understood to be able to build the attribution models that can properly quantify how online is impacting offline, and vice versa. We have 3.5 million Afterpay cards in the US market alone and it is providing us with [visibility], and an opportunity to close the loop.
As a retailer, seeking partners that help to provide this clarity of channel is key as shopping habits continue to blur in a post-pandemic world.”
Conscious Customer Acquisition Models Are Critical
“We are resolutely focused on the next generation consumer. From our research, we understand that Millennial and Gen-Z cohorts are shopping via debit, and avoiding credit cards. Outstanding credit card balances are at their lowest rates since the 1980s.
While Millennial and Gen-Z shoppers currently represent 25 percent of total economy spend, they will be earning half of all discretionary income in just seven years’ time. What does that translate to in terms of share of retail? Retailers will require very conscious customer acquisition strategies to target this next generation of consumers. Given their [payment] preferences, Afterpay can play a critical role. It’s why our consumers start their shopping journey with the app, and why we can be a channel for our partners.”
Payment Solutions Can Incentivise More Shoppers in-Store
“As in-store spend returns, leveraging the physical channel to drive growth is key. The [store] is the greatest investment that all retailers have on their balance sheet. We’re focused on driving foot traffic and re-invigorating the retail economy. In Australia, our first market, offline retail represents 25 percent of our total volume.
Offering contactless payments are critical to that. Millennial and Gen-Z cohorts are thought of as understanding and [utilising] contactless payments — but a third of our customers had never used this technology before Afterpay.
Today, our app sends over 1 million leads per day to our retail partners. As a customer acquisition tool, that equates to the same as social media. Via the app, we can leverage location-based push notifications to show customers the stores in their area that accept Afterpay. It’s interesting to consider that a payment product can drive meaningful traffic to physical retailers.”
In-Store Spending Has Rebounded Significantly
“As stores have reopened, physical retail spend has layered volume into the overall retail channel. Now, its share of total spend is showing meaningful growth. However, the way that customers are shopping in store has changed. Foot traffic is down, but conversion rates are significantly up and many of our partners have seen top line, pre-Covid year-on-year growth.
How do you cater for this new wave of shopping? We’re considering how we can support retailers in helping them roster, manage demand and forecast in-store [shopping behaviour]. Consumers are coming in very well-researched. In a lot of instances, they are well aware of what they want to buy. They want the store associate to help personalise the experience, but they are in the mindset of shopping when they walk through the door.
We’re seeing a lot of intent and great consumer demand. A retailer I spoke with recently told me, ‘Stores aren’t back to what they used to be — they’re double what they’re used to be.’”
This is a sponsored feature paid for by Afterpay as part of a BoF partnership. This interview has been edited and condensed for clarity.