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Macy’s Invests In Buy-Now-Pay-Later (BNPL) Service Klarna

Macy’s Invests In Buy-Now-Pay-Later (BNPL) Service Klarna

Macy's Invests In Buy-Now-Pay-Later (BNPL) Service Klarna

Macy’s and buy-now-pay-later (BNPL) firm Klarna have announced a five-year partnership that will allow Macy’s customers to pay for items over a series of four interest-free installments.

“With a strong focus on digital agility and innovation, Macy’s continually seeks strategic partnerships that enable us to provide our customers with the best possible shopping experience,” said Matt Baer, chief digital officer, Macy’s, Inc.

“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.”

In addition to the partnership, Macy’s Inc. has also become a Klarna investor. The amount invested, however, has not been disclosed.

The move comes at a time when offering flexible payment options has become a critical component for driving sales and customer loyalty. In fact, according to eCommerce payment provider PPRO, 42 percent of U.S. shoppers will forgo their purchase if their preferred payment method is not available.

42 percent of U.S. shoppers will forgo their purchase if their preferred payment method is not available.

Flexible payment options also have a way of encouraging customers to add more items to their cart, which essentially translates to increased average order value (AOV).

These buy-now-pay-later options offered by firms such as Afterpay, Clearpay and Klarna have largely been built around addressing the payment needs of a younger demographic i.e. Gen-Z and millennials, who tend to be more budget conscious and debt-averse. That said, these services are now also gaining traction among older consumers during the ongoing COVID-19 pandemic, especially among those with higher incomes.

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Macy’s move to not only partner but also invest in Klarna seems to be an overall strategic move for the department store chain.

“Klarna is delighted to partner with Macy’s as the shift to online retail accelerates and the company continues to innovate and enhance its digital offerings to meet evolving consumer expectations, for which smart and flexible payments are essential,” said Sebastian Siemiatkowski, CEO of Klarna. “This strategic collaboration is firmly rooted in a shared obsession with offering a superior innovative shopping experience that builds lasting connections with consumers.”

Recently, Macy’s also partnered with on-demand delivery platform DoorDash to offer same-day delivery through nearly 500 Macy’s locations nationwide. At this point, no minimum is required to utilize the service.

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