Holiday shopping deals from the nation's biggest retailers, along with S&P 500 and Dow Jones earnings, take off in earnest this week. This year, analysts and companies expect a surge in consumers using "buy now, pay later" apps like Affirm to pay for seasonal purchases, amid the cost-of-living crisis.
Amazon, Walmart Holiday Shopping Sales
Amazon Prime Day, set for Tuesday and Wednesday, brings exclusive deals for Amazon Prime members.
The Walmart Deals for Days event kicked off Monday and runs through Oct. 12.
The Best Buy 48-Hour Flash Sale focuses technology items. It also runs Tuesday and Wednesday, part of its plan for exclusive member savings every day in October ahead of Black Friday in November.
Ulta Beauty and Home Depot are also running special deal events in October, with savings on everything from hair tools to light fixtures.
Target's Circle Week shopping event ended Saturday.
Retailers are laying out early bird deals as consumers continue to grapple with stubborn inflation and steep interest rates. Now, the retail industry confronts an uncertain global outlook made more so by the Israel-Hamas war, as well as the restart of student loan repayments, which could strain shoppers further.
Buy Now, Pay Later Will Fuel Online Sales
In 2023, buy now, pay later (BNPL) services are expected to generate a record $17 billion in holiday shopping spending online, according to Adobe Analytics. That would be up $2.5 billion, or 17%, from last year.
"We expect strong e-commerce growth this season on account of record discounts and flexible payment methods," said Patrick Brown, an Adobe marketing executive, in a report dated Oct. 5.
Retailers partner with BNPL providers, who then process a purchase via credit or debit card. They generally break the purchase cost into four or more equal, interest-free payments. The purchases do not typically require credit checks.
For this season, Brown expects the "increasingly mainstream" buy-now-pay-later payment method to drive mobile spending. Mobile spending will hit a record $113 billion this year, overtaking desktop spending for the first time and driving over half (51%) of all online spending, the report said.
Buy-now-pay-later apps include Affirm, Block-owned Afterpay, Klarna and others.
One in five Americans plan to use BNPL apps this holiday shopping season, Adobe says. (Afterpay itself says one in six Americans, especially younger shoppers, plan to use a BNPL service.)
Adobe Analytics projects BNPL spending will hit $9.3 billion in November, making it the largest month on record. It expects $782 million in Cyber Monday buy-now-pay-later spending, surpassing the Cyber Monday 2022 record of $658 million.
So far in 2023, BNPL spending is up 15%, driven by groceries, up 37.5%, Adobe Analytics finds.
Affirm Stock, Block Stock
Shares of Affirm popped 3.6% to 18.59 on the stock market today. Affirm stock is up more than 91% year to date though sharply down from the September peak.
Block shares eased 0.2% Monday, near multiyear lows.
In March, Apple launched its Apple Pay Later service in the U.S., which it said allowed users to pay for purchases in four payments, spread over six weeks with no interest and no fees.
PayPal offers a BNPL service as well.
For now, Affirm and Sweden's Klarna continue to lose money despite growth in revenue and transactions.
Rewards, Risks Of BNPL Apps
Buy now, pay later apps give consumers a flexible way to manage their spending and budgets.
The popularity of these apps has soared in an uncertain economy, but there are worries about the impact on consumers, many already in debt.
It's easy for shoppers to get approved for BNPL plans and to take out loans from different lenders at the same time, since they aren't reported to credit bureaus, USA Today reported.
On top of that, while BNPL apps do away with interest on the loan, some of them impose late fees for missed payments.
