Marks and Spencer is launching a “buy now, pay later” service online that allows customers to spread the cost of purchases across up to six weeks. It enables shoppers to pay for home and clothing purchases between £30 and £800 in interest-free installments.
Fully available to customers from mid-November onwards, the service “is the latest step in the M&S’ far reaching transformation, becoming more relevant to customers with widespread change across the business”, according to a company press release.
Delayed payment methods are increasingly popular with online shoppers, especially millennials. Currently clothing retailers Asos, JD Sports and H&M offer the service in the UK.
In 2017 M&S found that 54% of its customers were over 50. As a result, the retailer’s strategy is dedicated to attracting the younger generations M&S had historically failed to attract, partly due to a subpar digital presence. Problems such as speed, ease-of-use and design of the website have been worked on since.
In the same year, M&S separated its Food and Clothing divisions into two independently managed businesses and committed to converting occasional into regular shoppers. While the two areas are different in terms of challenges and opportunities, many consumers still view them as connected. Looking into grocery in particular, we ran a single answer demographic to establish frequency of M&S shopping by age:
Overall, the younger the consumers, the less likely they are to shop at M&S. However, the ‘once every 3 to 12 months’ response is common for ages between 25 and 44 – around 30% of these consumers occasionally buy groceries at M&S. With the right strategy they could be converted into regular customers.
Grocery aside, Clothing and Home could prove to be key areas for attracting younger shoppers, especially if the online offering is of good standard. According to M&S’s 2019 Strategic Report, online currently represents 22% of sales compared with 19% last year. The retailer attributes the increase to “improvements in site speed, a redesigned homepage, enhanced product imagery, a simpler check-out and an improved delivery proposition”.
Within the plans for improving customer experience on marksandspencer.com is the new delayed payment service. Using a single answer steer targeting the younger part of our panel, we aimed to establish to what extent would a delayed payment service boost sales:
Over a third of consumers, aged 18-44, will keep buying clothes from M&S but won’t take advantage of the service. A smaller but still substantial 22% are current shoppers who will increase the amount they spend when delayed payment is available. Potentially the service could help convert them from occasional to more regular shoppers.
Nearly 14% of consumers who aren’t currently M&S customers could become such thanks to the service, with this ratio getting higher in the 18-24 age group (21.5%). The delayed payment service could help win over new customers from the youngest segment.
In the short term, M&S is hoping to attract younger customers and boost trade going into the key Christmas period with delayed payment, however, mid-November might prove to be too late to have an effect on Christmas sales. To check, we ran a multi-answer steer to consumers aged 18-44, asking which payment methods they would use for their online non-grocery shopping at M&S in the period before Christmas:
Given that slightly less than 27% of our panel selected ‘None of the above’, presumably stating that they didn’t plan to spend on the M&S website before Christmas, we assume that the remaining 73% of younger consumers intend to do so. This is positive result that justifies M&S’s digital strategy, showing that both the age segment and the retail format are extremely important, especially in the pre-Christmas period.
‘Delayed payment’ attracted 6.3% of votes – a ratio consistent among all ages between 18 and 44. This is a low result, showing that the service might have been introduced late in view of Christmas. It is likely to take longer for consumers to realize that this service is available, although appropriate digital marketing could help speed up the process.
Vypr can help brands and retailers forecast the effect their strategy would have on future performance. Rather than surveying opinions or satisfaction, we ask consumers about their actual shopping habits and intentions.