John Lewis is considering launching a buy now, pay later (BNPL) service as customers continue to feel the impact of inflation and higher interest rates on their finances.
Nish Kankiwala, the retailer’s CEO, said younger customers “expect” buy now, pay later (BNPL) and said the department store was likely to develop its own version of the service.
John Lewis tries to target younger customers
The retailer already offers buy now, pay later interest-free credit for purchases over £500 on big-ticket buys - including furniture and nursery items. John Lewis allows consumers to repay the interest-free credit over 12 months.
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Kankiwala told This is Money the retailer is considering lowering the minimum spend threshold for interest-free buy now, pay later purchases.
Allowing consumers to pay half upfront while borrowing the rest interest-free, BNPL has grown in popularity during the cost-of-living crisis.
Unlike many other retailers, John Lewis has not partnered with the likes of Klarna or any of its rivals.
“The introduction of a general buy now pay later scheme will likely encourage more people to shop with John Lewis. Due to the store’s positioning as a premium, high-expense retailer, many shoppers on lower incomes will often be deterred from shopping there. However, by giving them the option to split the payment over smaller, more manageable instalments will incentivise their custom,” Nick Drewe, retail expert at online discounts platform Wethrift says.
“This will also likely encourage returning custom, from shoppers who have cut back on non-essential spending due to the continuing cost of living crisis putting a strain on people’s spending,” he adds.
BNPL is a controversial method of payment with many critics saying it encourages people to buy things they cannot afford.
John Lewis focuses on financial services
John Lewis is also planning to introduce an interest-bearing credit option charging 16.9% on electrical goods bought online or through its app. It will extend the offer to furniture and store-based purchases.
The move comes as John Lewis chair Sharon White revealed financial services is a growth area for the retailer, with plans to invest £100m into its financial services business over the next five years.
Back in March, the partnership reported a loss of £234m for the year ending 28 January 2023. Still, it is aiming to post £200m in profit over the next two years.
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