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Afterpay wants to ride the rising tide of millennial retail spending
The poster child for buy now, pay later in Australia has drawn a line between the rise of millennial and Gen Z spending and the future of the not-quite-credit niche.
Afterpay wants to ride the rising tide of millennial retail spending
The poster child for buy now, pay later in Australia has drawn a line between the rise of millennial and Gen Z spending and the future of the not-quite-credit niche.
With an acquisition by Square now on the cards, Afterpay is hitching its future growth to that of Millennials and Generation Z.
According to the company’s latest Next Gen Index report, there has been a surge in the popularity of BNPL platforms like Afterpay among these demographics from the start of the pandemic.
Since January 2020, Afterpay said that BNPL usage has surged by 174 per cent among Gen Z and 110 per cent among Millennials.
Afterpay chief strategy officer Mark Teperson predicted that this demographic will account for nearly half of global retail spending by 2030.
“Their influence on the economy will only continue to grow, especially as they reach peak earning years,” he said.
The report also found that while BNPL only accounts for 5 per cent of total retail spending, that figure is growing at a significantly faster rate than debit card purchases.
Afterpay said that BNPL spending has risen by 120 per cent since January 2020. In contrast, debit card purchases have only grown by 20 per cent over the same window, while credit card usage has remained more or less stagnant or in decline.
While Millennials remain responsible for the majority of Afterpay purchases, the company said that Gen Z is quickly catching up. The latter now accounts for 15 per cent of Afterpay spending, rising by 35 per cent.
While Afterpay remains the market leader for BNPL in Australia, the company has lost some of its shine in recent months amid speculation that the local sector may have already peaked.
Still, if brands like Afterpay can maintain their reputation and popularity among the key demographics identified in the report, that might not matter.
Even if the overall size of their customer base doesn’t grow as rapidly as it did in earlier years, the amount of retail spending that each consumer brings to the table might be able to make up the difference.
Australian Retailers Association CEO Paul Zahra said that Gen Z and Millennials are becoming a powerful force in the Australian economy.
Like Mr Teperson, he expects them to represent nearly half of Australia’s total retail spending within the next 10 years.
“BNPL has proven to be incredibly popular for young Australians who are embracing new payment options in growing numbers,” he said.
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