payments

Macy’s, Klarna Partnership Expands to 750+ Macy’s, Bluemercury, Bloomingdale’s Stores

Exclusive: Klarna US Head David Sykes told Retail Brew the move could encourage other retailers to join the service.
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Francis Scialabba

· 3 min read

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.

Buy now, pay later (BNPL) firms like Klarna exploded in online popularity last year, with a boost from price-conscious Gen Z shoppers. In Klarna’s case, gross merchandise volume swelled 46% to $53 billion in 2020, and in March, it raised $1 billion at a $31 billion valuation. Klarna’s layaway remix isn’t yet as common in physical retail as it is online—but times may be a changin’.

Seven months after Macy’s made an undisclosed investment in Klarna, its partnership is ready for a second installment. Klarna’s BNPL service will roll out to 750+ Macy’s, Bloomingdale’s, and Bluemercury stores nationwide this month, Macy’s and Klarna told Retail Brew. The companies declined to share financial details of the partnership.

Macy’s, midway through an extensive turnaround plan, is betting Klarna’s flexible financing can lure younger shoppers back into stores. And Macy’s isn’t alone: “In the next four to eight months, you're not going to find a major retailer in the US that's not offering some sort of a flexible payment option online and in store,” David Sykes, head of Klarna US, told Retail Brew.

How do you do, fellow kids?

On its Q4 2020 earnings call, Macy’s CEO Jeff Gennette told analysts that introducing Klarna’s installment payments online was a “nice accelerant” for new shoppers—shoppers who don’t have to Google what “cheugy” means. (They’re young.)

  • Overall, “Klarna users are a greater percentage under 40 than our core customer base,” Matt Baer, chief digital officer at Macy’s, told us.
  • According to Klarna, 51% of shoppers who use BNPL on Macys.com are millennials or Gen Z.

Taking the partnership to stores should bring the youths along, Sykes told us, and help Macy’s grab a larger share of their allowances. In an earlier partnership with Sephora, Klarna found that average order values (AOV) jumped 65% after its installment payments were offered in store. Online, AOV only rose 35%. Klarna declined to share specific order totals.

One barrier: “Introducing BNPL solutions is more difficult in-store because it can be harder to make consumers aware the payment option is accepted,” Daniel Keyes, research associate at Insider Intelligence, told Retail Brew. “Consumers will have to do some of the work themselves as they'll have to follow an app's steps to make an in-store purchase on their own.”

  • Baer said Macy’s is 1) training store associates to pitch shoppers on Klarna and 2) testing in-store signage across its three banners.
  • Sykes added that Klarna will offer promotions on its app to drive shoppers to stores–like geotargeted discounts for shoppers within walking distance of a Macy’s.

Looking ahead...Klarna expects ripple effects from its wider Macy’s rollout: “When we launched online with Sephora last year, that was the catalyst for us growing so rapidly in the US,” Sykes said. “We hope the same thing will happen from a physical retail perspective with this launch with Macy’s.” — HL

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.