‘Buy now, pay later’ platforms that make luxury fashion accessible get boost from coronavirus and embraced by brands such as Drunk Elephant

Skincare and fashion brands that have seen sales fall during the Covid-19 pandemic have embraced pay-by-instalment services such as Klarna and Afterpay

‘Buy now, pay later’ platforms open luxury up to more customers – which could lower its cachet. Yet skincare labels Drunk Elephant and La Mer have signed on

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Luxury brands are partnering with “buy now, pay later” service providers such as Klarna to encourage spending. Photo: Shutterstock

Published: 1:15am, 27 Aug 2020Updated: 10:36pm, 27 Aug 2020

Luxury fashion has a problem it needs to solve. Younger clients are the most likely to covet new collections and update their wardrobes, but they also have the least money to spend.

The cumulative impact of the previous recession, student debt and now the coronavirus has left them poorer than the previous generation – and warier of in-store credit cards.

Pay-by-instalment platforms are the industry’s solution to this conundrum. Payment service firms such as Sweden’s Klarna and Australia’s Afterpay have proliferated in response to lacklustre sales in Europe in particular, luring in younger shoppers with a “buy now, pay later” option.

Customers are effectively taking out a small loan to pay for the item of clothing they’ve just bought, which they pay back over periods ranging from a few weeks up to several years.

Payment service firm Afterpay has seen revenue more than double to US$3.8 billion this year.

The pandemic has seen the popularity of these platforms grow exponentially. During lockdown, people turned to online shopping – but with millions losing their jobs or being put on furlough, they were also anxious about spending too much.