--- title: Consumer Credit + Retail: description: 5 things you need to know about changes in consumer spending image: https://indicia.konicaminolta.com/hubfs/Klarna_Headers_Social_F.jpg --- [**](https://indicia.konicaminolta.com/blog/consumercreditandretail#) [![iww_logo_website](https://indicia.konicaminolta.com/hubfs/iww_logo_website.svg "iww_logo_website")](https://indicia.konicaminolta.com/) - Europe - Asia Pacific - Americas ![km](https://indicia.konicaminolta.com/hubfs/km.svg "km") ![Emmeline Kite](https://indicia.konicaminolta.com/hubfs/Blog_Image_Em.png) Emmeline Kite 12 July 2021 # Consumer Credit and Retail 5 things you need to know about changes in consumer spending. ![Emmeline Kite](https://indicia.konicaminolta.com/hubfs/Blog_Image_Em.png) Emmeline Kite 12 July 2021 5 things you need to know about changes in consumer spending. With a substantial 58% of the UK economy driven by household consumption, the pandemic has had a huge effect on most of our incomes and outgoings. Things are changing and adapting at such a pace that marketers can’t afford to rely on old models of consumer expectations and behaviour. Even those based on previous behaviour data.   We’re in uncharted territory, that’s for sure. So here are five things we know marketers should know about in order to get consumers to spend.   ### **1. Things are looking up**  Spending is very much on the rise once more. In fact, in Q1 of this year, Deloitte’s [Consumer Confidence Index](https://www2.deloitte.com/uk/en/pages/consumer-business/articles/consumer-tracker.html) leapt by an impressive seven points in just one quarter. While still not quite at pre-pandemic levels, this is the highest jump in the history of the index, caused by the lifting of restrictions, combined with more people with savings ready to hit the shops, pubs and leisure outlets. ### **2. There's a considerable divide**  As you might expect, households with high and low incomes have faired very differently during the pandemic. Between February 2020 and January 2021, 31% of consumers said their savings have increased, but almost an equal number (29%) said their savings had decreased during the same period. Those on lower incomes have been disproportionately affected by the pandemic. And those working in vulnerable sectors (like hospitality or leisure) are much more likely to have relied on borrowing to buy the essentials.   ### **3. The demand for credit is at a new low**  It makes sense that while we were all bored stiff sitting at home, unable to go out and spend, lots of people were able to pay off their debts. In fact, between March and November 2020, a staggering £17.3 billion household debt was paid off. Refinitiv Datastream, which collected the data, revealed that the demand for credit from consumers fell to -6.7%. Compared to a much more substantial 6% in February 2020. The lowest level since it started collecting data in 1994.  ### **4. Credit cards are less popular than ever** According to Yieldify, 65% of shoppers are now avoiding using their credit cards when it comes to retail purchases. While ONS data showed that in May of this year, consumers borrowed more than they paid off – the first time since August 2020 – this was driven by car finance and personal loans. Appetite for credit card borrowing remains low. Only time will tell whether this shift in behaviour will stick around for the long term, but one thing we’re actually seeing an increase in is buy now, pay later in instalments. Which leads us to… ### **5. Buy now, pay later is essential for successful brands** A recent European Payments Council report found that 17% of UK consumers said that the availability of different finance options is the most important factor when considering a purchase. And 36% said that they would shop again at a retailer that offered buy now, pay later options at checkout.  Brands offering a payment alternative such as Klarna, PayPal Credit or Splitit are winning by lowering the obstacles to making the purchase. Especially if they want to attract younger, online customers. Ideal for anyone with less disposable income, particularly if they’re shopping for FMCG. It means there’s no need to wait for payday, but unlike credit cards, there are no interest fees, late payment charges or waiting for the returned items to be credited back to your card.   It comes as no surprise that the success of Klarna and its competitors can be attributed to younger customers. But with many households now relying on credit to make ends meet during the pandemic, there’s an opportunity for growth for brands that offer alternative payment methods. Especially paired with a data-driven marketing platform. And those without are likely to fall behind because as we’ve learned, it definitely pays to take the pressure off payday.   If you'd like to find out more about how you can adapt your marketing strategy and ensure you're not missing the mark, with out-of-date models on consumer behaviours, get in touch now. Our team would be delighted to have a conversation and find out more about the issues you're facing and how we may be able to help create new value for your organisation. 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