Andy Harding, Managing Director, Openpay UK

Young shoppers are often stereotyped as spending more frivolously and recklessly than older generations. Articles all over the news are constantly echoing the idea that younger consumers are more likely to spend their cash on technology, clothes and eating out. While this may or may not be true, it’s worth thinking about the role social media plays in influencing spending decisions.   

Modern day technology has made consumers more impulsive, more demanding for instant gratification and in turn, the fashion industry has responded. Gone are the days of seeing designs on the runway and waiting for them to hit the stores. Today, high street favourites can bring the latest trends to rails quicker than you can say Versace and enable consumers to constantly feel ‘fashion forward’. And whilst the demand ultimately comes from the consumer, the catalyst can often be traced back to the pressures of social media platforms like Instagram.

Social media has led to a mounting desire for younger generations to not only appear “on trend”, but to constantly be able to prove it.  As part of a recent study we did at Openpay, which can be read in full in our Diminishing Returns report we discovered that over one in 10 Brits don’t like to ‘recycle’ outfits because of the pressures of social media platforms like Instagram and Tik Tok. Influencer marketing has meant that by the time an item has been released in stores, social media stars are already promoting and encouraging the purchase of these items. Whilst this may seem innocuous and retailers are benefiting from the increased consumer purchasing, there are also less obvious consequences – increased returns.

Popular hashtags, such as #OOTD (outfit of the day), serve as a constant reminder that once an article of clothing has been worn, it should not be seen again. However, few people can afford to buy enough clothes to keep up the facade. This has resulted in consumers becoming accustomed to the idea of buying with the intent to return or wearing and returning. Essentially, consumers are able to appear on trend without actually spending any of their own money. It’s this sort of behaviour that has led to fashion brands, such as ASOS, banning users who return items at a suspicious rate.

Before the COVID-19 lockdown, returns were already a major issue for retailers. But as bricks and mortar stores closed and even more shopping moved online, the pandemic has exacerbated the issue further. Online returns as a result of unnecessary purchases can be a costly business for retailers. They take up human and technical resources and logistical capacity – not to mention the negative environmental and sustainability implications.

That said, the pandemic seems to have done little to deter the decadent shopping habits of the younger generations. Our latest research, commissioned in partnership with Retail Week, has shown that consumers aged 18-24 are expected to return to old shopping habits (57% agree), and 21% expect to spend even more on fashion items then they did pre-lockdown.

The right to return has been a pillar on the high street for years, giving consumers the right to a full refund should an item be faulty, badly described or doesn’t do what it’s supposed to. However, the majority of retailers have more liberal policies, based on goodwill and to offer consumers peace of mind – and, of course, remain competitive. We are by no means suggesting that retailers stop customers from returning products, the issue is more that they are becoming too accustomed to a habit of returning items – whether that’s buying multiple sizes, misusing free delivery offers or taking advantage of the Buy Now Pay Later (BNPL) solutions which require zero financial commitment.

Unfortunately, the increased amount of returns is not expected to change organically, companies must actively work to discourage ‘buying with the intent to return’. The next generation of shoppers, Gen Z, are likely to become the largest shoppers in the consumer market as, according to our recent research, they are the most eager demographic to go out and spend money (57% agree) and they are the generation who use social media the most.

When surveyed, 28% of consumers said that retailers make it too easy to return items, this increases to 35% when asking consumers aged 18-34. Luckily for retailers, consumers are becoming increasingly more environmentally conscious (43% said they were conscious of the environmental impact of their shopping habits), so charging a small returns fee to offset carbon use could be one way to not only remind users to make considered purchases, but also discourage unnecessary spending, that leads to a greater number of returns and ultimately hurts a retailer’s bottom line.

Perhaps by far the biggest influencing factor is money and by this, I mean the actual funds leaving a consumer’s account. As part of our recent report, we asked consumers how they spend their money online, we found that most online transactions are done through debit cards (62%), however there’s also evidence that younger generations in particular are moving towards BNPL forms of payment. And with more and more retailers partnering with these services, almost all ecommerce platforms have some form of credit lending options. This means that for those who are planning to buy items with returns in mind, they now have an option to do so without any financial obligation or personal impact. Consumers essentially have the ability to ‘borrow’ products for their own free gain, while retailers are forced to bear the brunt of the costs.

However, BNPL services can be a useful budgeting tool if used correctly. A key differentiator of Openpay is the financial framework it provides. Consumers are required to place an initial down-payment on the goods upfront which helps to drive considered purchasing, ATV and importantly, reduce unnecessary and costly returns.  

Andy Harding, Managing Director, Openpay UK


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