Alongside Millennials, Gen Z consumers have generated “the entire luxury market growth in 2022“, according to a Bain & Company survey as cited by the American business publication Fortune, part of Time Warner. Furthermore, it is estimated that by 2025, 70% of purchases of luxury products will have been made by GenZ and Millennials customers, including Generation Alpha (people born after 2010).
“BNPL is becoming a must for luxury products retailers. A decade ago, luxury brands were mainly reserved for a category of buyers with substantial financial power. Today, things are different. Customers from the Millennial and Gen Z generations, as well as those who follow, have a different mindset compared to their predecessors. They want instant access to their favorite products and are not willing to save for months or years to make luxury purchases. These buyer categories – which form the core of the BNPL – intensely dislike traditional financing methods and prefer more flexible alternative methods. In today’s context, it’s becoming increasingly clear that luxury brand sales will be determined by adding the BNPL button at checkout,” says Alexandru Balaci, CEO of Mokka Romania.
The survey cited by Fortune magazine underscores an “earlier luxury mindset“ among Generation Z consumers compared to Millennials. They start purchasing luxury items three to five years earlier than Millennials, around the age of 15, as opposed to the 18-20 group age. It is estimated that Generation Alpha will exhibit a similar behaviour. These findings compel major players in the luxury goods sector to swiftly adapt to the new market conditions generated by the changes in consumption habits of the newer generations.
Brands like Gucci, for instance, have made substantial efforts to connect with customers from these generations, employing creative campaigns on platforms such as Instagram, TikTok, and with the help of influencers. Simultaneously, incorporating the BNPL alternative payment option has resulted in a 24% increase in online sales in just one quarter.
“Alternative payments like Buy Now, Pay Later not only facilitate potential customers’ access to goods but also encourage them to spend on pricier items, as these become more attainable. From our experience with Mokka BNPL across all markets we are present in – Poland, Romania, and Bulgaria – we find this to be a winning solution for both customers and retailers“, says Alexandru Balaci.
The CEO of Mokka Romania, the fintech company with European and American ownership, the first BNPL provider in Romania, pointed out that when it comes to retailers, “Mokka BNPL is an effective loyalty tool, and data from internal studies indicate high levels of return for customers using this alternative payment method“. Increased traffic, better conversion rates and average transaction values, along with a significant decrease in check out abandonment rates are some of the advantages of Mokka BNPL for retailers. For customers, the service provides the advantage of instant registration, rapid financing, financial flexibility, and a comfortable, hassle-free user experience.
“For luxury brands aiming to attract as many Gen Z and Millennial customers as possible, BNPL is the perfect solution. This system allows the cost of the purchase to be divided into multiple instalments. For instance, with Mokka BNPL, payments can be made in flexible, personalized instalments ranging from 30 days to 24 months. It’s a win for customers and also for luxury products retailers, who have the opportunity to increase sales volume without relying on promotions or discounts—a measure that makes luxury brands accessible and is increasingly present in European markets“, explains the CEO of Mokka Romania.
Mokka was founded by Irene Shvakman of Ukrainian origin and Fernando Dias Da Silva and is the first Buy Now Pay Later provider to have entered the Romanian market three years ago. Available for categories such as fashion, jewellery, electronics, footwear, children’s items, furniture, travel, and more, Mokka has developed financial products in close collaboration with retailers, focusing on customer profiles and their needs. Continuous innovation has gradually turned the shopping experience with Mokka into a highly comfortable one. The volume of goods purchased with Mokka BNPL has doubled in the last 12 months as compared to the previous year.