Authentic Brands Group, Klarna, Partner to Facilitate Sales for Young Consumers


Authentic Brands Group is making it easier for Gen Z and Millennials – not to mention other cohorts – by partnering with Klarna, a global retail bank, payment and shopping service.

Gen Z consumers are delaying home buying because they don’t want to be tied down by mortgages and are avoiding traditional credit cards. The group is a conundrum for retailers and brands because they have disposable income, but getting them to part with it can be a challenge.

Klarna’s flexible “Pay in 4” service is offered to buyers of ABG’s portfolio of brands, which includes Juicy Couture, Sports Illustrated, Nine West, Marilyn Monroe and Shaquille O’Neal. Customers will be able to shop with Klarna’s four interest-free installments at the e-commerce sites of more than 30 ABG brands as the partnership rolls out in the coming months.

The strategic benefits for ABG of connecting Klarna include expanding its customer base and attracting new audiences. “Our long-term goals include creating an ecosystem that is the best-in-class enterprise technology solution for improving the customer experience and ultimately modernizing transactions at scale,” said Adam Kronengold, chief digital officer of ABG.

“One of the main reasons we wanted to work with Klarna is their ability to create value among the younger generation,” said Kronengold. David Sykes, director of Klarna in the United States, added: “There is a demographic shift. Over half of Millennials don’t have a credit card, while 80% of Baby Boomers have credit cards. When I buy coffee in the morning, I pay with a credit card. We see a generation of young people who have not embraced credit cards. ”

Mike Dupuis, Digital Director of SPARC Group, whose operating platform includes Aéropostale, Eddie Bauer, Brooks Brothers, Lucky Brand, Nautica and Forever 21, said: “Our partnership with Klarna provides access to payment options that we know our buyers want to see and has resulted in a significant increase in the average order value. “

“We have seen encouraging initial results on order value,” said Dupuis, adding that Klarna’s orders saw double-digit increases over the averages for Aeropostale and Nautica e-commerce sites, where Klarna is live.

Kronengold said that Klarna’s adoption rate on ABG and SPARC brand sites depends on the label, but about 10% to 25% of consumers have verified through Klarna’s solutions.

“Klarna has a product that lends itself very well to the young Gen Z consumer who doesn’t have credit, so Klarna is their payment of choice,” Kronengold said. “It’s certainly independent of age. There are adults or older consumers who use it, but it lends itself very well to this young audience. “

Klarna charges up to a 5% transaction fee, which differs among merchants, depending on many factors, Sykes said.

The idea that consumers use payment plans like Klarna primarily for big ticket items like $ 1,000 handbags isn’t true, Sykes said, adding he was surprised to find shoppers using Klarna for products that cost much less.

“The average order value from Klarna is $ 140 to $ 150, way less than people think,” he said. “We are seeing the average order value of retailers increase between 20% and 80%. Sephora which has seen increases of 40%. The average order value is $ 70 or $ 80 at Sephora. We are very successful at this. ”

Forever 21 will use Klarna, which will be integrated into payment options on the website and physical stores. “Our vision is for Klarna to be used cross-channel, but we are still in the planning stages for this,” said Dupuis. “Our vision is that payment methods should not be channel specific, but rather channel independent, which is why the solutions we are working on take this into account.”

“Klarna does a terrific job on their own product marketing, but the real estate that ABG and SPARC will provide in terms of our online business and our social presence, that real estate goes upstream and downstream and is a big which is why Klarna has been delighted to work with us, ”said Kronengold.

Klarna has a strong presence and visibility at checkout, and the global company “has a giant footprint in Europe,” he added. “[The partnership] is focused on the domestic market, the United States, but look forward to the future, we see a great opportunity beyond North America. Most of the brands in our portfolio have an international presence. “

“What’s exciting about this partnership and the entire deployment of ABG,” said Sykes, “When we thought of potential partners, we think they are at the forefront of retail. We see the brands they have acquired and how they have transformed brands.

“They have great brands that we can partner with today and we are also looking at their growth,” said Sykes. “We expect there will be more. One of the reasons we think it’s a good partnership is because Klarna is living and growing up in new countries. We can support ABG in the US and other markets where they license. “


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