A Summer of Yes

Last summer, consumers were focused on investing in their futures and saving money. This summer, nearly half of U.S. consumers are spending more money than they did during the last two summers combined, according to new research from Affirm. Further, a recent McKinsey report indicates that more than half are spending extra by treating themselves.

Where consumers are splurging may not be that surprising: travel, clothing, and dining. But, what may be surprising is that pandemic spending habits haven’t been abandoned either. 

With the onset of the pandemic, Affirm saw consumer spending in the home category surge. In just six weeks, home office and home fitness purchases experienced triple-digit growth. Those categories continue to show momentum as many consumers continue to invest in their homes. In fact, for many, it’s their largest planned expense this summer. According to our recent study, one in three consumers are spending more on home upgrades this summer than any other category, and one in four are spending the most on hosting friends and family at home. Purchases with Affirm show a consistent trend — construction purchases such as home improvement materials, flooring, fencing, glass and mirrors were up 20% in early June.

It’s not just category spending that shows consistency. Consumers’ desire to remain budget conscious is persisting. Half of the respondents to our recent survey felt they had saved enough money throughout the pandemic to spend guilt-free this summer. However, 44% shared concerns about getting too excited and racking up credit card debt.

To me, this underlines an important reality. Even as we enter an “era of yes” — where consumers are ready to splurge and treat themselves — it's important to help consumers do so responsibly. In thinking about this further, I found myself looking up the exact definition of affordability: “a cost that is not too high.” In other words, affordability is subjective. So if every individual has their own threshold, how do you meet consumers where they are? We believe that it is by offering flexibility and choice at checkout. 

Consumers who reach checkout, only to feel trapped or limited by their payment options, are more likely to abandon their carts. Further, before completing a purchase, they want to know that flexibility also exists in the return process. Last year alone, U.S. consumers returned an estimated $428 billion in merchandise to retailers. Additionally, online returns, which often occur at triple the rate of physical retail, more than doubled in 2020 from 2019. Because consumers want this level of flexibility in returns, seamless solutions like Returnly — which provide immediate credit to consumers upon initiating a return — are critical for enabling the purchase experience modern shoppers expect.   

Understanding what consumers are buying this summer and how they view spending can enable merchants to establish stronger customer relationships. But this is just the first step. I encourage merchants to continually explore how they can deliver more options and flexibility to consumers as their preferences evolve. You can also visit our website to learn more about how Affirm helps merchants drive sales and conversion, and subscribe to No Fine Print by clicking “subscribe” up top.