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Credit where credit is due
By Jane Revell-Higgins N
ever a day seems to pass without our hearing from the many customer finance providers about their latest retailer
signings. Staged payments have almost become ‘the must have’ for every online merchant, yet with so many consumers currently struggling to get by on furlough pay or finding themselves out of work, it begs the question whether credit has become too freely available. Debt counselling groups are already warning of a major surge of consumers getting in touch with them, seeking solutions, due to an inability to meet their essential outgoings.
We are also all very much aware of the problems which credit offering retailers have run into in recent years, following accusations that they had misrepresented the cost of borrowing over many years. Subsequent orders to compensate over-charged customers made significant dents in balance sheets and will not have done the retailers any favours when it comes to consumer trust.
Not that there is anything intrinsically wrong in offering customers a more affordable way to budget for larger purchases, provided that they can afford to make repayments. The problem lies with some consumers who, realistically, cannot afford to get into further debt or service their borrowings. The national press has already started to question the ethics behind easy access credit offerings, highlighting extreme cases of indebted individuals who have very little to show for their ill-advised spending sprees.
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In response to these concerns, Klarna launched KlarnaSense, an initiative designed to encourage consumers to adopt smarter shopping practices, by purchasing the right things, at the right time. It says that our brains consume and process approximately 11 million pieces of information per second in order to make a decision, all subconsciously. The decisions are effortless and quick, but can be far from considered, and can lead to impulse buying.
KlarnaSense uses retail psychology to promote more mindful shopping, challenging consumers to engage their conscious brain by asking themselves three simple questions before they head to the checkout:
Do I love it? Will I use it? Is it worth it?
Applying this ‘Rule of Three’, has been developed with renowned retail psychologist, Kate Nightingale to ensure that consumers use the part of their brain that controls whether they make a considered decision, rather than an impulsive one.
Why shopping smart is important for UK consumers The growth of Klarna in the UK shows that consumers are demanding a better shopping experience which offers both flexibility and convenience. KlarnaSense builds on these changing behaviours and empowers consumers to make the right choice at the right time when shopping online or in-store.
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