As Lululemon introduces Klarna at its in-store checkouts, Michaela Weber, SVP Payments at Commerce, explores the growth of BNPL and its place in omnichannel retail.
The way shoppers choose to pay is changing rapidly. Lululemon recently introduced Klarna as an in-store payment option across its UK stores, reflecting the rising popularity of buy now, pay later (BNPL) options. In fact, one in four UK adults have now used a BNPL service, up from just 14% in 2023.
As payment preferences evolve, so too do expectations around flexibility. Yet, despite 70% of UK retail sales still taking place in-store, many retailers have yet to offer the same flexible payment options available online, from BNPL to digital wallets and instant payments.
To stay competitive and maximise sales, retailers need to give customers the flexibility to pay how they want, wherever they choose to shop.
Omnichannel is about more than where customers shop
Retailers understand the importance of meeting customers where they are, and the investment in various emerging technologies and platforms demonstrates this. This trend is visible from AI-driven ecommerce to online marketplaces, and social commerce platforms such as TikTok Shop. The goal has been simple: if customers are shopping somewhere, retailers need to be there too.
The next step for retailers is to apply that same thinking to payments.
As payment methods such as BNPL continue to grow in popularity, particularly among younger shoppers, retailers need to ensure the in-store payment experience evolves alongside the shopping one. Despite credit cards being around since the 1950s and Klarna having launched in the UK market in 2014, research shows that 54% of Gen Z consumers now use BNPL, surpassing the 50% who use traditional credit. This underlines just how quickly modern payment preferences are changing. Offering the payment methods customers expect is becoming just as important as being present on the channels they use.
This matters because the in-store experience is increasingly being blended with the digital experience. Customers are used to discovering a product on social media, using AI shopping tools to compare prices or find the most relevant products, and then heading into a store to complete their purchase. This means they expect the same level of convenience throughout the entire journey and across multiple surfaces.
The checkout is where the customer experience is won or lost
Every stage of the shopping journey is designed to lead customers to one moment: completing their purchase. Yet, even after investing in product discovery, marketing and the in-store experience, retailers can still lose a sale at the final hurdle. In fact, around 13% of shoppers abandon their purchase because their preferred payment method isn’t available.
The checkout needs to be treated as a core part of the omnichannel customer experience, rather than just the final transaction.
Customers expect the same diverse offering of payment options wherever they shop. As those expectations continue to evolve, retailers need to ensure the checkout reflects the flexibility customers have come to expect across the rest of their shopping journey.
A seamless, consistent checkout does more than improve the customer experience. It removes unnecessary friction at the point of purchase, helping retailers convert more store visits into completed sales.
The business case for bringing BNPL into stores
BNPL may have built its popularity online, but its move into physical stores is a natural next step. Many of the purchases where payment flexibility matters most still happen in-store, particularly for larger basket sizes and higher-value items that customers want to see before committing to.
Giving shoppers the option to spread the cost in-store simply extends the flexibility they’re already used to online. It provides customers with more choice while giving retailers another way to remove barriers to purchase, particularly for larger basket sizes where payment flexibility can influence whether a sale converts.
The future of retail payments is about adaptability
In-store BNPL won’t be the last shift retailers need to respond to. From the widespread adoption of contactless cards to the rapid uptake of Apple Pay and Google Pay, BNPL is simply the latest example of a popular payment preference.
As payment options continue to evolve, consumers will respond by expecting the same flexible range of options, across whichever channel they chose to shop.
The retailers that treat payments as a strategic part of the customer journey, rather than simply the final transaction, will be best placed to succeed in a crowded and constantly evolving industry.
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