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Adobe Reveals Increase in BNPL Debt; Rising Costs and Upcoming Spending Trends in the UK

UK consumers racked up £4.9billion in Buy Now Pay Later (BNPL) debt in just the first four months of 2023; reveals the latest Adobe ‘Digital Economy Index’.

While UK consumers spend a total of £32.6billion up until the end of April 2023, Adobe data reveals BNPL usage remained high. Consumers spent £1.3billion through BNPL services in April alone, representing 16 per cent of total online spending in the month. Overall, in April UK consumers spent a total of £8billion online – actually down 1.7 per cent from the previous month, and down 2.2 per cent YoY.

Adobe’s analysis also highlights a two per cent increase in average order values using BNPL compared with March, as well as an acceleration in the amount spent using these services from 20th April onwards. For the final 10 days of the month, order values using BNPL were around £8 higher on average than the period from 1 to 19 April – indicating consumers are more reliant on these services in the lead-up to payday.

Mobile shopping has also continued to grow, with April seeing 61 per cent of purchases taking place on smartphones – an 8.6 per cent YoY increase. Overall, consumers spent £4.9billion with their mobile devices in April this year.

UK residents are well aware of continuing price increases of essential items. Adobe found that groceries cost 0.68 per cent more than the previous month in April, and a significant 9.2 per cent more than last year. The prices of pet products also rose 0.84 per cent compared with March and were 12.3 per cent more expensive than April 2022.

As the cost of essential items increases, non-essential items have struggled to maintain high levels of demand – as people in the UK pay more attention to bank balances and budgets. Because of this, non-essential items such as electronics and apparel products again saw a month-on-month decrease in price as retailers seek to stimulate demand.

Saving a princely sum on coronation weekend

During the Coronation weekend itself from 6 to 8 May, spending dropped by 20.4 per cent compared with the same weekend in 2022, equivalent to a loss of £114million for online retailers. In the past, Adobe data has shown that bank holiday weekends cause online spending to decrease compared with normal weekends. The additional Coronation bank holiday is expected to drag online spending down even further this year.

King Charles III’s coronation also appeared to have some more unexpected effects on spending habits. The types of products that sell more as temperatures rise, such as outdoor grills, air conditioners, garden planters, patio umbrellas and coverings, and ice cream makers, all proved to be popular purchases in April. Adobe explained that spending in this sector was accelerated by the build-up to the coronation.

Suzanne Steele, Adobe BNPL
Suzanne Steele, VP and MD for Adobe in the UK

Suzanne Steele, vice president and managing director for Adobe in the UK, offered her take on the findings: “With essential items including groceries and pet products increasing steadily in price since the start of the year, it’s no surprise to see consumers continuing to make use of buy now pay later services to manage their spending.

“While warmer temperatures will ease the pressure put on household finances by high energy prices, the interest rate rise to its highest point in 15 years coupled with the expectation that inflation will fall more slowly than predicted means that consumers will still need to keep a close eye on their outgoings.”

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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