UK shoppers rack up £4.9bn Buy Now Pay Later debt in four months – report

UK consumers racked up over a billion pounds a month (£4.9bn) in Buy Now Pay Later (BNPL) debt in the first four months of 2023, according to the latest Adobe Digital Economy Index (DEI) data from the UK. This represents 15 per cent of a total of £32.6bn spent online in that period.

The BNPL figure for April remained high at £1.3 billion. April also saw a 2 per cent increase in average order values using BNPL compared with March, and an acceleration in the amount spent using BNPL from 20 April onwards.  For the final 10 days of the month, order values using BNPL were around £8 higher on average than the period from 1-19 April, indicating that consumers are more reliant on BNPL services in the run up to payday.

The Adobe DEI used Adobe Analytics to analyse tens-of-billions of visits to retail sites from UK consumers, 100 million SKUs, and 18 product categories in the period 1 April to 30 April 2023. Global figures are based on analysis of over a trillion visits to eCommerce sites and direct transaction data of consumers from over 80 countries.

The data show the trend towards mobile shopping continuing, with April seeing 61 per cent of purchases taking place on smartphones, a year-on-year increase of 8.6 per cent. Overall, consumers spent £4.9bn using their mobile devices in April.  

Consumer spending power faced increased pressure in April as the online price of essential items continue to rise, with groceries costing 0.68 per cent more than the previous month, and 9.2 per cent more than last year. The price of pet products also rose 0.84 per cent compared with March, and by 12.3 per cent compared to the previous April. By contrast, non-essential items such as electronics and apparel products again saw a month on month decrease in price month-on-month as retailers seek to stimulate demand.

During the weekend of the Coronation (6-8 May), spending dropped by 20.4 per cent compared with the same weekend in 2022, equivalent to a loss of £114m for online retailers. Historically, Adobe’s data shows that bank holiday weekends cause online spending to decrease compared with normal weekends, and the additional Coronation bank holiday is expected to drag online spending down even further this year.

“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,” said Suzanne Steele, Vice President and Managing Director for Adobe in the UK. “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.”