Oscar de la Renta Partners With Payment Solution Affirm, As the Luxury Market Embraces DTC Commerce

Madeleine Streets

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The recent growth of payment installment plans is frequently associated with younger demographics and low mid-price products, but the category is seeing adoption in high-end markets too. Oscar de la Renta is the latest luxury brand to partner with payments solution Affirm, reflecting the company’s goal to connect shoppers with retailers at all price points.

Millennials and Gen Z-ers are commonly targeted for these payment plans as there is an expectation that they have tighter budgets that benefit from staggered payments. These groups also have a commonly reported aversion to credit cards — only 1 in 3 millennials has a credit card, according to payments solution Afterpay.

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But Affirm said it aims to support customers throughout their purchasing life, not just at the start.

“We give consumers a responsible way to pay for important purchases throughout their lifetime, from a great pair of shoes for their first job to home decor upgrades,” said Greg Fisher, chief marketing officer at Affirm. “Purchases range from a few hundred to several thousand dollars, whether it’s a pair of Adidas sneakers or a Peloton bike.”

While many of its competitors have spending caps of around $2,000 that prohibit luxury purchases, Affirm offers consumer loans of up to $17,500. Its payment plans are correspondingly longer; whereas Afterpay and Quadpay traditionally divide purchases into four payments over two-week intervals, Affirm repayment terms commonly range between three and 12 months. Larger purchases can receive extended terms of up to 48 months.

Luxury is facing a particularly challenging period, with McKinsey estimating a market contraction of 35% to 39% in 2020, compared with 2019. Personal luxury items are often the first class of purchases to be abandoned during economic uncertainty, as seen during the 2008 recession, and this looks to be continuing as a result of the COVID-19 pandemic.

However, by partnering with a solution like Affirm, luxury brands can increase their DTC presence and reach a new crop of potential customers.

In fact, luxury brands that widen their target audience could continue to generate sales despite the current environment, particularly if offering a more accessible way to finance those purchases.

For instance, Affirm’s luxury retail partners, which include Moda Operandi and Tamara Mellon, reported a 23% growth in average daily volume during the second half of April. Fisher attributed the increase to consumers anticipating the end of stay-at-home orders and the consequent opportunity to dress up again.

The company noted that the recent lockdowns also encouraged investment in home products, with consumers taking advantage of the payment plan solution to ease the financial burdens of buying larger items. Additionally, consumers are shifting their spending toward more long-term investments, reported Affirm.

“According to Affirm research, 38% of shoppers say they are making an effort to purchase higher-quality items that will stand the test of time,” said Fisher. “With many people undoubtedly having purged their closets during shelter-in-place, we also anticipate consumers will be looking to refresh their closets with a shift toward buying fewer, more classic pieces they can wear for years to come.”

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