Athleisure.

No-sweat sales boost. How to keep athleisure payments super cool klarna.com/uk January 2020

UK consumers can’t get enough of that delivers comfort, style and performance. Whether at the gym, on the town, in the office, or just chilling, they’re hot for active-wear brands that blend fitness, and celebrity lines. As retailers fight it out to gain or retain a foothold in this crowded fashion-athletic hybrid segment, Klarna is on hand to help them stay fighting-fit.

The UK athleisure market is worth * 6.5 % annual growth** (higher than £3B many other retail sectors) Brits love athleisure. It offers them everything For aspirational lifestyles. they need to take them from work, leisure and Lives lived through social media is a trend play – without any fuss, fast changes or faffing that’s been picked up on by celebs everywhere. around. It can be smart but comfy, casual but As a result, millions of followers are aspiring impressive and it’s now accepted as the social to their laidback, fitness-focused and casual norm – even for celebs that to impress. way of living and ‘share-worthy’ athleisure Athleisure at work. looks. Body-conscious celebrities such as Cara Delevinge, Kendall Jenner and Rita Ora Employers and clients are comfortable with often Instagram their latest fitness-inspired workers expressing their individuality through fashion. Some celebrities have even launched athleisure style too. Dress down days, the their own athleisure brands – think Kate Hudson’s gig-economy and the increase in home working Fableticsm, Khloé Kardashian’s Good American has relaxed policy. It’s no longer and Beyoncé’s Ivy Park. a must to be suited and booted 9 to 5. Just to be comfortable. At play. Hi-tech consumers are increasingly less willing Consumer interest in health and wellness to sacrifice comfort elements for cool looks. trends is one of the principal growth drivers From stretch-ability, wash-ability, odour control, for athleisure. For both the Millennials and the moisture management – athleisure’s high-tech middle-aged, gyms are replacing bars, restaurants materials not only perform better but can be more and cafes as social hubs to meet like-minded comfortable than traditional . And a bit peers. Social media not only provides new ways of lycra-stretch removes many of the issues with for people to share their experiences and wellness fit posed by traditional fashion tailoring. regimes but also adds pressure on them to look good while working out. Or to make a luxe statement. Athleisure is even starting to move up into the luxury fashion space with brands like Dior, Louis Vuitton and Chanel all creating sports inspired collections to take advantage of high-end athleisure demand.

2 Athleisure klarna.com/uk January 2020

With athleisure now mainstream, So, what are shoppers looking for when retailers can’t afford to pull buying athleisure? their punches. Klarna’s recent athleisure shopper survey High demand is great news for retailers, but it also shows that, when it comes to their priorities, attracts new and aggressive players – with major athleisure buyers are attracted to retailers that brands offering exclusive lines and big spends. offer a wide variety of quality products (40%), Sports inspired fashion is increasingly found in combined with a fabulous customer experience chain stores and multi-retailers – both on the high (36%) and a seamless checkout UX (25%). street and online. What they don’t want is complexity, delays and lack of flexible payments. In fact, half of all athleisure To differentiate and stay profitable athleisure shoppers (49%) feel that if a checkout is too long retailers are looking at new ways to add value. and drawn out, they won’t shop there again. They are also extending their offerings beyond functional or fast-fashion labels to premium and luxe sportswear to drive sales growth with Millennials and Gen Z. buy active-wear That means knowing their audiences, expanding online because it’s their appeal and finding new ways to drive loyalty. 65% more convenient This also means making sure their websites are at the top of their game (because no-sweat fashionistas hate friction). want to see the Indeed, preventing negative attitudes and goods before buying emotional resistance at the checkout is now 63% a major challenge for retailers. Poor conversion figures show that a bad UX will cause buyers to run, leaving retailers holding an empty basket. The more fear, anxiety, stress won’t buy expensive or disappointment, the less uplift and items unless they loyalty retailers can expect. 53% can check them out first

3 Athleisure klarna.com/uk January 2020

Can athleisure retailers restyle their By offering Klarna at the point of sale – via checkouts and empower customers to online and in-store checkouts and mobile spend more on the items they truly love? apps – retailers can deliver the smooth, frictionless buying experience that resonates Our study reveals that more than half of athleisure with today’s convenience-focused consumers. consumers (53%) find shopping more enjoyable The payment choice that reflects their lifestyles with flexible payments and are also prepared to and spending habits. spend more with this option (55%). Importantly, one in two would also be more likely to choose Here’s how: a retailer that offered flexible payments(52%) – giving them an edge over competitors that don’t. 1. Add the ‘feel-good’ factor. Athleisure websites can lose out to physical When it comes to loyalty, the figures stores because customers can’t experience speak for themselves. the goods or ensure they fit. We found that 55% of athleisure shoppers would be more 47% of online athleisure buyers are afraid likely to remain loyal if a retailer offered flexible items will arrive in poor condition while 42% payments and 52% would also recommend are often disappointed because their purchase that retailer to family and friends. fails to match their expectation. Klarna empowers customers to try before they buy by letting them acquire goods and only pay for them 30 days later – so they only part with their cash when they’re completely happy. Happy 70% customers spend more and are more loyal. of athleisure buyers also read (and are influenced by) online 2. De-stress the UX. reviews, generating positive Having to make an on the spot decision about whether they like an item enough to pay a bit ‘word of mouth’ is crucial – extra for it will lead many to walk away. Half of especially for pure-play fashion athleisure buyers (50%) find that having the and sportswear brands option to pay in monthly instalments makes shopping much less stressful for them as they know they can spread the payment. Klarna At Klarna, we believe alternative lets shoppers pay for goods in 3 equal monthly payment options can set new instalments, interest and fee free. performance records for athleisure sales in-store, at events and online. 3. Empower premium spend. By applying the same no-compromise approach to Sometimes, disposable income is tight their checkouts as they do to their merchandise, (particularly for Millennials and Gen Z – retailers can raise their game and compete more the largest group of athleisure shoppers). effectively. Pay later options such as Klarna If premium athleisure items are out of their give customers the confidence to buy premium range, 31% will wait till they can afford it, 26% clothing, hi-tech and luxe-accessories, will look for a cheaper alternative and 21% so they can work new athleisure looks whenever will not buy it at all. With a potential 5 out of they want, as often as it them. 10 premium sales being lost on price alone, it makes sense to provide flexible pay later options that help alleviate financial pressure and allow for better budgeting.

4 Athleisure klarna.com/uk January 2020

4. Cut FOMO and give back control. 7. End mobile frustration. No-sweat fashionistas hate not being able Athleisure shoppers’ active lifestyles mean to buy what they want when they want. their demand for convenience is high and Exclusive lines fly of the rack (especially after checkout friction is a big no-no. Consumers in a rave review or celeb-endorsement) so limited this sector are likely to browse and shop on stock runs out fast. With Klarna, customers the go straight from their mobiles. With Klarna, don’t have to wait, but can buy as soon as returning customers can pay with one-click collections are launched with the option to across the entire Klarna merchant network, manage the spend over time. without having to worry about completing registrations or complex forms. 5. Get under buyers’ skin. As well as providing a springboard for 8. Smoooth seasonal spend. highly-targeted value-rich promotions, new Many athleisure fashion shoppers buy during checkout platforms, like Klarna, support CRM seasonal promotions with Black Friday and wit insight into consumer spending behaviour Christmas delivering a huge spike. With a Klarna and preferences, plus personalised payment pay later option in your checkout, customers plans. Additionally, Klarna users have access can buy earlier in the season and shop more to the Klarna app to manage their repayments consistently throughout the year. post-purchase, snooze a payment (for free!), report returns and chat to customer service. 9. Ditch discounting. It’s easy for retailers to get sucked into a 6. Click with the Instagram generation. cycle of reducing prices to drive volume. Consumers influenced through social sites This can de-value their products and drive such as Facebook and Instagram often want to a bargain culture where customers are bag as many items for as little cost as they can reluctant to pay full price and only shop the – and are eager for services that help them get sales during shorter time frames. Klarna more for their money. They also want to look enables retailers to add value all-year round, good, especially in figure defining active-wear, while keeping their profit margins intact and so being able to try before they buy is a real differentiating from competitors. bonus for these frequent online shoppers.

Check out Klarna for Athleisure retailers

Klarna is proven to deliver a competitive advantage and boost revenue for retailers of all sizes. That’s why over 190,000 merchants offer our pay later products in 17 countries and 80 Million consumers rely on us to keep them ‘shopping smoooth’.

5 Athleisure klarna.com/uk January 2020

About Klarna: Retailers include:

• Founded in 2005, HQ in Stockholm

• Working with 190,000 online retailers

• Active in 16 markets

• 2,500 employees

• 80 Million global consumers have used Klarna

• Adding 50K new users per week in the UK

*ThisisMoney.co.uk **Allied Market Research All other figures quoted are from the Klarna Athleisure Consumer Survey, 2019.

6 Athleisure Get in touch with the Klarna team: [email protected] klarna.uk