Retail’s Revitalization: Tackling New E-commerce Challenges With Klarna

With over 90 mil­lion consumers and 250,000 retail partners around the world – includ­ing The North Face, Macy’s, Rebecca Minkoff, Sephora and Etsy, among others – leading global retail bank, payments and shopping service Klarna has a pulse on what con­sumers want.

According to Klarna CEO Sebastian Siemiatkowski, the future of retail lies in flexibility and digital innovation. As the retail industry moved online during the pandemic, there was a shift in the way that consumers browse, discover and purchase items. Today, consumers expect to access the brands that they love 24/7 across multiple channels and demand a more flexible, personalized shopping journey from discovery to checkout. Beyond payment services, the Klarna for Business suite is uniquely positioned to support retailers as they navigate this new normal, offering pay­ment and marketing services to help retailers engage consumers in new ways and drive brand loyalty.

Here, Siemiatkowski talks to Fairchild Media Group about the challenges of retail’s new landscape and how Klarna is working with retailers to capture the attention of today’s modern, digitally savvy consumers.

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Sebastian Siemiatkowski: Shoppers have become more mindful of budgets and are increasingly moving away from traditional forms of credit towards more transparent and innovative spending op­tions. This isn’t shocking, since traditional credit has lost sight of customer needs.

In fact, according to the latest Federal Reserve Bank of New York’s Household Debt and Credit Report, credit card balances dropped by $49 billion in the first quarter of 2021 and are $157 billion lower than they had been at the end of 2019. Americans also paid off a record $83 billion worth of credit card debt in 2020, according to data from Wallet Hub.

This is being driven by a huge appe­tite for more transparent, flexible ways to shop and pay, with younger genera­tions leading the way. Gen Z credit card holders have an average of 1.5 credit cards, which is lower than the average American’s four credit cards.

FMG: How does Klarna help brands face the new challenges of today’s expanding e-commerce head-on?

S.S.: We are focused on being a strategic partner and growth engine to retailers. While this includes our interest-free payment options like Pay in 4, Klarna’s work doesn’t start and end at checkout. We support our retail partners by en­abling discovery and curation to drive product and brand visibility and col­laborate with retailers to implement strategies that enhance their ability to acquire, convert and retain customers.

For example, we recently ran our second “Hauliday” event – a two-day virtual shopping extravaganza that drove positive results for several of our U.S. retail partners. The event featured over 50 brands, including Macy’s, Foot Locker, and HAUS LABORATORIES, and incorporated our first livestream shopping element, enabling consumers to discover and engage with participat­ing brands in new ways.

FMG: To that end, how is Klarna helping brands to reposition themselves as consumers shop through multiple platforms?

S.S.: The majority of consumers – 59 percent – expect a consistent shopping experience online and in-store. Klarna enables retailers to offer a smooth and frictionless omnichannel shopping ex­perience across all touchpoints so that shoppers experience the same level of convenience when shopping in physical stores as they do online and via mobile.

We continue to invest heavily in our in-store platform, and it’s grow­ing rapidly. Klarna is now live in over 60,000 physical retail locations in the U.S., including Foot Locker, Macy’s, Bloomingdale’s and Sephora.

Klarna partners with brands to provide consumers with engaging experiences. Courtesy Image.

FMG: Why is it so important for a brand to diversify or expand its discoverability and how does Klarna enable this?

S.S.: The acceleration of e-commerce by the pandemic means shoppers are now browsing and discovering prod­ucts in new ways across multiple chan­nels. Consumers aren’t just perusing the aisles of a brick-and-mortar store – they are engaging with the brands they love on social media and researching new products via mobile apps.

Our platform is just as much a dis­covery tool as it is a shopping service, with a global network of 90 million shoppers and 18 million active users of our mobile app. We have also built out an enhanced suite of market­ing services to help retailers connect with consumers across all channels in new ways, through activities includ­ing sponsored placements, curated Collections (formerly called “Wish Lists”) in the Klarna app, featured articles, dedicated CRM channels, and more. We also provide AI-driven con­tent creation capabilities and compari­son-shopping services (CSS) that enables merchants to list their Google Product Listings Ads (PLAs) more efficiently.

FMG: How does Klarna enable a personalized shopping experience for the consumer?

S.S.: We have a unique view into buyer be­havior that provides insight into SKU-lev­el data and digital receipts when we pro­cess transactions. This, in turn, allows us to create a much richer, more personalized post-purchase shopping experience for consumers by allowing us to offer tar­geted offers, item suggestions, and more. Ultimately, this helps drive additional incremental sales on behalf of our retail partners while simultaneously enhancing the shopper’s experience.

The Klarna app is also equipped with features to elevate and personalize the shop­ping experience for consumers. Shoppers can create and follow shareable Collections with friends, influencers and brands, and set up features including price drop notifica­tions to keep track of sales on their favorite items. In the US, we have seen over 8 million items added to Collections by Klarna shop­pers over the last six months, with over 1 million items added each month.

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