Adobe research: Brits rack up £4.9 billion buy now pay later debt in first four months of 2023

UK consumers spent a total of £8 billion online in April 2023, down 1.7% from the previous month, and down 2.2% YoY, according to the Adobe Digital Economy Index.

And they have racked up £4.9 billion in buy now pay later debt for the first four months of 2023 from a total online spend of £32.6 billion.

In April, BNPL usage remained high with consumers spending £1.3 billion through these services, representing 16% of total online spend. 

Adobe’s analysis also revealed a 2% increase in average order values using BNPL compared with March, and an acceleration in the amount spent using these services from 20th April onwards. 

For the final ten days of the month, order values using BNPL were around £8 higher on average than the period from 1st – 19th April indicating consumers are more reliant on BNPL services in the run up to payday.

Consumer spending power faced increased pressure in April as the online price of essential items continue to rise, with groceries costing .68% more than the previous month, and 9.2% more than last year. 

The prices of pet products also rose .84% compared with March, and were 12.3% more expensive than April 2022. 

In 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 Coronation weekend itself (6th - 8th May), spending dropped by 20.4% compared with the same weekend in 2022, equivalent to a loss of £114 million 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 temperatures rising, products such as outdoor grills, air conditioners, garden planters, patio umbrellas and coverings, and ice cream makers were all popular in April, with data showing that spending accelerated in the lead up to the Coronation of King Charles III.

“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,” says 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.”

Additional insights include: the trend towards mobile shopping is continuing, with April seeing even more spending coming from the palm of consumers’ hands – with 61% of purchases taking place on smartphones, representing a 8.6% YoY increase in share.

Overall, consumers spent £4.9 billion with their mobile devices in April this year. 

Click and Collect, meanwhile, remains stable. This fulfilment method was used in 9.1% of online orders in April (for retailers who offered the service), up slightly from 8.7% the previous month, and from 8.9% in the year prior.