Adobe: UK Consumers rack up £4.9 billion ‘Buy-Now-Pay-Later’ Debt in first four months of 2023

The latest Adobe Digital Economy Index data from the UK, based on Adobe Analytics data, revealed UK consumers spent a total of £8.0 billion online in April 2023, down 1.7% from the previous month, and down 2.2% YoY.

UK consumers have racked up over a billion pounds a month (£4.9bn) in Buy Now Pay Later debt for the first four months of 2023.

Since the start of the year, UK consumers have spent £4.9 billion online using Buy Now Pay Later, from a total online spend of £32.6bn. In April, Buy Now Pay Later 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 Buy Now Pay Later compared with March, and an acceleration in the amount spent using Buy Now Pay Later from 20^th April onwards. For the final 10 days of the month, order values using Buy Now Pay Later were around £8 higher on average than the period from April 1^st – 19^th indicating consumers are more reliant on BNPL services in the run up to payday.

Online inflation continues to rise for essential items

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.

Coronation weekend sees spending drop £114m

During the Coronation weekend itself (May 6^th – 8^th), 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.

Consumers get their gardens Spring-ready

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,” 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.”

Additional insights include:

Mobile remains the channel of choice

• 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 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.

About the Adobe Digital Economy Index

The Adobe Digital Economy Index (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 April 1^st to April 30^th 2023, to provide the most comprehensive view of the UK digital economy. Adobe Analytics is part of Adobe Experience Cloud, relied upon by major retailers to deliver, measure, and personalise shopping experiences online.

Global figures are based on analysis of over a trillion visits to ecommerce sites and direct transaction data of consumers from over 80 countries – more than any other technology company or research firm.

Find out more about the Digital Economy Index here.