Consumers Embrace BNPL for Groceries Amid Rising Food Costs

Around the world, grocers are exploring buy now, pay later (BNPL) capabilities to offer installment options to consumers struggling with inflation.

In the United Kingdom, for instance, BNPL is getting one step closer to making its way into grocery stores. Klarna announced Friday (June 7) a partnership with British supermarket giant Sainsbury’s to provide split payments via the retailer’s Argos, Habitat and TU eCommerce platforms. This iteration of the partnership does not include Sainsbury’s grocery offerings but suggests the beginning of a working relationship between the two companies.

In California, grocery chain Vallarta Supermarkets implemented BNPL via Sezzle June 3.

“At Vallarta, our priority is to enhance the shopping experience for our customers,” Vallarta Supermarkets Chief Information Officer Steve Netherton said in a statement. “Partnering with Sezzle allows us to offer a new-age, convenient payment option that aligns with the needs of our diverse community.

The move comes as ongoing budgetary pressures prompt consumers to seek ways to make their grocery purchases more affordable.

“Consumers who use BNPL get the benefit of spreading grocery payments over three or four installments over a similar four- to six-week period,” PYMNTS CEO Karen Webster noted earlier this year. “Getting the use of the BNPL provider’s money, for free, over that period is enough of a reward for many consumers, especially when everyone across every income level feels the persistent pinch of food inflation.”

Many consumers want to be able to pay for their grocery purchases in installments. The September PYMNTS Intelligence study “Installment Plans Becoming a Key Part of Shopper’s Toolkit” found that among the 60% of consumers who had used some type of installment payment plan in the previous 12 months, 34% had done so to purchase groceries. Plus, younger consumers exhibited greater demand for installment plan options for groceries, as that share rose to 45% for Generation Z.

As such, BNPL providers are looking to grow their share of grocery sales. Sezzle, for instance, is using its Anywhere paid subscription, which enables consumers to pay in installments in any store where Apple Pay or Google Pay is accepted, to enable BNPL grocery payments.

“Our Anywhere members are shopping at a broader array of locations and are making everyday purchases at general merchandise retailers, grocery stores and restaurants to meet their discretionary needs,” Sezzle Executive Chairman and CEO Charlie Youakim told analysts on an earnings call in May.

BNPL users, for their part, often use the payment method to buy groceries when given the option. The PYMNTS Intelligence study “The Credit Economy: How Younger Consumers Make Credit Decisions” found that many BNPL users leveraged the option to buy groceries. Eleven percent of Gen Z, 15% of millennials and 14% of Generation X said that the most recent time they used BNPL, they did so to pay for groceries.

Affirm, too, aims to grow its grocery share. Affirm founder and CEO Max Levchin told analysts on the company’s most recent earnings call that it can use its scale to “sort of barge into some of the checkouts” that used to have exclusive deals with competitors. He noted that its extensive user base (the company had nearly 18 million active customers in the third quarter of fiscal year 2024) proves attractive to merchants.

“The first fundraising deck that I’ve ever put together for this company featured a mockup [of] a convenience store door that showed Visa, Mastercard, Amex, Affirm,” Levchin said. “The ultimate goal of this company is to be a brand that everybody just expects in a grocery store door.”

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