Deep Dive: How BNPL Services Incentivize Hikers To Spend More On Gear

Millennial and Gen Z stereotypes often revolve around being tied to smartphones or computer screens, but these consumers love the outdoors just as much as their parents’ and grandparents’ generations. One study found that individuals between the ages of 18 and 30 performed more than one-third of all hiking-related web searches, for example, with 81 percent of millennials saying they would consider taking up hiking as a hobby. Sixty-one percent of this group is exploring camping for the first time — numbers that are far more than the 25 percent for members of Generation X and 14 percent for baby boomers.

This enthusiasm has not translated into profits for the outdoor gear industry, however, largely because of high costs. Basic equipment, like hiking boots, can often cost more than $100, and those wishing to get into activities like camping, backpacking or fishing could easily drop hundreds on tents, rods and other equipment. Younger generations — who are typically less interested in high-skill pursuits, according to some reports, and instead view outdoor hobbies as social activities — are instead turning to cheaper, more versatile options, like light hiking shoes or dual-sport mountain bikes. That also means retailers are missing out on selling the high-margin specialized equipment that drives much of their annual sales.

Buy Now Pay Later (BNPL) solutions might be key to reducing the financial barriers that keep customers from purchasing the outdoor gear they want or need. The following Deep Dive examines merchants that have partnered with third-party BNPL providers or introduced their own financing plans to supply such offerings to their customers and why installment payments could mean big growth for the industry.

Facing Challenges In Enjoying The Outdoors

Social media can show how much millennials and members of Generation Z love hiking, camping and other outdoor activities. These generations partake for several reasons, including their exercise benefits, cited by 65 percent, and the promise of inspiring views and the potential for interacting with nature, reported by 55 percent and 53 percent, respectively. An additional 29 percent said hiking was a good way to get pictures for their social media accounts.

The ongoing COVID-19 pandemic has driven individuals outdoors, with state-level social distancing guidelines disrupting normal recreational activities such as going to the gym. The White House urged the U.S. Department of the Interior (DOI) to waive national park entrance fees early in the outbreak, encouraging untold thousands of individuals to stock up on outdoor equipment and travel to the parks. This move backfired, however, as hiking paths became so crowded that park officials were concerned about maintaining social distancing guidelines. One Grand Canyon park ranger reported having more than 600 close encounters with visitors in a single day, for example, and dozens of national parks have since closed certain areas, like visitors’ centers, or shuttered entirely.

This interest in outdoor hobbies, especially among younger generations, should be resulting in record-setting revenues for outdoor retailers, but this has largely not materialized. The problem appears to be that budding outdoor enthusiasts’ shopping habits are not conducive to the expensive, specialized equipment that drives the industry’s profit margins.

Growth And Interest Discrepancies

Millennial and Gen Z consumers’ enthusiasm for outdoor activities only resulted in 1.3 percent annual growth for the outdoor equipment industry between 2014 and 2019. This is because these generations largely prefer less expensive and more versatile equipment, resulting in less profit for retailers. A pair of light hiking shoes could be used for both a trip to a national park and to the local grocery store, for example, so many customers choose to invest in these rather than expensive, specialized boots. Individuals can also use inexpensive mountain bikes to get around on city streets — with less risk of theft than high-end road and mountain bike equivalents.

These more affordable, multi-use items may be economical in the short term, but they will likely require repairs or replacements much more quickly than their high quality, costlier counterparts. Paying a one-time higher price for specialized gear could thus help customers save money in the long run. Such products are more durable, longer-lasting and better equipped to withstand the elements — both on the trail and around town.

Encouraging customers to spend more on specialty gear could be key to bringing outdoor industry revenue in line with younger generations’ growing interests in these activities. Retailers are exploring BNPL services to that end as outdoor enthusiasts could be more incentivized to make hefty purchases if costs were deferred over a longer period of time.

Encouraging Industry Growth

BNPL offerings are a surefire way to incentivize sales when customers need certain goods. Seventy-six percent of all U.S. consumers are more likely to go through with purchases if offered payment plans at the point of sale, according to certain research, mainly because they desire a simpler alternative to opening lines of credit with bank or card providers. Millennials and Gen Z consumers around the world are particularly keen on BNPL services, too, representing more than 40 percent and 35.1 percent of Australian BNPL users, respectively.

Combining younger consumers’ embrace of BNPL products with their love of outdoor activities seems to be an ideal match to encourage growth in the industry, especially as other areas have seen BNPL-related success. Retailers in the U.K. saw 15 percent incremental sales increases after incorporating these payment options, for example. Many outdoor retailers have already instituted BNPL options to spread the cost of expensive gear over several smaller payments. First Tactical, Hyke & Byke, Filson and YETI have collaborated with third-party BNPL providers to offer these services —the apps pay retailers the full purchase price and users pay the apps back in installments. Their goal is to reduce the financial burden for those wishing to purchase higher-priced gear and get into outdoor activities.

Other retailers, including Bass Pro Shops and Mountainman Outdoor Supply Company, have introduced their own financing options. These systems allow customers to pay off their purchases over several months, with typically longer terms than their app-based counterparts. Retailer-branded options may be successful with customers who are already familiar with their offerings and products, but these offerings do not necessarily drive new revenue to the store, as is the case with third-party apps that advertise retail partners to their users.

Making outdoor equipment more affordable is the primary goal, however, and any BNPL option will likely encourage outdoor enthusiasts to spend more on the equipment they need to enjoy their favorite activities. This lowered bar for entry could also go far in convincing the 81 percent of millennials who are considering trying hiking to take their first steps along the trail.