The New Rules For Retail Credit: What Younger Shoppers Really Want In 2018

  • Written by  Doug Filak, Vyze

0aaDoug Filak VyzeThe stereotype is widespread: Younger consumers are spooked by parents’ debt misadventures, stressed by college loan repayments and leery of buying on credit, even as they endlessly document their purchases on Instagram and splurge on trend-based products and experiences.

This vision is understandably distressing for retailers. After all, Millennials and Generation Z, whose ages range from teens through the mid-30s, together comprise 50% of the U.S. population. If such a large segment of consumers are disinterested in traditional bank or store credit options, big-ticket purchases may slow. (Why own a car when you can Lyft?) Furthermore, shoppers who spend hours a day on social media may perceive little need for physical stores, except as pickup locations for items sourced online.

Thankfully, the truth about young consumers’ spending habits is very different from the vision above. While Millennials and Generation Z are definitely digital natives in ways their predecessors aren’t, retailers needn’t raze their stores — or their business plans — to meet the future needs of shoppers.

In fact, 53% of Millennials prefer to use credit cards over cash to pay for purchases, and 59% have more than one credit card in their wallets, according to a recent survey from Vyze. And fully 71% of under-35s say they’re comfortable carrying a balance on their cards.

But just because Millennials and Generation Z use credit cards doesn’t mean merchants can stick to their 20th-century store card program. For one, Millennial and Generation Z shoppers are disproportionately declined in credit checks, according to ID Analytics, with some 66% of Millennials receiving a decline in the past year — a hurdle that can become a dead-end. More than six in 10 Millennials who are declined not only abandon their purchases, but fail to re-apply for any kind of credit again for at least a year, which means that retailers who reject younger consumers’ store card applications are likely to lose customers altogether.

More credit options can save the sale, and the challenge for merchants in 2018 is to deliver those options nimbly and clearly. Expect to see retailers win over Millennial and Gen Z shoppers by executing a simple game plan:

1. Offer a viable alternative to Amazon.

Amazon dominates the world of online retail: well over half of consumers globally have shopped on the site, according to survey data from PwC. But Amazon is also a player in the consumer credit marketplace, with a range of offerings that award points and cash back on site purchases.

Perhaps not surprisingly, Amazon’s credit card options are popular with younger consumers: fully 48% of Millennials own an Amazon credit card. What’s more, given that Amazon has existed as a shopping leader for most of their lives, younger consumers view it as a stable brand, not a risky upstart. When asked who they trust as a card issuer, Amazon was second only to banks, with “other retailers” coming in a distant third.

Merchants have long strategized about competing with Amazon for eCommerce sales — but if they’re to remain top-of-mind and win space in young consumers’ wallets, they need to compete with credit offers, too.

2. Go anywhere — including stores.

Millennials’ use of mobile devices is by now well-documented: during the recent holiday season, for example, more than 69% of Millennial and Gen Z shoppers planned to use their phones to browse and research gift picks, according to Deloitte.

But when it comes to applying for credit, fewer than two in 10 younger shoppers say they prefer to do so on mobile devices. Instead, 38% of both Gen Z and Millennial shoppers say they prefer to apply online using a laptop or desktop computer — while 41% of Millennials actually preferred in-store applications, making it their most popular option, according to Vyze data. With such diversified preferences to accommodate, merchants must deliver fast, streamlined credit processes that work just as well at a store point-of-sale terminal as they do online or via mobile.

3. Deliver transparency.

While merchants should simplify their credit processes, they shouldn’t skimp on clarity. Indeed, younger shoppers prize transparency when it comes to credit offers: when asked what they wanted to know when applying for credit, interest fees — not rewards — topped the list, followed by learning their own credit score. Furthermore, mistrust is high, with more than 30% saying information presented in the credit application process is misleading.

Merchants can counteract these perceptions by shepherding younger shoppers through the credit application process with user-friendly forms, pop-up tips and detailed information on the offers they are receiving. In doing so, they have the opportunity to differentiate their brands and earn trust — which, in turn, can lead to repeat business.

To appeal to the large and increasingly-mighty generation of Millennial and Generation Z consumers, merchants should prioritize credit services in 2018. With the right tools deployed nimbly across touch points, sellers can help the next generation of shoppers enjoy the benefits of credit — and earn sales and loyalty as their reward.


Doug Filak is CMO of Vyze, where he leads the effort to develop innovative marketing initiatives to bring Vyze to more retailers, lenders and consumers. Prior to Vyze, Filak served as a head of marketing for PayPal, created the Chase Freedom card for Chase Card Services, and held senior roles at American Express and Citibank.

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