Ikea and Afterpay cozy up ahead of Black Friday

Ikea is teaming up with Afterpay to leverage the BNPL company’s significant Gen Z and Millennial customer base and help shoppers manage spending this festive sales season.

Ikea has teamed up with Afterpay to target Gen Z shoppers during the festive sales season.

Ikea has teamed up with Afterpay to help the retail giant engage with Gen Z shoppers and help them take advantage of high-ticket items during the festive sales season.

The partnership, which launched this week in time for the Black Friday and Cyber Monday sales period, enables Ikea customers to purchase in-store and online using Afterpay’s pay-in-four payment method.

The move aims to help the Swedish furniture giant to deliver on its brand promise of affordability while also helping customers to manage the cost-of-living pressures during the “spending season”.

“We have this business promise, which is to provide home furnishings at low prices so that as many people as possible can afford them,” said Ikea Australia head of communications Patricia Routledge.

“We’ve invested over $100 million over the last year and a half across thousands of products to bring the prices down to pre-covid levels. Affordability and ensuring that our customers know we’re affordable is really important from a brand perspective. And of course, with Afterpay helping our customers manage the upfront costs it’s a no-brainer.”

Ikea has teamed up with Afterpay to target Gen Z shoppers during the festive sales season.

The deal is a response to significant consumer demand with Ikea reporting it had more than 50,000 attempted transactions using Afterpay before the service went live.

In the first seven days since the partnership launched, more than 3,800 transactions have used Afterpay, “and that’s without any big bells and whistles marketing activity”, said Ms Routledge.

The partnership also aims to help Ikea connect with a younger Gen Z and Millennial demographic, which account for a significant share of Afterpay’s 3.5 million customers. One in every three Australians aged between 18 and 59 years used Afterpay at least once in the last 12 months, according to the BNPL business and more than half (54 per cent) of Afterpay customers state that they will choose to shop elsewhere if Afterpay is not available at a retailer.

With Gen Z and Millennials currently accounting for 36 per cent of the total retail spend in Australia, with this figure is expected to grow to 48 per cent by 2030, as more people enter the workforce, Afterpay’s customer base is becoming quite lucrative to brands seeking to engage this audience.

Afterpay director of trade & partner marketing Kevin Azzopardi said, “A lot of our partners see us as an additional marketing channel within their mix that allows them to reach consumers that perhaps they can’t otherwise reach on their own. And Gen Z and millennials, make up a huge base of Afterpay consumers that we can talk directly to. So a lot of the work that we do is around how we connect merchants and consumers in really meaningful ways.”

Afterpay is preparing to roll out marketing activity to make its customers aware of the Ikea partnership and specific deals and promotions.

“Furniture, home decor and kitchenware is incredibly popular with our consumers. About 90 per cent of our consumers have shown interest in this category and interest to shop in this category, and we’ve seen about our 127 per cent growth in home decor and homewares category.

“For Afterpay [this partnership] is about providing another affordable option for consumers, especially at a time when cost of living concerns are really high. It makes it just a little bit easier for consumers.”

Mr Azzopardi said the business is expecting a record Black Friday and Cyber Monday sales event this year.

“It’s one of our peak sales moments, outside of our Afterpay Day event. Last year we had 500 customers checkout using Afterpay every minute at the peak of the campaign, which is huge. This year we’re expecting it to be bigger. Our research says that 44 per cent of Aussies plan to shop the event, and 59 per cent plan to spend the same or more compared to last year. So it’s going to be a record event for us,” said Mr Azzopardi.