Majority of consumers see circularity as a money saver, says new report from Klarna

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Klarna's 2024 Circularity Insights Report unveils surprising consumer trends and opportunities in circular economy

NEW YORK, Jan. 18, 2024 /PRNewswire/ -- The vast majority of consumers are aware of the financial benefits of circular practices – particularly repair and second-hand shopping – finds a new report from Klarna, the AI-powered payments network and shopping assistant. Drawing on insights from a survey of over 3,000 consumers across the UK, USA and Germany, along with interviews with sustainability experts from The Wardrobe Diary Project, Save Your Wardrobe and Refurbed, Klarna's 2024 Circularity Insights Report sheds light on new and emerging consumer trends related to circular practices within the fashion and electronic sectors, while also offering actionable strategies for brands to harness the full potential of circularity.

Consumers are increasingly aware of the financial and environmental benefits of circular practices like repair and second-hand shopping, particularly the younger generations. However, the report finds that a notable gap between attitudes and actual behavior persists, with barriers like cost, feasibility, and convenience hindering widespread adoption of these practices.

"Klarna's 2024 Circularity Insights Report highlights consumers' increasing awareness of the economic benefits of more sustainable, circular practices, like repairing items or second-hand shopping," said Alexandra Colac, Sustainability Lead, Klarna. "It also sheds light on challenges in turning this awareness into action. Our research is geared towards bridging this gap, offering businesses, including our 500,000+ retail partners globally, deeper insights to help them actively engage with and apply the principles of the circular economy in their practices."

KEY REPORT FINDINGS INCLUDE:

High awareness of circularity's financial benefits: The vast majority of consumers are aware of the financial benefits of circular practices, with repair and second-hand shopping seen as prime money-savers. Notably, 69% of consumers have or anticipate potential savings from second-hand fashion, repairs, and rentals, with 66% noting similar benefits in second-hand electronics shopping. This awareness is more pronounced among those under 35 than it is among older generations.

Out with the new, in with the old – consumers prioritize eco-friendly choices: Over half (54%) of consumers across all demographics express indifference towards owning the latest gadgets, and 42% show decreased interest in new product releases compared to last year. Meanwhile, more than a third (36%) of global consumers are more concerned about their ecological footprint than they were a year ago.

Growth potential in second-hand market, led by younger consumers: 70% of consumers purchased only new clothes in the past year – a trend that is even more pronounced in other categories: 82% for phones and laptops/tablets, 84% for shoes and accessories, and 87% for entertainment electronics. However, younger consumers, particularly Gen Z, show a promising trend as they are three times more likely to opt for second-hand electronics than those over 55, indicating a shift towards more sustainable consumer habits and a potential market expansion in second-hand goods.

The repair paradox: Awareness vs. action: While nearly half (45%) of consumers believe repaired electronic devices are as good as new, there's a notable behavior gap: the majority of consumers chose not to repair their entertainment electronics (85%) and mobile phones (71%) the last time they broke. Similar trends are observed within the fashion category, with 77% avoiding clothing repairs. This disconnect presents a substantial opportunity for brands and businesses to encourage and facilitate repair options, potentially shifting consumer behavior towards more sustainable practices.

Barriers towards action are diverse: The main hurdles in adopting circular practices differ across sectors. In electronics, cost (57%) and feasibility (33%) are the top barriers to repair reported among consumers – often, software incompatibility and built-in expiration dates make it difficult for consumers to extend the lifespan of their electronics devices. In fashion, feasibility (31%), convenience (30%), and utility (27%) prevail. Depreciation also hinders second-hand shopping, with 21% of consumers citing low clothing resale value, and 27% for electronics, as deterrents to reselling.

"What our research shows is that there's an educational opportunity for brands to remind consumers of the true and long-term value of products. Brands can also boost consumer involvement in the circular economy by emphasizing the financial, convenience, and style benefits of secondhand shopping, rentals, and repairs. This strategy not only extends product life but also merges environmental and financial perks, making circularity more appealing to consumers," continued Colac. 

To learn more, read the full report here.

To learn more about Klarna's sustainability initiatives, visit https://www.klarna.com/international/sustainability/. 

Methodology

Quantitative research was conducted in partnership with Opinium between 27th September and 3rd October 2023 with 3.000 representative adults (16 years or older) in the UK, USA and Germany (1.000 participants per market). Qualitative research was conducted through expert interviews with Olof Hoverfält (The Wardrobe Diary Project), Hasna Kourda (Save Your Wardrobe) and Peter Windischhofer (Refurbed).

For additional information, please contact:

Adaline Colton
[email protected]
+1 (614) 429-9125

About Klarna

Since 2005 Klarna has been on a mission to accelerate commerce with consumer needs at the heart of it. With over 150 million global active users and 2 million transactions per day, Klarna's fair, sustainable and AI-powered payment and shopping solutions are revolutionizing the way people shop and pay online and in-store, empowering consumers to shop smarter with greater confidence and convenience. More than 500,000 global retailers integrate Klarna's innovative technology and marketing solutions to drive growth and loyalty, including H&M, Saks, Sephora, Macy's, Ikea, Expedia Group, Nike and Airbnb. The company became the first fintech to join The Climate Pledge and Race to Zero campaign, and makes annual financial contributions to high-impact climate projects, including carbon removal, reforestation and forest protection, and emission reduction projects. For more information, visit Klarna.com.

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SOURCE Klarna Bank AB (publ)