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A Recent Report By Klarna Reveals That Most Consumers View Circularity As A Way To Save Money

January 18, 2024 – New York, NY – A recent report by Klarna, the AI-driven payments network and shopping assistant, reveals that the majority of consumers are cognizant of the economic advantages associated with circular practices, specifically emphasizing repair and second-hand shopping. Derived from a comprehensive survey involving over 3,000 participants across the UK, USA, and Germany, coupled with insights from sustainability experts at The Wardrobe Diary Project, Save Your Wardrobe, and Refurbed, Klarna's 2024 Circularity Insights Report delves into emerging consumer trends related to circular practices in the fashion and electronic sectors. Moreover, it offers actionable strategies for brands to fully leverage the potential of circularity.

The report underscores the growing awareness among consumers, especially the younger demographic, regarding the financial and environmental benefits of circular practices such as repairing items and opting for second-hand purchases. Despite this heightened awareness, the report identifies a discernible gap between attitudes and actual behavior, attributing it to obstacles like cost, feasibility, and convenience that impede the widespread adoption of these sustainable practices.

Alexandra Colac, Sustainability Lead at Klarna, commented on the report, stating, "Klarna's 2024 Circularity Insights Report brings attention to consumers' increasing understanding of the economic advantages associated with more sustainable practices, such as repairing items or engaging in second-hand shopping. It also sheds light on the challenges hindering the translation of this awareness into tangible action. Our research aims to bridge this gap, providing businesses, including our 500,000+ retail partners globally, with deeper insights to actively integrate the principles of the circular economy into their operations."

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Key Report Highlights

  • Circular Benefits Awareness: The overwhelming majority of consumers are cognizant of the financial advantages linked to circular practices, particularly recognizing repair and second-hand shopping as effective cost-saving measures. Notably, 69% of consumers acknowledge or foresee potential savings in second-hand fashion, repairs, and rentals, while 66% recognize similar benefits in second-hand electronics shopping. Younger demographics, particularly those under 35, exhibit a higher awareness compared to older generations.
  • Eco-Friendly Preferences: A shift towards eco-friendly choices is evident, with over half (54%) of consumers from diverse demographics expressing indifference towards owning the latest gadgets, and 42% displaying reduced interest in new product releases compared to the previous year. Furthermore, more than a third (36%) of global consumers are now more concerned about their ecological footprint than a year ago.
  • Second-hand Market Growth, Driven by Youth: While 70% of consumers exclusively bought new clothes in the past year, the trend is more pronounced in other categories, with 82% for phones and laptops/tablets, 84% for shoes and accessories, and 87% for entertainment electronics. However, the younger demographic, especially Gen Z, exhibits a promising trend, being three times more likely to choose second-hand electronics than those over 55. This suggests a shift towards sustainable consumer habits, indicating potential market expansion in the second-hand goods sector.
  • Repair Paradox: Awareness vs. Action: Despite 45% of consumers believing repaired electronic devices are equivalent to new ones, there exists a noticeable behavior gap. The majority of consumers opted not to repair their entertainment electronics (85%) and mobile phones (71%) the last time they broke. Similar patterns are observed in the fashion category, with 77% avoiding clothing repairs. This disconnect presents a substantial opportunity for brands to encourage and facilitate repair options, potentially redirecting consumer behavior towards sustainability.
  • Diverse Barriers to Action: The primary obstacles to adopting circular practices vary across sectors. In electronics, cost (57%) and feasibility (33%) are reported as the top barriers to repair, often attributed to software incompatibility and built-in expiration dates. In fashion, feasibility (31%), convenience (30%), and utility (27%) prevail. Low resale value for clothing (21%) and electronics (27%) also hinder second-hand shopping. Brands have an educational opportunity to remind consumers of the lasting value of products and can promote involvement in the circular economy by emphasizing financial, convenience, and style benefits of second-hand shopping, rentals, and repairs. This strategy aligns environmental and financial benefits, making circularity more appealing to consumers, according to Colac.

About Klarna

Since its inception in 2005, Klarna has dedicated itself to revolutionizing commerce by prioritizing consumer needs. With a commitment to fairness, sustainability, and cutting-edge AI-powered payment and shopping solutions, Klarna has garnered a substantial user base of over 150 million globally, facilitating more than 2 million transactions daily. This transformative approach is reshaping the landscape of online and in-store purchasing, empowering customers to make smarter decisions with enhanced confidence and convenience.

The influence of Klarna extends across a vast network of over 500,000 retailers worldwide, including industry giants such as H&M, Saks, Sephora, Macy's, Ikea, Expedia Group, Nike, and Airbnb. These businesses leverage Klarna's innovative technology and marketing solutions to foster growth and cultivate customer loyalty. Notably, Klarna stands as the first fintech to align with The Climate Pledge and actively participates in the Race to Zero campaign. The company goes beyond conventional financial contributions, channeling support into high-impact climate programs, encompassing carbon removal, reforestation, forest protection, and emission reduction.

For consumers seeking a seamless and secure payment experience, Klarna's partnerships extend to various sectors, including online gaming. Numerous casino sites that accept Klarna as a popular deposit method in several EU countries and worldwide enable players to enjoy the thrill of gambling with the added convenience of Klarna's streamlined payment solutions. Whether you're shopping for the latest fashion trends or indulging in online entertainment, Klarna continues to redefine the intersection of technology, sustainability, and consumer empowerment.

Resources

To learn more, read the full report here.

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