American Eagle says it plans to offer buy-now, pay-later services as it appeals to cash-strapped teens

colorful shirts American eagleShoshy Ciment/Business Insider

  • American Eagle confirmed that it is planning to offer buy-now, pay-later purchase services.
  • Several retailers including Abercrombie and Urban Outfitters already offer similar services. Their customers are able to purchase an item and spread the cost across four installments.
  • Analysts say buy-now, pay-later encourages shoppers to spend more money and is especially appealing to younger shoppers with less disposable income.
  • Visit Business Insider's homepage for more stories.

American Eagle is planning to offer its shoppers buy-now, pay-later services.

American Eagle president Chad Kessler confirmed to Business Insider on Wednesday that the retailer is looking to implement this alternative payment method as soon as possible.

"This is something that our customer would very likely participate in so we are eager to get that up and running," he said.

To do so, Kessler said American Eagle would partner with a payments provider. This could be Afterpay or Klarna, for example, who handle transactions in similar partnerships.

With this service, shoppers would be able to purchase an item and pay for it in installments. With other retailers, this has typically been across four installments.

Read more: The clothing industry is adopting a time-tested strategy to win over cash-strapped Gen Z and millennial shoppers

Urban Outfitters and Abercrombie are already offering similar payment services at their brands. H&M will roll out one of its own in the fall.

Using these services is a smart way for apparel brands to reach Gen Z and millennial shoppers who likely don't have much disposable income to spend on clothes.

"It helps customers that don't have a buffer in their discretionary income and budget," Corey Pierson, CEO of customer intelligence platform Custora, recently told Business Insider's Bethany Biron when Abercrombie launched its own buy-now, pay-later service.

"They're not sitting on a giant amount of discretionary income where they can go to a store, drop 500 bucks and have it not make a dent," he added.

And it clearly works to the advantage of brands, too.

This is because customers are likely to spend more if they don't have to pay the lump sum up front, and they are less likely to wait for discounts.

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