Simon, the largest shopping center owner and operator in the U.S., and Klarna, which offers payment plans, social shopping and finance to consumers, today announced a strategic national multi-year alliance that will provide customers in Simon shopping destinations with access to Klarna’s unique in-store payment solutions.
The collaboration will harness the power of Simon’s vast in-store shopper base with Klarna’s millions of monthly active users. Klarna and Simon are also working closely on additional strategic initiatives, which will be announced and rolled out in the future.
This is the first strategic multi-retail partnership with a shopping center in the U.S., said David Sykes, head of North America at Klarna, adding that there may be more announcements during the quarter.
“Identifying ways that support the success of our merchants while elevating the customer shopping experience are key priorities for Simon,” said David Simon, chairman, CEO and president of Simon. “By aligning with Klarna, we’re giving our retail tenants an important advantage this holiday season and well into the future. It’s a unique way to attract new audiences already embracing the convenience that Klarna’s interest-free payment options provide.”
Klarna had been engaged with Simon for about 18 months before embarking on the strategic partnership. The payment firm worked with Authentic Brands Group, whose brands include Aeropostal, Nine West and Eddie Bauer, among others, and in which Simon is a part owner. “We were actually in the middle of a soft rollout,” said Sykes. “We’ve been operating across a small number of stores and this is the full kickoff.”
Klarna’s flexible payment options will be made available to shoppers at participating merchants across the entire Simon portfolio. Klarna will bring a suite of innovative performance-based digital marketing capabilities to physical retailers in Simon centers and collaborate with Simon on marketing campaigns, in-mall activations and communication programs to raise awareness with shoppers over time.
Klarna, which counts 20 million customers in the U.S., sends clients push notifications and special promotions at local retailers. “How can Klarna help drive traffic to Simon malls,” said Sykes. “We can promote special deals and discounts or Black Friday savings or whatever it might be that Simon retailers are offering, and share that with our consumer base.
“This partnership is not just about buy, now pay later,” Sykes said. “Don’t get me wrong that’s a very compelling solution for younger consumers. Customers also come to Klara to register for price drop notifications and use Klarna to make wish lists of favorite items and share them with their friends. A big component of why customers use Klarna is to discover deals. We have a deals tab to show relevant promotions for that consumer.”
Klarna segments promotions and deals, tailoring them to individual customers. “We know so much about our audiences,” Sykes said. “They use us every day, and use us across many retailers. We’re hoping we can connect the Simon mall retailers with our audience in a very personalized way so they’re getting a promotion that’s very relevant.”
A key benefit for Simon is that Klarna’s consumers tend to be younger than those who typically visit shopping centers. “If you think about our 20 million consumers, what’s unique about Klara is that they’re overwhelmingly Millennials and overwhelmingly a Gen Z audience,” said Sykes. “It’s a younger audience and part of why this makes sense for Simon.
Sykes said that Macy’s has been a retail partner of Klarna since October, and the retailer is a tenant in some Simon centers. Macy’s CEO Jeff Gennette recently told the Wall Street Journal that buy now, pay later attracts a new, younger customer, and that 40% of shoppers using Klarna are new to Macy’s, with 45% are under the age of 40.
“For this cohort of shoppers who really in the last few years has almost exclusively shopped online, our ability to activate these consumers and drive them back to [brick and mortar] and enhance the in-store experience is going to be powerful,” Sykes said.
While e-commerce accounts for the lion’s share of Klarna’s business, the company sees brick and mortar traffic improving. Klarna’s recently-released holiday report found that 34% of customers surveyed said malls were the most popular place to shop this holiday season, and Gen Zers (44%) are more likely than all other age groups surveyed including Millennials, Gen Xers and Baby Boomers, to hit shopping malls this holiday season.
Klarna’s business model is based on individual partnerships with each of the retailers. When a customer uses Klara in a store, there’s a transaction fee just as there’s a transaction fee with American Express
“Our relationship primarily with Simon isn’t about our charging a fee for a transaction,” Sykes added. “It’s a strategic partnership based on co-marketing. It’s Simon promoting Klarna and us promoting Simon to our consumers. The other part is the strategic development of new products and new concepts to enhance the store experience.
“This is a massive project for us,” Sykes said. “Watch this space for some of the things we’ll launch in the coming months.”
It’s not just about buy now pay later. Everybody talks Don’t get me wrong that’s a very compleling solution for younger consuemrs.