partnership | Sep 30, 2021 |
The Container Store tapped Afterpay to reach the next generation of customers—and it worked

If there were any Americans who were unconvinced of the value of a well-organized home, the last 18 months have surely won them over. As our houses became our schools, restaurants, theaters and gyms, neat living conditions went from “nice to have” to an absolute necessity. A tidy home is no longer a perk—it’s a wellness issue.

“As we’ve learned over the past few years, organization has benefits across the board, including mental health benefits,” says Barbara Snook, vice president of custom closets general manager at The Container Store.

It’s hard to think of a brand better positioned to meet the moment than The Container Store—it’s the only major retailer whose sole focus is on home organization. But just because consumers have recently started paying (a lot) more attention to cultivating well-kept spaces, that doesn’t mean the brand hasn’t stopped looking to the future. In particular, the company has been looking to grow its younger demographic.

“We have tremendous brand recognition among Gen Z and millennials, and they certainly know who we are,” says Snook. “But they’re still not the greatest portion of our customers, and we know that that’s our customer of the future. To build customers for life, that’s an important sector for us to market to.”

In an effort to meet the rising generation, in June, The Container Store partnered with Afterpay, a service that allows customers to break down purchases at checkout into smaller installments.

Afterpay has been at the forefront of the “buy now, pay later” phenomenon, the payment model taking the retail world by storm. (A recent study estimated that BNPL is a $100 billion business.) The concept has gained particular traction with millennial and Gen Z consumers who love shopping online but, having come of age amid the 2008 financial crash, have developed a distrust of debt.

“Generation Z and millennials are increasingly credit averse—wary of high interest and revolving debt cycles—and favor debit cards,” says Zahir Khoja, the general manager of Afterpay North America. “They want to use their own money instead of turning to expensive loans or credit cards, but still want and need the flexibility of being able to pay over time.”

Much of the early success of BNPL has come in youth-oriented categories with a sophisticated e-commerce ecosystem—namely, fashion and beauty. But Khoja says that home is the next frontier. “In a recent customer survey, ‘home and decor’ was a top-requested category that shoppers said they’d like to see offer Afterpay in stores,” he says. “Additionally, home has shown to be one of the fastest-growing categories on Afterpay, with purchases in this space up 150 percent year-over-year.”

There are strong signals that the demand is there. But when the rubber meets the road, does it work?

In a word: Yes. After teaming up with Afterpay, The Container Store saw an immediate impact—it was clear that BNPL was delivering a younger consumer in a buying mood. “The Afterpay customer is about 8.5 years younger than our standard traditional customer base,” says Snook. “We’ve also noticed that Afterpay customers are spending more.”

It’s clear that BNPL works, whatever the category. But for retailers looking to make it work for them, there are still important considerations—namely, which provider to partner with. It’s tempting to think that the major players in the space are all alike, but that’s not the case. Some of the differentiators are financial. Afterpay, for example, has staked out a strong consumer-friendly position—the service doesn’t affect a customer’s credit score, and there are no upfront fees or interest rates, unlike competitors that charge up to 30 percent interest.

But for The Container Store, there was another surprising benefit to working with Afterpay: a marketing boost. Over the years, Afterpay has built up a sleek and stylish online shop aggregating its retail partners on one consumer-friendly site. The platform is so powerful that many consumers begin their shopping journey with Afterpay—Khoja says it generates an average of 1 million referrals per day.

That’s particularly appealing to a brand like The Container Store, which relies on milestones—like moving into a dorm or furnishing a first apartment—to build a relationship with younger customers. This summer, as part of the partnership, the two brands launched a cross-channel marketing campaign around back-to-school shopping, featuring a boost on Afterpay’s channels, paid social campaigns, an influencer unboxing event, and targeted media buys. All told, it generated millions of impressions and more than doubled referrals to The Container Store’s site.

The numbers are impressive. But just as important is the feeling that payment flexibility evokes in the right customers. “One of my children is a millennial in her first home, and she was very excited at the opportunity to break things up into payments,” says Snook. “Millennials aren’t reticent to spend on something they think is a good value, but they love flexibility.”

This story is a paid promotion and was created in partnership with Afterpay.

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