Buy-now, pay-later is a growing form of payment, but it’s not without its risks. Now regulators are taking a closer look. Also, we explore what’s behind the executive leadership changes taking place throughout fashion. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Buy now, pay later
One of the key narratives to emerge from this year’s Black Friday and Cyber Monday shopping weekend was the boom of the buy-now, pay-later model. Adobe reported a 42% increase in BNPL purchases compared to last year. And Afterpay, a BNPL provider, found a similar figure.
But as this form of payment grows, regulators are becoming more concerned about the potential risk to shoppers. Last week, the U.S. Office of the Comptroller of the Currency issued a statement urging banks to manage the model’s risk to consumers, a sign that it may be interested in regulating the industry more strictly.
Amid inflation, with prices of some everyday goods at a high, more consumers are being tempted to use BNPL, but at the same time, many are falling behind on payments. LendingTree estimates that 42% of BNPL users have missed a payment. Missing a payment means paying late fees or high interest rates on a payment. On top of that, many BNPL platforms will only report missed payments to credit bureaus. That means that they’ll negatively affect your credit score if you slip up, but won’t positively affect your credit score if you pay on time.
The U.K. is also weighing regulation increases on the industry. Draft legislation has been in the works since February of this year.
While BNPL is still on the rise, the risks to consumers are real and regulation could potentially shake up the growing sector.
CEOs are on the move
In my Luxury Briefing last week, I wrote about all the fashion creative directors who have stepped down or been replaced in the last few months. But I didn’t touch on other leadership shakeups happening in fashion. Companies are swapping their CEOs around nearly as frequently.
Last week, longtime Levi’s CEO Chip Bergh announced his retirement, to be replaced by current president Michelle Gass. Joann Cheng, the founding CEO of Lanvin Group, also abruptly announced she would step down, which was followed soon after by the announcement of her replacement, Eric Chan. If we zoom out to all of 2023, we’ve had major CEO departures at Gucci, Maison Margiela and Gap. Even Rihanna stepped down as CEO of Savage x Fenty in June.
Like creative directors, CEOs shape the overall direction of a brand. And right now, when people are spending less and brands across the industry are seeing their sales slow down, new leadership can sometimes be what’s needed to give a brand a fresh start. Whether the new CEO ends up being any more effective than the last, however, is not a guarantee.