Marks & Spencer Group Plc is starting to offer a digital credit account allowing customers to spend as much as £500 interest-free as shoppers battling the higher cost of living seek to postpone their payments.
Sparks Pay is available to customers who have signed up to the M&S Sparks loyalty program and allows shoppers one-click purchases on the M&S website and app with deferred interest payments. Later, the annual interest rate is 23.9%.
Shoppers are increasingly buying on credit as the cost of living crisis pushes up the price of everything from food to fuel to electricity. The Bank of England noted last month that consumer credit-card borrowing grew by 13% in the year to August, the highest rate since 2005.
Budget grocery chain Iceland Foods has also started to offer interest-free loans to customers, allowing them to pay for their food in installments. The offering has received tens of thousands of applications. Buy-now-pay-later options from the likes of Klarna and Afterpay, which are unregulated, are increasingly being used to buy essentials.
For M&S, this is part of the retailer’s turnaround efforts as it seeks to boost online sales, streamline its store portfolio and cut costs. In 2020, M&S relaunched its Sparks loyalty scheme as a digital program, and since then the membership has more than doubled to almost 16 million customers. M&S shoppers are buying more and more online with the website making up 34% of clothing and home sales.
Sparks Pay is a regulated account that will offer up to 76 days interest free on the first order and then the grace period will be shortened to as many as 45 days for further purchases. M&S acts as the credit broker, while M&S Bank, a joint venture between HSBC Holdings Plc and M&S, is the lender.
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