Urban Outfitters and Anthropologie have a sneaky new strategy to avoid committing retail's deadliest mistake

AnthropologieAnthropologie makes its dresses seem more affordable with a payment plan.
  • Urban Outfitters, which also owns Anthropologie and Free People, is using a new payment program called Afterpay, which allows customers to pay for products in installments online.
  • If shoppers opt in for Afterpay, the total cost of their items – which have to be between $US35 and $US1,000 to qualify – is split across four payments. The first payment is taken immediately, and the remaining three are taken every two weeks afterwards.
  • This could be a way to encourage customers to pay full-price without having to lure them in with discounts.

Urban Outfitters has a new tactic to lure customers into spending more.

The US retailer, which also owns Anthropologie and Free People, is using a new payment program called Afterpay, which allows customers to pay for products in installments when shopping online.

If shoppers opt in for Afterpay, the total cost of their items – which have to be between $US35 and $US1,000 to qualify – is split across four payments. The first is taken immediately, and the remaining three are taken every two weeks after.

There’s no extra cost to the consumer to do this, and it doesn’t delay the time in which they will receive their items. However, it isn’t just a generous new perk.

According to Afterpay’s CEO, Nick Molnar, paying in installments with Afterpay can help to “increase conversion rates and incremental sales by 20-30%,” he said in a statement to the press.

What’s more, the retailer is able to encourage customers to pay full-price, as installments make the total cost seem less overwhelming. This could help it avoid leaning on discounts to get shoppers in the store.

Discounting has been the flavour of the past decade as retailers have sought to bring cost-conscious consumers back to stores in the days after the recession. These customers, however, have become hooked on discounts, and it’s becoming harder and harder for stores to convince them to pay full-price.

“It’s almost like a drug,” Tiffany Hogan, a retail analyst for Kantar Retail, told Business of Fashion in 2016.

“We’re on this 40% off drug that we pulse every weekend or even more frequently. What happens when you take away your promotions? Your shopper just kind of melts away because you know that you’ve trained them to come back on that 40% off day,” she said of Gap, which is known for its heavy discounting.

The new system at Urban Outfitters now allows them to charge full-price without it seeming expensive.

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