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Crypto has been a chaotic year.
“I think after the market slump of the last week or two I’m not sure any of us are really into cryptocurrencies,” said Craig Bromers, chief marketing officer at American Eagle Outfitter, at last month’s CommerceNext 2022 conference. is ready.” The retailer chose not to accept cryptocurrency as a form of payment when developing the NFT collection last year.
With extremely volatile trading trends, the crypto market crashed in May. Rohit Chopra, director of the Consumer Financial Protection Bureau, also warned companies that stablecoins may not be willing to pay, telling Bloomberg. Nevertheless, some retailers have announced that they will accept crypto as a payment method. Brands like Gucci, Balenciaga, Elo Yoga, and Tag Heuer are some of the notable companies that have recently jumped into the crypto game.
Even brands in the same region think differently about digital currencies. Both Pacson and American Eagle Outfitters are making heavy use of digital transformation to attract and retain younger audiences. Both brands have been involved in virtual shopping and gaming experiences by launching initiatives in Roblox. Pacson has issued non-fungible rat-themed tokens at malls this year and auctioned some at ComplexLand 3.0, an immersive virtual shopping event. American Eagle Outfitters also launched an NFT collection last year and most recently created an apparel collection featuring designs by NFT designers.
The main difference between the two brands’ NFT launches: Pacson sold them for crypto and American Eagle Outfitters didn’t.
In October of last year, Paxon began accepting crypto as a form of payment via Bitpay, billing itself as the first “teen fashion retailer” to do so.
“When we thought about our 15-25 year old clientele, the reality was that they weren’t ready for cryptocurrency.”
Craig Bromers
Chief Marketing Officer, American Eagle Outfitters
“Gen Z audiences, our primary consumer, are very tech-savvy, and we’re devoting our efforts to social media and e-commerce to adapt it to their lifestyle and engage with them on a more personal level,” said Michael Relich. , co-CEO Paxun said in a statement at the time. “With their growing desire for cryptocurrency, it was clear that we needed to consider and offer BitPay as another payment option so we could continue to earn their trust as one of our retailers. the one who really listens.”
American Eagle Outfitters thinks differently.
“If we think about our 15-25 year old clientele, the reality is that they weren’t ready for cryptocurrency,” Bromers said at CommerceNext.
Who Uses Crypto?
The data paints a picture that the use of crypto, whether for investment purposes or as a means of payment, varies greatly by gender and age.
A survey released by the Pew Research Center in November 2021 showed that men are twice as likely to say they have used crypto than women. Looking at the 18-29 age group, 43% of men reported investing, trading or using crypto. This compares to just 19% of women in the same age group.
Crypto is currently attracting a younger audience of both men and women, which is likely to be of interest to Paxon and American Eagle Outfitters. Thirty-one percent of 18-29 year olds surveyed have used crypto in some form, while only 8% of 50-64 year olds have used crypto.
However, using crypto for investment purposes or by purchasing NFTs is vastly different than using it as a means of payment. A May 2022 Federal Reserve Board report states that crypto used for financial transactions or purchases is far less common than its use for investments.
The report found that in 2021, just 2% of US adults have used crypto for payments in the past 12 months. Those who only used crypto for investment purposes had higher median incomes, a relationship with a traditional bank, and retirement savings than those who used crypto for payment purposes.
2% of US adults have used crypto to make payments in the past year
The Economic Wellbeing of American Families in 2021 Report.
Federal Reserve Board
However, this is the current demographic and does not necessarily stay the same over time.
Deloitte US Banking and Capital Markets Payments Leader Zachary Aron said in an interview with Retail Dive, “When we look at the body of research, there is no doubt that the more active groups have fallen short in cryptocurrency and stablecoin adoption. Is.”
“And there’s also a correlation that the younger demographic…banks less overall,” Aaron said.
When asked how retailers should consider this data in their decision-making, Aron said, “I would not only evaluate it on whether or not crypto is accepted, but actually on the basis that my who is the customer base I’m aiming to attract.” .”
Deloitte recently released a report on its survey of 2,000 senior executives at US retail companies to examine interest rates and investments in crypto as a means of payment. The report found that 64% of merchants surveyed said their customers have significant interest in crypto payment options, and 83% expect interest to increase over the next year.
Based on this data, many companies are looking at crypto’s long-term role in retail transactions and perhaps anticipating that the current user demographics will grow and change over time.
According to a study by Gartner’s Software Advice, crypto users are not greatly affected by market volatility. The 2022 Cryptocurrency in Ecommerce Survey, which surveyed 596 U.S. consumers who used crypto as a payment method once a month in the past year, found that more than half of the respondents expect to spend more using crypto in the next year . is planned. Only 29% of respondents who intend to spend more on crypto in the coming year fear price volatility.
However, the report cautioned small and medium-sized businesses against jumping into crypto payments too early, noting that some of the perceived consumer benefits for this payment type are not helping retailers. For example, the idea that crypto transactions are private is not entirely true as companies are required to report any changes in crypto value as they are subject to capital gains tax. Additionally, the notion that transaction fees are low does not always apply to merchants, as fees change over time as reported.
However, American Eagle Outfitters bromers are taking a short-term approach based on what is known about the currently active crypto audience and how volatile the digital currency market has been this year. Pacsun, on the other hand, looks at the long-term potential of widespread adoption of crypto.
“We certainly believe there are attitudes towards digital currencies that are clearly being influenced by the investment side of the digital currency space,” said Deloitte’s Aaron. “Companies think long-term, they believe there will always be short-term ups and downs. But the long-term aspect of digital currencies being part of payments and how they can improve the customer experience may be tolerable.
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