Installment Payments Come to Luxury Retail as Wealthy Buyers Feel Price Pressures

About a hundred years ago, so the story goes, F. Scott Fitzgerald, chronicler of the Jazz Age, turned to Ernest Hemingway and remarked, “The rich are different from you and me.”

To which fellow author Hemingway supposedly replied: “Yes. They have more money.”

The story resonates with a quarter century of the new millennium under our collective belts, but in the world of commerce, there’s a twist. The rich may have more money, at least in terms of headline, take-home pay. Yet they are increasingly demanding the same flexibility as other demographics when it comes to paying for the goods and services that they want.

For the luxury brands and platforms catering to the relatively well off, attention must be paid. Affluence, it appears, no longer guarantees frictionless spending.

Luxury spending continues to exhibit resilience at the upper end of the income spectrum, although that resilience now operates alongside unmistakable constraints.

Earnings calls across industries continue to describe a two-speed economy in which higher-income households sustain discretionary demand while financially constrained consumers reduce nonessential purchases. Delta CEO Ed Bastian summarized the divergence succinctly: “The strength in the consumer sector is at the higher end of the curve.”

Macroeconomic data supports this interpretation. Moody’s Analytics estimates that the highest-earning 10% of U.S. households now account for nearly half of all consumer spending. Chief Economist Mark Zandi has observed that the spending gap “has never been wider,” underscoring the extent to which consumption growth is increasingly concentrated among affluent households.

Yet PYMNTS Intelligence data introduces important nuance. High income does not necessarily translate into high financial slack.

In the PYMNTS Intelligence report on high earners, nearly half of consumers earning more than $100,000 annually reported living paycheck to paycheck. More than one-third of consumers earning above $200,000 indicated the same financial condition. These findings complicate the traditional assumption that higher earnings reliably buffer households from budgetary pressure.

The implications extend directly into purchasing behavior. Among high-income shoppers surveyed, 28% reported buying lower-quality products in response to price increases. Even within households typically viewed as economically secure, inflationary pressures appear to be reshaping value perceptions and trade-off decisions.

Generational Pulse research, which was conducted by PYMNTS Intelligence and debuted last month, further reinforces the breadth of these pressures. As of January, 51% of consumers described managing daily living costs as financially challenging. Meanwhile, the share of consumers who characterized their coping strategies as “extremely” or “very” effective declined materially over recent quarters.

Together, these data points suggest the emergence of a more deliberate affluent consumer. Spending remains active, but decision-making increasingly reflects budget management rather than reflexive indulgence.

Reassessing Luxury Value

Luxury retail has not been immune to these recalibrations. Industry analyses indicate that years of aggressive price increases are beginning to test consumer tolerance. Bain & Company has warned that repeated price hikes have eroded trust among some shoppers.

For merchants, the challenge lies not merely in sustaining sales volumes but in preserving perceived value. Premium pricing strategies now require stronger experiential justification, whether through service differentiation, product exclusivity or enhanced customer engagement.

Digital Engagement and Practicality

Affluent shoppers continue to display high levels of digital engagement, reshaping discovery and conversion pathways. PYMNTS Intelligence research found that consumers earning more than $100,000 averaged 22.1 shopping-related online activity days per month, significantly exceeding lower-income cohorts.

More than half of these consumers reported shopping or purchasing via social media within the prior month. However, digital fluency does not eliminate value-seeking behavior. Our data shows that high-income consumers demonstrated notable selectivity across retail categories. Essential spending frequently gravitates toward merchants perceived as offering reliable value propositions, even among affluent households.

Resale, Rationalization and Payment Flexibility

Perhaps the most revealing shifts are occurring at the intersection of resale markets and the potential for payment innovation.

The global luxury resale market reached an estimated $59 billion, reflecting sustained consumer demand for secondhand premium goods, per figures by The Wall Street Journal. Younger consumers, in particular, are increasingly comfortable acquiring pre-owned luxury items, especially within high-ticket categories such as handbags.

Buy now, pay later adoption may offer some momentum to resale of these luxury goods. PYMNTS Intelligence data shows that 61.4% of Americans earning more than $100,000 annually have used BNPL. Notably, usage patterns among higher earners increasingly reflect preference rather than distress.

Installment structures are being integrated into broader budgeting strategies, smoothing cash flow without necessarily signaling financial instability. PYMNTS Intelligence’s January installment on how people shop and pay indicates that digital wallets are increasingly valued for the budgeting and installment features they bundle alongside payment functionality.

When considered together, resale and BNPL form a complementary logic. Affluent consumers seeking value discipline can manage upfront expenditures through installments while retaining optionality via secondary-market liquidity. Luxury purchases become financially structured decisions rather than purely emotive ones.

As for the platforms themselves, and paying over time, in just one example, The RealReal allows “luxury now, pay later with Affirm.” Affirm’s latest earnings results help connect some dots, as gross merchandise volumes in the fashion/beauty segments (which would include luxury items in those designations) were up 34% year on year in the most recent quarter.

The future of luxury commerce will not be defined solely by product or prestige. It will be a critical effort for firms to accommodate evolving consumer expectations around flexibility and, by extension, how this flexibility augments their own liquidity and financial management.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.