Retail Rethink – Why A UK Fintech Startup Is Looking Beyond Big Brands To SME Partnerships

What do you do when the market you’ve set to address changes out of all recognition in the space of just a few months?  

That was the question facing U.K. startup Hyperjar as the Covid pandemic accelerated trends that were already altering the face of Britain’s high streets.   

Launched in September of last year, Hyperjar is a consumer-facing fintech offering a novel take on the budgeting app theme. Founded by Mat Megens, the company invites its account holders to create virtual jars into which money can be deposited for specific purposes – in other words, a modern take on the type of budgeting tool that your parents or grandparents might well recognize.

But rather than being simply a savings app,  Hyperjar allows funds to be allocated to partner retailers. So if you shop at a particular department store regularly, you can save into a prepay jar to fund future purchases, with the money held in an interest-paying escrow until it is spent.   

It’s a model that effectively reverses the common point of sale model of “buy now pay later” and instead encourages a save and remain debt-free approach to purchasing goods or services. Megens puts the premise simply: “Debt shouldn’t be used to pay for consumption.”   

It’s early days for Hyperjar but they have struck partnerships with major retail and online shopping operations such as Boden, Shell, Virgin Wines, and Dyson.  

Convincing Consumers

Arguably Hyperjar faces two major challenges. One is to convince consumers that pre-planning and saving offers a better way to fund regular purchases than heeding the siren call of instant credit or indeed buying on a credit card. The other is to address a retail landscape that is reconfiguring itself almost on a daily basis.  

A combination of a sequence of lockdowns and the consequent rising popularity of e-commerce is putting major retail brands under pressure and in recent weeks, the Arcadia Group and Debenhams – both national chains – have disappeared into administration with their brands being sold on respectively to e-commerce pure-plays. Boohoo bought Debenhams. ASOS purchased some of the Arcadia brands. The deals means that the stores will disappear from the high street even though the brands will live on. Behind those recent headlines lies an even more worrying picture. Back in November of 2020, the Local Data Company warned that around 18,000 high street businesses could be left empty due to the impact of lockdowns and restrictions. In January, the same company reported that vacancy rates in the fourth quarter of 2020 had risen to 13.7 percent. Since then, the U.K. has gone into another lockdown and non-essential retailers remain closed.  Not a good situation for the sector.

That won’t necessarily affect the ability of Hyperjar to partner with both online, omnichannel and bricks and mortar retailers but it does illustrate that the retail sector is in a state of flux or even crisis. That in turn could impact the appetite of major brands for partnering.  

Turning To SMEs  

All of which raises the question of how you grow the audience for a new consumer-facing tool in the midst of huge industry uncertainty.  

Hyperjar’s answer has been to perform a semi-pivot. While continuing to talk to major brand partners, the company is now putting much greater emphasis on the SME market.   

“We are running a beta test with SMEs, with businesses such as dance schools, pubs and delivery firms taking part,” says Megens. 

There is a commercial logic to this that goes beyond the travails of big-name retailers. As Megens explains, on the business side, Hyperjar is essentially a loyalty tool in that it encourages consumers to support their chosen retailers.” And small businesses need support,” he adds.  

Local Loyalty

Thus, consumers might use Hyperjar to set aside funds to pay for meals at a local pub or restaurant or at a grocery store. “It is often the local shops that people are most loyal to,” Megens says. 

But the challenge lies in reaching those partners. It might be difficult to get an initial hearing from a major retailer, but once you do, there is the possibility that one or two meetings will result in a rollout across the entire national operation. On the other hand, partnering with enough local businesses to achieve critical mass requires a lot more physical or metaphorical shoe leather to be expended. “Small businesses are hard to scale up,” Megans acknowledges. 

So Can it be done?  

Hyperjar is aiming for shortcuts. Megens cites one investor in the company who has an extensive network of small consumer-facing businesses – thus providing a means to reach a lot of potential partners quickly. “Chief Strategy Officer Chris Francis also sees other potential partnerships. “Payment integration is another way in,” he says, citing payments companies that could use Hyperjar to add another level of service. “And we can also talk to industry bodies such as the Federation of Small Businesses and Chambers of Commerce.”  

There is a hill to climb, but Hyperjar has made progress. To date, it has 17,000 to 18,000 users who have bought into the virtual jar model. The attraction, Megens says,  is interest paid on saved funds and the security that comes from knowing that the funds are protected in an escrow account. That means that unlike gift vouchers, the money can still be used if a specific retailer goes out of business.  

However, there are questions to be answered. Are British consumers actually that loyal to local stores and businesses such as gyms and pubs? And will that loyalty prompt an embrace of the savings jar paradigm? The onus is now on the company to demonstrate that consumers are prepared to demonstrate loyalty to big brands and small businesses alike by setting aside their hard-earned cash.