With people feeling unsure of the economy and how President Trump’s tariffs may affect their everyday cost of living, it’s no surprise they are leaning away from unnecessary spending.
And the data says that’s exactly what’s happening. Consumer spending is slowing down across all income levels, according to Bank of America’s research arm, with a noticeable increase in pricier items like airline tickets and hotels.
This slowdown has been underway since January, the report says, with the biggest decline among lower-income households.
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As some businesses already struggled coming into this year, and many others declared bankruptcy or closed store locations, it’s overall a worrisome time for the retail landscape, which has become extremely hard for brick-and-mortar stores to endure.
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As people become more cautious in the current economic climate, retailers will need to strike a careful balance. In order to thrive in an unsure time, these businesses will need to strategically pivot to continue attracting customers without scaring them away.
One retailer aiming for that balance is Costco (COST) , a company that is so highly profitable it doesn’t have to grapple with the same concerns many others do today. But it’s just announced a smart new partnership that will help its customers tremendously, ultimately bringing more foot traffic in the door and maintaining its performance.
Costco introduces a new way for customers to pay
Affirm made an announcement on May 14 that it will now formally partner with Costco to serve its customers. Affirm is a pay-over-time service that allows customers to make payments monthly on larger purchases.
If you think that sounds like good old layaway from the ’80s, you’d be right — except you immediately get to take home the product you bought.
The partnership with Affirm will allow shoppers using Costco.com to check their eligibility in real time, and if approved, choose a payment plan for purchases ranging from $500 to $17,500. This will surely take the sting out of larger-ticket items and make upgrading to a new TV or outdoor furniture set a lot more affordable.
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Costco says in the announcement that noticing more people using Affirm in general is part of what prompted the partnership.
“As summer approaches, we’re seeing more consumers turn to Affirm to prepare for the season ahead — whether it’s outdoor entertaining essentials, like a new barbecue or patio furniture, a storage shed, or a new set of appliances,” said Pat Suh, Affirm’s SVP of revenue. “Costco members in particular know the value of planning ahead and buying in bulk. We’re excited to offer them an alternative to traditional credit, helping them confidently manage their spending on larger purchases without hidden fees.”
Costco originally mentioned the partnership in a shareholder letter, but until now has not confirmed when the partnership would launch.
A savvy move from Costco
While the third-largest retailer is doing financially well, it’s also in an ideal spot to strike a deal like this. The number of Costco’s paid household members has increased in the last year to 78.4 million, up 6.8% compared to last year.
That means Costco has a captive audience that’s willing to pay for access to its warehouses — but still looking for a deal.
Costco has previously offered a buy now, pay later option called Flex Pay through its partnership with Citi Bank. However, only Costco Anywhere Visa Card members are eligible for Flex Pay, whereas the Affirm deal will be available to all of its customers.
Thirty percent of people have tried a pay-over-time service, according to a Bankrate study from May 2025, which says the service is best paired with healthy financial habits.
Related: Costco quietly limits customer purchases of a beloved product
