Are subscriptions killing retail?

21st August 2023

Subscription-based shopping is a massive trend that took off in a big way during the pandemic when nobody could shop.

Here in the UK, it’s SMOL cleaning and washing products, Serious Tissues sustainable loo roll, Oddbox’s odd fruits and vegetables being saved from becoming food waste; and of course- beauty boxes! Potentially where it all started. Birchbox started in 2010 delivering 4-5 products per box, designed around the skin/hair needs of the customers and it’s spread from the US to UK, and around 5% of people who get the sample-sized product go on to buy the full sized off their platform. Pret has recently announced that their coffee subscription has saved their business hitting their first profits since 2018, the coffee chain saw revenues rise 20.2% year on year for the first six months of 2023 to £429.9m.

But are subscription businesses here to stay and taking increased spend away from high streets and online retailers?

An article on Fast Company stated that “Fuelled by post-pandemic lifestyle changes and the promise of recurring revenue, the global subscription e-commerce market size was estimated at $120 billion in 2022 and is expected to reach $904 billion by 2026.

But why are subscriptions doing so well? Is it the convenience and dependability compared to going physically shopping and stock being low, the price unexpectedly increasing or the lack of drive to bother going into the store in the first place?

An article on the Retail Innovation Hub discusses here the recipe to success “Acquisition, retention and scalability are necessary for long-term success in subscriptions, and creating a brilliant subscriber experience will achieve this. Cost matters, and one way to capture a greater number of subscribers is to offer a number of plans at different price points to appeal to those with smaller budgets,” says Oscar Wall, General Manager – EMEA at Recurly.

As retail brand and interior design consultants; we’re aware of these challenges for our clients. We must be aware of the trends and changing customer behaviours but for the brands and retailers we know; we offer this advice;

> Stay focussed on both new and existing customers – how can you disrupt your customers buying behaviours? How can you stay relevant? How can you deliver better service?

> Keep your brand relevant – if your customers need faster stock replenishment, more sustainable supply chains, more eco-shopping environments- communicate how you are improving your brand. And let’s face it – far too many emails are being sent and there are better ways to inform them regarding your brand values.

> Be reliable

> Make your point of difference known

Subscriptions aren’t going anywhere. Consumers love the convenience and they also an elevation in lifestyle that outweighs their investment.

Get in touch to find out more about how we can help your retail brand be relevant, communicate coherently, and deliver award-winning environments for your customers.