Subscription services have been one of the few bright spots in a retail sector that has struggled with the economic impact of the Covid-19 pandemic and multiple lockdowns.
As consumers found themselves unable to visit physical stores, many brands found new ways to bring products to them – whether they were offering meal kits and children’s books or coffee and beauty products.
The rise of subscription services – such as HelloFresh, Gousto, FabFitFun, and Birchbox – during the pandemic led Barclaycards Payments last year to label the UK a nation of ‘super subscribers’, with the average household spending £552 per annum on monthly subscriptions according to its analysis.
In fact, figures from Finder suggest the country spends a combined more than £2 billion on subscription services.
Naturally, there are nuances to these numbers.
Prior to the pandemic, while research found that just over one-quarter of Britons were signed up for at least one subscription box service, there were big disparities between generations: 23% of 18-34 year-olds regularly received a subscription box, but only 3% of 55+ year-olds did.
No doubt that will have changed significantly since 2020. Subscription-based businesses, such as Parsley Box, have set out to deliberately target specific age groups and other demographics.
In that company’s case, the ‘baby boomer+’ generation, which it contends has been under-served by existing services – an argument backed up by the aforementioned research on different age groups.
The Growth Challenge
Despite its stellar growth over the past 18 months, the subscription services sector looks like it has even further to go as more brands emerge and companies develop new and innovative ideas for boxes and services.
Analysis suggests that subscription boxes alone would grow to a market of £1.8 billion in the UK by 2025.
However, the question for many businesses will be how they can continue to serve their target market and tailor their customer service and experience to them as they expand.
The challenges are many and varied – subscription services are generally expensive, between input costs, logistics, and marketing in an increasingly competitive environment, to name just a few of the major overheads.
Yet, some analysts have identified customer retention as one of the sector’s most significant challenges.
Outsourcing their customer experience to a trusted supplier is the best and most efficient way of ensuring that they can focus on growing their subscription business, safe in the knowledge that their existing customers have a great experience of their brand.
Why You Should Sign Up
As we move out of lockdown, the consumer habits and shopping trends of the pandemic look like they will continue to shape retail in the months and years ahead.
Subscription boxes are a great way for consumers to get their favourite products delivered straight to their door and will likely be a big part of the future retail landscape, building on the momentum of the past 18 months.
Comdata has 21 years of subscription management and retention, offering flexible commercial models to clients on a cost per contact or cost per managed live customer basis.