Subscription POV
By Morten Suhr Hansen
A new report from PYMNTS coins the term “The Replenish Economy” stating that 4 in 10 millennials satisfy most of their shopping needs via retail subscriptions.
Subscription boxes are an industry that has taken a long time to evolve, and only certain product categories have proven to be profitable in the long run. Additionally, the market is saturated with smaller providers, challenging the development of major players in areas such as hobby materials, arts & crafts, and similar.
That being said, a new report shows that millennials, in particular, have become more fond of subscribing to boxes that replenish their stock of everyday items like groceries, dog food, razors, and similar.
I have compiled the main conclusions in this article and comment on them continuously. PYMTNS particularly highlights 3 conclusions that a retailer should consider if they want to respond to the new development in consumer behavior.
We start with the distribution across generations, and it’s hardly surprising that it’s especially the younger consumers who see the benefit in receiving regular deliveries of their favorite products.
Share of subscribers using scheduled and auto-fill product subscriptions for most of or all their regularly used products in the last six months, by generation:
Shopping from home
42% of subscribers to retail subscriptions report making fewer visits to physical stores due to their subscriptions. Obviously, this makes a lot of sense. But what are the implications for the retail business?
If you’re a traditional brick & mortar store and you’re worried about the market entrance of these subscriptions, there are ways to create a bulwark against your online competitors. The introduction of a “Green Fee” subscription can foster more loyalty from your customers or even introducing a monthly delivery yourself, might be the way to stay competitive, when consumer behavior changes.
High Standards
Consumers are getting more and more sensitive to poor service. 17% of subscribers relying on scheduled and auto-refill subscriptions would terminate their subscription if the merchant could not give a refund for a disliked item.
This is not only an implication in retail. Subscribers are especially demanding when talking about service elements, because their increased engagement with your business allows them to expect a little more. This is why your subscription offer is never any better than your customer service. You must keep that in mind, when developing – and maintaining subscription services.
Options, please
Another crucial element of running retail subscriptions today is the focus on flexibility. It’s not a question if your subscribers will change preferences, but only a question of when. Therefore, 74% of retail subscriptions already offer the opportunity to change their subscription plans at will.
This means that you should focus on creating a strong self-service platform, where subscribers can monitor and adjust their subscription, to fit their current needs.
The most popular “Replenish subscriptions”
Services like Amazon Subscribe & Save, HelloFresh and Chewy are among the most popular “replenishment” subscriptions out there:
This list indicates that especially companies who operate within a single product category, succeeds in catching the most Share-of-Wallet from consumers. Chewy’s Goody Box top the list here, with 10.5% of subscribers saying they no longer shop in-store at all. The runner up here being Dollar Shave Club with 7.8%. Respectively, 42,6% and 34,3% of subscribers to these services say that they shop in-store less often.
What are the implications, if you’re a retail business, who doesn’t use subscriptions?
Retail subscriptions like the ones described in this article, have taken a long time to really take off. Naturally, Amazon has a staggering amount of Prime subscribers to convert into “Subscribe & Save” customers, and HelloFresh has taken considerable market share with very aggressive sign-up discounts and referral programs, resulting in many subscribers moving in and out of the subscription to take advantage of discount offers. In Scandinavia, however, most people still prefer shopping at their local supermarket a few times a week, so it might be a long while before meal boxes will replace shopping retail entirely.
That being said, ‘replenish’ subscriptions for pet food and the like are growing in popularity as you can see in these numbers. It seems that people like to place their consumption of passions and hobbies in the hands of subscription companies. It seems that these categories are moving to become a lasting part of the replenish economy.
If you want to read the entire report yourself, you can download it here.
