The rise and rise of the subscription economy
You may use it for beer or bread, for razor blades, watching films or even for the simple act of reading books on Amazon. The subscription economy is something that has taken a hold on a large and growing portion of the population. It used to be said that Britain was a nation of shopkeepers. Have we since become a nation of subscribers?
In case you have not heard the term, what is the subscription economy? Simply put, it is the network of consumers paying a fixed monthly price for a product they know they are going to keep using. If you know you are going to keep shaving, or you know that you are going to keep watching films and reading books, then why not pay a simple monthly subscription that takes care of our needs? It sounds easier than buying the razor blades or the individual films or books as and when you need them.
Unsurprisingly, with so many people stuck at home over the last eighteen months, the subscription economy has boomed. The latest research from Barclaycard showed that it grew by almost 40% in the UK last year, and is now worth a whopping £323m per annum.
The research throws up some other interesting facts:
- Almost two-thirds (65%) of UK homes are currently signed up to a subscription service, with an average of seven subscriptions per household
- The average spend per individual is £46 per month. Men, averaging at £57 per month, spend more than women, who on average spend £35 per month.
Clearly statistics like this represent a big potential market, and a challenge, for retailers. In fact, one in ten retailers launched some form of subscription service during lockdown, and one in five say they will continue to develop their subscription service despite the easing of lockdown.
Amazon boss Jeff Bezos has dubbed the new, subscription focussed consumer the “divinely discontent customer.” Companies and brands now need to do more than just meet demand. According to Bezos, if they are going to keep their subscribers, they need to anticipate and shape demand as much as respond to it.
Will the subscription economy continue to grow? It seems inevitable, and the UK subscription economy is a fraction of that worldwide, which has grown 435% in just nine years, with some commentators dubbing it “the end of ownership.”
There appears to be growing consumer preference for subscribing over ownership. 71% of international consumers currently have a subscription service and 75% believe that in the future people will own less physical products.
And why not? The subscription economy is more than just boring old razor blades. You can get cat litter on subscription, Japanese snack boxes and newspapers that only focus on good news. And why settle for Christmas just once a year? One subscription service guarantees that a box of festive goodies will arrive every four weeks, whether it’s December or July. It is worth noting that they do turn up on your doorstep, not down the chimney.