From indulgence to necessity: the rise and rise of Britain’s subscription economy

From newspapers to new phones, subscription services are nothing new. But for consumers, the dynamic is shifting towards products and services that were once deemed a luxury. Streetbees explores how, why, and where next.

Coffee in the post? No longer an luxury request for many people in the UK. But does this mean any brand can crack the market?

In 2017, there’s one aspect of the consumer landscape that is impossible to avoid: subscription services. But while ‘access’-style plans (think everything from newspapers and television to phone contracts and the gym) are now part-and-parcel of daily life for tens of millions of people across the country, it’s now products and services that are catching the eye — and with good reason.

Even at the most basic level, the fact that 52% of people state they ‘really like’ these types of services is a huge signifier of the market’s potential. But to understand the overall motives, you need to begin at the first stage of the purchase decision: why do people start a new subscription?

It’s fair to say that these services have long been synonymous with convenience. But, while still remains an important factor, it’s no longer the defining one.

Across the board, value for money reigns supreme — and, as Streetbees’ field research shows, this is no different within the subscription model. There are a multitude of reasons for this, from real wage decline to an increase in quality of low-cost alternatives in almost every industry, but this particular shift is an important one for brands to consider. Regardless of the quality of your artisanal offerings, it’s your price point that proves pivotal in your customer’s decision to purchase.

The benefits people feel are most important are also an indication of a shift in consumer motives.

Cutting out the middleman — indicated clearly by the 68% of respondents that cited it as a primary benefit — is now one of a whole host of factors brands need to consider in order to succeed.

The study shows the growing importance of variety, the opportunity to delight the recipient with a ‘surprise’. This alone raises key questions. This unpredictability, resonating with a large segment of the customer base, highlights a shift in the brand loyalty paradigm that companies will find impossible to ignore. If the ‘brand’ is becoming a secondary motive for subscribers, how can they adapt their offering to ensure their relationship with consumers survives?

67% of respondents prefer subscription services that are flexible or optimised

There are, of course, many ways to approach this. But one simple route? Flexibility.

Allowing people the freedom to opt in and out of the subscription shows an appreciation for the ever-changing circumstances of the modern consumer, and this scores important points in an increasingly-crowded market.

Brands that aren’t too proud to recognise their position within their customer’s priority list will find themselves more appreciated in the long run.

Those that are already doing so — Amazon Prime, Birchbox and Hello Fresh were clear frontrunners within the study — each epitomise a degree of the three attributes that consumers hold dearest: value, variety and flexibility. Their tailored approach ensures they appeal to the unique demands of their consumer base and, as a result, they’ve established themselves as an integral addition to the monthly budgets of thousands of people across the UK.

But, with these best practice examples to follow, does that mean all e-commerce brands have a shot at cracking the market? According to the study, this remains unlikely.

As the focus of the subscription moves further from ‘essential’ to ‘indulgence’, consumer interest begins to wane. Floristry, Wine & Spirits and Arts & Crafts lead the list of those that people would never invest in. Why?

“I know what I like”, said one respondent, “so I prefer to shop for these items in person.” For many others, these categories simply “aren’t worth the money”. The challenge for brands in these industries is to stay relevant to their audiences — both core and new. When it comes to subscriptions, customers remain unconvinced.

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A quick word on our methodology: The figures in the article are taken from two separate pieces of field research, carried out between September and October 2017 and covering 540 British respondents of all ages. All of the data was collected by mobile and web surveys, and is accurate to within 3 percentage points 19 times out of 20.

Streetbees is an independent research platform, founded on the principle of humanising how we collect data. Join our community today by downloading the Streetbees app.