Non-traditional options set to drive growth in subscription economy

Non-traditional sign up products and services are likely to fuel the next wave of subscriptions, according to new research from Barclaycard Payments.

The company found that 68% of businesses currently offering subscriptions will expand their portfolios before the end of 2022.

This is being driven by companies in groups often less associated with this space. DIY & home improvement (76%), homeware & furniture (73%), department stores (73%) and technology businesses (69%) plan to launch new subscription offerings, all above the industry average of 61%.

Technology retailers, grocery brands and DIY & home improvement merchants plan to introduce the largest number of new sign up products and services before the end of the year, with an average of four new offerings, compared to an average of three across all businesses.

Of businesses which do not currently offer subscriptions, many report plans to invest in new offerings, with technology companies (50%), department stores (49%) and homeware & furniture retailers (41%) all planning to launch at least one new sign up product or service within the next 12 months.

As the cost of living continues to rise, 51% of businesses which offer subscriptions are planning price cuts to attract shoppers.

Businesses are also diversifying into new areas to increase sales, with three fifths creating subscriptions designed to be purchased as presents in time for the festive season.

This comes as 38% of Brits also said they plan to gift a subscription product or service to their loved ones.

The retailers most likely to launch new offerings to appeal to Christmas shoppers include festive food and drink providers (72%), clothes & accessories retailers (70%), and DIY & home improvement stores (66%).

In addition, 34% of businesses plan to introduce more environmentally friendly packaging, and 24% are looking to sell more ethical and sustainable products through a subscription model.

Demand for subscriptions is strongest among younger shoppers, and those in London.

Across the country, an average of 21% say they are likely to sign up to new subscriptions before the end of the year; with those aged between 18-34 reporting the highest intention (35% ), and regionally, those in London are most likely (33%).

The same two demographics are also more likely to buy subscriptions as gifts for others: 55% and 56% respectively, compared to a national average of 42%.

Harshna Cayley, Head of Online Payments, Barclaycard Payments, says: “While the growth of some subscriptions has tailed off following the pandemic, demand remains strong for services which make our lives easier and provide good value of money.”

“Our data indicates higher-value products such as furniture and technology are where new growth is coming from, rather than more traditional areas like entertainment and meal kits.”

“Although phone subscriptions have been around for many years, more recently we’ve seen packages for wearable devices, coffee machines, bicycles and even robotic vacuums all start to take off.”

“Businesses who diversify by tapping into how consumers want to pay for, and renew, more expensive items will be best placed to thrive as the subscription economy evolves.”