Replenishment, Curation & Access: The Subscription Economy

Subscription boxes, the recurring, physical delivery of a tailored selection of products, are becoming increasingly popular. The UK subscription box market is forecast to grow by 72% by 2022, according to research conducted by Royal Mail Group, with the market forecast to be valued at £1 billion by 2022. While the high street is struggling, the subscription e-commerce industry is thriving and has grown into a major disruptor in the retail sector.  

According to Mckinsey & Company, there are three types of subscriptions: Replenishment, Curation, and Access. Replenishment subscriptions enable consumers to automate the purchase of necessities, such as razors or nappies; Curation subscriptions offer new products or highly personalised experiences in categories such as apparel, beauty, and food; while Access subscribers benefit from lower prices, or members-only perks.  

The increased popularity of subscription boxes has been driven by startup brands. The concept has low implementation costs, enabling startup brands to test new products and build a following of loyal advocates. This gives consumers the opportunity to experiment with a unique selection of new products. 

For example, Glossybox, one of the UK’s leading beauty subscription boxes, delivers 5 products worth £50 every month for just £10. Royal Mail Group forecast beauty subscription boxes to grow by 229.8% between 2017 and 2022. Beauty subscription boxes, such as Glossybox, are popular with consumers as they meet replenishment needs while also curating an exciting selection of new products to try.  

Royal Mail Group claim that male grooming subscriptions could attract almost two million members by 2022, making them the fastest growing subscription category. This is reflected by the success of Dollar Shave Club, a razor and male grooming subscription brand, which was recently acquired by Unilever and is now expanding internationally.  

While male grooming and beauty subscription services offer the biggest growth opportunities, subscription services are available for a wide range of products, from monthly flower bouquets from Bloom & Wild, to innovative laundry capsule delivery from Smol.  

Smol calculates a unique delivery schedule according to customers’ laundry habits. Subscribers are asked how often they do laundry, and Smol works out when they will run out of capsules, and automatically delivers more. This meets replenishment needs and attracts tech-savvy millennials seeking convenient solutions to everyday tasks. 

Another innovative success story is Graze, a snack brand founded as an online-exclusive subscription service, delivering healthy alternatives to consumers’ homes and offices. Graze offers personalisation, convenience and good nutrition, tapping into current retail trends and meeting the needs of millennial consumers. Graze products are now available in leading supermarkets – its journey into multichannel retailing reflects its success and cements its position as ‘the UK’s leading food subscription brand’. 

Subscription box brands have attracted consumers for being innovative, with their model enabling rapid change in response to customer feedback and trends. However, with Graze diversifying to become a multichannel retailer, available in supermarkets, and Dollar Shave Club now owned by Unilever; It is clear that brands cannot rely on subscription models alone to stay successful.  

One of the most discernible threats to subscription-only brands is ‘churn’, the rate at which consumers unsubscribe. This most often occurs when the product is not of the quality the consumer expected it to be when ordering, when a consumer no longer has a need for a specific product, or when the costs outweigh the benefits of an alternative or similar product, readily available within the local supermarkets. 

The reality of this, has forced previously subscription-only brands to become available in supermarket; indicating that as popular and convenient as subscription economy is, the best way to succeed in the current competitive retail environment, is with a strategic, well managed and multi-channel approach.  

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