Global subscription economy outperforms during lockdown

Corporate Citizenship

 

Posted in: Speaking Out

Global subscription economy outperforms during lockdown

September 30, 2020

According to a report by Zuora, the leading subscription management platform provider, subscription business outpaced S&P 500 revenues nearly six times amid the global coronavirus pandemic. The Subscription Economy Index showed that this model has grown by more than 400% over the last 8.5 years, and even maintained momentum to expand by 12% during Q2 2020, while S&P companies sales contracted by 10%. The lockdown has specifically fuelled a boom in retail subscription services, with research showing that UK consumers now have an average of seven per household and spend about £46 a month on subscriptions. As a result, about a fifth of UK retailers have launched subscription services during lockdown, augmenting the 30% of retailers that already had them in place. Entertainment subscriptions led the way, providing a key at-home pastime while outdoor entertainment options have been limited. However, food and meal subscription services – such as wine tasting kits and meal boxes – are the second most adopted, while health, wellbeing and grooming services are also on trend. So finds research by Barclaycard, which goes on to say that 82% of retailers believe the popularity of subscription services increased during lockdown, as shoppers took advantage of safe and convenient ways to receive everything from essential items, such as groceries, through to entertainment into their homes.

While small businesses are closing at an alarming rate and working hours falling by 14% during Q2 2020, equivalent to the loss of 400 million full-time jobs, it seems the subscription-based model has weathered the storm of Covid-19 quite well. Although the reasons for consumers signing up to subscriptions are based on receiving exclusive, personalised content and convenience, what does this mean for sustainability? While entertainment and rental subscriptions are seen as a more circular business model, is subscribing to consumables a more sustainable option than shopping online? In these uncertain times, it may be the regularity and predictability of these subscriptions that not only keep business afloat, but reduce waste, increase customer engagement and ensure producer responsibility. Whether intentional or not, this increase in subscriptions is another step away from the traditional linear approach and towards new, adapting business models. However, if there is a limit to how much consumers are willing to pay for subscriptions – for fear of becoming “oversubscribed” – then there is a risk that the sustainability agenda will miss out on the opportunities of the subscription economy to deliver sustainability gains.

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