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  |   Business


Convenience is king: How subscription services are killing big-name retailers

From Spotify soundtracking our daily commute to Netflix helping us binge-watch through our free time, subscription services have rapidly become an intrinsic part of daily life. The rise of the so-called subscription economy’ has been rapid, with the industry growing by over 100% between 2013 and 2018. In the US, 15% of online shoppers have signed up for one or more subscription services, while across the Atlantic in the UK, the subscription box market is forecasted to be worth £1bn by 2022.

While great for consumers and profitable for businesses, the industry is having a negative effect on the already unstable main street with brick and mortar stores are closing at a rapid rate. Despite there being a number of different factors at play—like squeezed incomes and rising overhead costs for retailers—subscription services are undoubtedly a major competitor for retailers. But what is it that makes a doorstep delivery more inviting than a stroll to the shops?

Subscription services are more convenient

Consumers can now have pretty much everything delivered to their doorsteps, meaning they are less willing to venture out to physically shop around. Dining has perhaps been hit hardest by this. Research from MCA shows that the restaurant sector is growing at its lowest rate for five years, and this is partly due to subscription food boxes.

Subscribers are no longer heading to restaurants or supermarkets. Why would they when everything they need to make healthy meals can be delivered at affordable prices? One leading example of a food subscription company is SimplyCook, which delivers restaurant-quality recipe boxes containing ingredients to cook anything from beef stroganoff to Thai green curry. Supermarkets have even started capitalising on the popularity by launching their own recipe boxes.

As well as meal kits, subscribers are splurging on boxes full of snacks and treats too, from cheese-filled boxes to healthy snack packs. Take The Cheese Geek, whose monthly cheese subscription boxes provide 4 or 5 hand-picked dairy delights each month. The company uses its expert tasters to scour the globe for the best cheese around, before curating the boxes for customers each month. Meanwhile, Graze’s low-calorie snack boxes appeal to the health-conscious customer, containing anything from banana bread to protein nuts already portioned out in punnets, making them perfect to grab and go.

The subscription model is more personalised

Personalisation is becoming increasingly essential to the modern consumer. Research shows 36% of consumers are interested in buying personalised products or services, and 48% admitting they’d even wait longer to receive them. However, this appetite is not being met by brick-and-mortars, with a mere 22% of shoppers happy with the level of personalisation currently available. Again, subscription services are stepping in to provide just what consumers want.

Take Spotify, one of the world’s most popular streaming services with over 96 million subscribers. The music streaming platform has won plaudits for offering users personalised track recommendations and playlists based on their listening history. While convenience and affordability are clearly the most important factors in Spotify’s monopolisation of the market, its personalisation strategy has helped cement it as the king of music streaming. Meanwhile, high street music stores like HMV continue to flounder after being forced to close 27 stores, leaving over 450 employees redundant at the start of the year.

Monthly subscriptions provide a reward that physical retailers can’t

Subscription boxes evoke various emotions. There’s anticipation as we keenly await the delivery, curiosity as we wonder what it will contain, and then the surprise upon opening the package. We finally experience delight, satisfaction, or even perhaps disappointment when we find out what’s inside before the whole cycle starts again a few weeks later.

Our incentive to subscribe to these boxes is down to the rush of dopamine we experience before and during opening the box. This dopamine comes from both the anticipation of and receiving a reward and is the same rush experienced by gamblers, which physical stores simply can’t replicate. Such a rush can be explained by Burrhus Skinner’s theory of operant conditioning, which explores changes in behaviour based on both negative or positive reinforcement, with subscription boxes belonging to the latter. Skinner discovered that one of the most effective forms of positive reinforcement happens when there is “reward uncertainty”. This is exactly what boxes provide due to the contents being different each time, creating the intense dopamine rush that retains subscribers.

Considering the convenience, personalisation, and reward of subscription services, it is perhaps no great shock that they are providing a real threat to the big name brands established on main streets across the country. With some even predicting that every business will eventually turn to subscriptions, it might not be long until we stop venturing out to the shops altogether.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

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