General and grocery retailers are increasingly looking to subscription models to counter plummeting consumer loyalty and competitive pressures from e-commerce, subscription boxes, and quick retail. How are retailers using subscriptions to differentiate their products and shopping experience?
Increased Challenges Exacerbated by the COVID-19 Pandemic
Retailers faced competitive challenges prior to the pandemic. However, 62% of consumers changed their shopping habits during the pandemic, and 30% changed the stores they patronize for better value and convenience.
Quick retail and subscription boxes have posed considerable challenges to retailers. For example, quick commerce digital retailers generated about $20 billion in revenue in 2020 alone. Subscription boxes like Dollar Shave Club and Harry’s shrunk Gillette’s market share from 70% to 50% in the nine years ending in 2021.
Shifting Consumer Preferences
Subscriptions may help retailers adjust to shifting consumer preferences. Subscribers list convenience as the top perceived benefit, followed by cost savings and more variety.
Potentially more important to retailers is that 64% of subscribers feel more connected to companies with whom they have a direct subscription experience versus companies whose products they can purchase one-off. Thus, subscriptions may help retailers appeal to consumer preferences and build brand loyalty.
How Are Retailers Using Subscriptions to Improve the Customer Experience?
An examination of 15 retail subscription programs found the top five similarities among plans:
How Are Retailers Using Subscriptions to Differentiate Themselves?
Five major differentiators among retailers offering subscriptions include the following:
As competitive pressures increase, subscription models may help retailers counter these challenges while building loyalty by providing differentiated products and services for subscribers.
 A general retailer sells a wide variety of goods, excluding grocery and food products; we will refer to general and grocery retailers collectively as retailers
 All data sourced from: How General & Grocery Retailers are Fighting Back with Subscription Models, Subscribed Institute, March 2022
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