Do Recent Adoptions of Subscription Services Have Staying Power?

Both digital and physical subscription services have seen a spike in consumer interest and significant growth during the pandemic as new consumer behaviors continued to rapidly take on new shape. In fact, according to new survey data from Pitney Bowes, 27 percent of consumers say they have subscribed to a subscription box service in the last year.

Among these consumers, the company found the highest demographic to be young affluent urbanites. Further, of current subscribers, 30 percent told Pitney Bowes they subscribed for the first time in the last 12 months. And while 30 percent of subscribers kept the same number of subscriptions, 22 percent said they had added even more in the last year. Only 19 percent said they had reduced the number of current subscriptions from the year before.

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Moreover, 16 percent of non-subscribers said they plan to sign up in the coming year with Gen Z and Millennial members leading with greater intent than Gen X or Baby Boomer consumers.

So, does the adoption of subscription services have staying power? According to Pitney Bowes, the verdict appears mixed.

The company puts the subscription box segment into two distinct models being “replenishment” and “curated.” While the replenishment model ships consumers the same products on a recurring — often monthly — basis, the curated model contains a different assortment of products each time. Notably, replenishment subscriptions have found huge popularity during the pandemic as consumers found safety in home delivery for essentials, while subscriptions including meal kits fall into the curated category alongside apparel or beauty memberships.

Of note, while meal kits saw spikes in memberships during the pandemic, categories with about twice the staying power compared to meal kits were revealed as pet supplies, household supplies, and apparel or footwear.

At the same time, across generations, subscription priorities were found to be a bit different. Both personal care and food and beverage subscriptions ranked in the top five categories across all age groups. Though, fitness subscriptions are top of mind and ranked the most popular category for Gen Z and Millennials.

The survey also revealed 39 percent of consumers have also canceled a physical product subscription this last year. And while the company notes physical subscriptions notoriously are the hardest to hold consumer retention, another 39 percent of consumers say that they would cancel digital entertainment services first if they were forced to cancel a subscription while half of the consumers indicated they would cancel meal kit subscriptions.

Notably, consumers who report a lowered income since COVID-19 were revealed more likely than those with maintained income to sign up for a subscription service in the last year. The company notes this may be due to the idea that some subscription models replacing alternative categories of spend.

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