NRF: The Status of Subscription Boxes

NRF: The Status of Subscription Boxes

Originally published in the NRF

On the best of days, subscription services have delivered much more than beauty products, pet toys and meal ingredients to consumer doorsteps. They’ve also brought convenience, simplicity and a sense of discovery.

But when finances, delivery schedules — or even availability of inventory — are uncertain, the surprises associated with the box might not be of the delightful variety.

It can be hard to look forward with confidence, after all, when there’s still so much to work through today.

“Subscription models require a high level of commitment on the part of the consumer,” says market researcher Pam Danziger of Unity Marketing. “And it’s hard enough to get that commitment in normal times.”

In the early days of the coronavirus pandemic, my friend Susan was already speaking of a certain level of subscription fatigue. She had signed up for a few, and for a time had enjoyed the unique benefits of the model. There was one with products for her cats, for example, “and I knew that it was just going to arrive, and I would be happy when it would get here.” Another featuring workout clothes, however, turned out to be extraneous — in addition to just too much work.

“It might have been different if I had really engaged with it and took the time to say what I liked and what I didn’t,” she says. “Sometimes, it was fun. But sometimes, I ended up just giving it away.”

Like many, Susan found herself reassessing her life in the light of the coronavirus pandemic — including how she spends her money and what she really needs. She’s not certain boxes are still on that list.

“The world is different,” she says. “What had value for a period of time may not anymore.”

More crowded than ever?

AdAge pondered retail subscription fatigue as far back as 2018, noting that the market was “more crowded than ever” with mainstream brands like Gap, Under Armour and Target then rolling out their own versions (with varied levels of success later). Then there’s meal kit delivery company Blue Apron, an oft-cited cautionary tale as it faces a shifting culture; after going public, its subscriber base dropped almost in half between 2017 and the first quarter of 2019.Danziger, who keeps a close eye on the affluent market in particular, believes subscription boxes were hitting a plateau before the pandemic. The concept’s novelty drew many consumers in, “but that newness is wearing off. The subscription model doesn’t have the ‘zing’ it once did. And retention has been a barrier for companies to overcome.”

“There were disruptive companies at the beginning that attracted a lot of attention,” Danziger says. “Others, acting out of desperation, believed they could do it, too. But they’re discovering it isn’t as easy as it looks … . The cost of acquiring a new customer and keeping them in the program is a huge, huge undertaking. It’s really hard to make money at that, and companies are learning that the hard way.”

Unboxing value

On the consumer side, the appeal of subscriptions is found in value, access and convenience, says Erica Carranza, vice president of consumer psychology for market research company Chadwick Martin Bailey. Here, value is a function of appeal relative to expense.

“But retail boxes, beauty, clothing, jewelry, hygiene? I think that may be a different story,” Carranza says. “The question is now is: Is that too expensive, especially if people are concerned about being laid off, or worried about the economy? In the current climate, does it appear too frivolous? How do I justify that clothing box if I’m not leaving my house?” Further, with supply chains and deliveries upended, what if money comes out of the bank account, but the box never arrives?Amid the pandemic, she says, subscriptions for streaming video, games and all things digital are still considered convenient, and reliably deliver access to entertainment. Value is high — especially in unprecedented times of families being at home. Do-it-yourself boxes featuring various in-home projects or crafts might also see a surge.

“If I have to hunt down my box or hunt down my money, that’s no longer convenient,” she says. “It no longer makes me feel smart, safe or in control.”

Forming new habits

When life radically shifts, as with the COVID-19 pandemic, motivation can be high to try new things. Consider immersive experiences to keep kids occupied or free live-streamed exercise classes. Carranza has been considering a Facebook Portal video communication device for the first time, giving her 7- and 11-year-old children the opportunity to connect with grandparents without having to carry around her phone. She’s not alone; Facebook Portal is reportedly selling out.

But what happens on the other side of the pandemic is still anyone’s guess. New habits are being established in this season, but not all of those habits will stick.

“Self-control is like a muscle,” Carranza says. “There’s a fair amount of research that suggests this — there’s a tendency for behaviors to bounce back after a period of trying to control them. For example, when you go to the grocery store, you’re exercising self-control when you go through all of the aisles. But then you get to the checkout, you relax a little bit, and then you buy five things on impulse, right?

“We’re all in a situation where we have to exercise a lot of self-control. Some of those behaviors are going to bounce back when restrictions are loosened. However, motivation is high to reevaluate what we’re doing and create new habits.”

Post-pandemic, consumers being able to return to bricks-and-mortar stores will experience a variety of emotional, identity, social and functional benefits: comfort, perhaps, as well as relief, a sense of community, connection with others, being in control or even taking pride in supporting local businesses. “It could be exciting,” Carranza says, “depending on how much of a sense of loss has lingered.”Demonstrating benefits

But subscription boxes that were dropped during the pandemic might be hard to pick back up — as might subscriptions that had been offered free during challenging times, but now incur a charge.

“Businesses can use that strategy to get people into the habit and let them experience the benefits while they’re using something for free, and then introduce cost incrementally,” she says. Success depends on how much value those consumers have received, and whether the service or product is truly unique or beneficial. “The challenge with some of these apps and subscriptions is whether others are continuing to offer the same thing for free.”

She points to fitness brands that have been offering free classes online, like Gold’s Gym, Corepower Yoga and Planet Fitness. As the pandemic wears on, some might continue to offer content for free, while others try to move back to a paid model as soon as possible. Introducing costs incrementally — and with the right messaging — will be key. Consumers are paying attention to how companies are communicating, she says. Those that have seemed opportunistic — or those who rush to get things back to “normal” — may not survive.

Defining ‘normal’

That does beg one other question: What will the new normal be?

Danziger says she heard a TV personality talking about how, in this season of restaurants being closed and people staying in, his wife had been cooking dinner regularly. By the end of it all, he expected she’d be quite skilled. In terms of meal subscription kits — touted for their convenience amidst busy days — “the whole design is aimed at turning inexperienced, poor cooks into good ones,” Danziger says. “How many months do you need before you learn the techniques?”

How long, indeed, before something that was once considered a welcome, delightful surprise represents an extraneous presence instead?

“My instinct is that all of this could deeply and profoundly affect how consumers purchase any discretionary item,” Danziger says. “We’re already seeing it.”