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Subscription Retailers’ Expansion Strategy? Holiday Gift-Giving

Giving a subscription allows a single gift to stretch well into the future, and they are becoming increasingly popular: 32% of shoppers have received a subscription as a gift, and 44% are at least somewhat likely to give one, according to a study by Magid. Introducing a subscription into a household is a crucial step for many retailers, as the intention to renew is 85%.

The average U.S. household has 3.7 subscriptions, and 25% of them currently have more subscriptions than they did six months ago. Gifts may be partially responsible for this rise, and many shoppers are considering giving a subscription out in the next 12 months across a number of categories, including:

  • Kids/Baby Foods: 48% have been gifted subscriptions, 18% are somewhat or very likely to gift;
  • Kids/Baby Non-Food: 40% have been gifted, 19% would gift;
  • Clothing/Fashion: 36% have been gifted, 23% would gift;
  • Home: 34% have been gifted, 22% would gift; and
  • Meal Kits: 31% have been gifted, 23% would gift.

Even for retailers with more traditional business models, subscriptions can provide a sales boost. In the U.S., 41% of revenue comes from returning or repeat purchasers, even though they represent just 8% of all visitors, according to OrderGroove. Repeat orders generate more revenue for retailers while offering convenience for customers.

Subscription services still represent a relatively small portion of the retail industry: the Subscription Trade Association (SUBTA) found that 66% of providers have 1,000 or fewer monthly customers. However, the industry is poised to hit the mainstream. Amazon has launched a dedicated subscription section, where shoppers can sign up for monthly boxes from Loot Crate, Allure and other brands.

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Other signs of growth in this sector include:

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