Table of Contents
- 1 The no-hassle nature of food subscriptions
- 2 Hobbies and experiences
- 3 The pursuit for mindfulness
- 4 The self-care trend
- 5 The future of the market
It’s January 2021, the depths of lockdown 2.0. Social interactions are limited to a walk in the park with one friend. The glow of the TV is filling you with lethargy and YouTube workouts are wearing thin. But then a surprise package arrives through your letterbox – the perfect pick-me-up when popping to the supermarket is the only highlight of your day.
Subscription boxes, which range from food to beauty and crafts, experienced a renaissance during the pandemic when other businesses struggled. During a time of such little joy, it is no surprise that these services were popular – research from the Royal Mail found that consumers spent nearly £1.4bn on subscription boxes in 2020, while over half of people said they signed up to a box during Covid-19 because they wanted to treat themselves. As we return to normality, the trend does not appear to be slowing down – the UK market is expected to double in size to £1bn by 2022.
The no-hassle nature of food subscriptions
Grocery boxes, which send subscribers pre-measured ingredients for specific recipes, were a desirable option during lockdown when the alternative was socially distanced supermarket queues or failing to secure a home delivery slot.
In 2020, Gousto more than doubled the number of monthly meals it delivered from 2.5 to six million, marking its first full year of profitability. It is now selling eight million monthly meals while rival HelloFresh attracted three million more customers in 2021 compared with the previous year.
Gousto co-founder Timo Boldt quit his job in investment banking in 2012 to start the company, on the basis that those with busy lifestyles struggled to find time to cook healthy meals from scratch. He believes that this penchant for pre-planned eating is permanent due to a “seismic shift” in the grocery market driven by three key trends: convenience, health and sustainability.
The company has more than 50 different weekly meals and uses artificial intelligence to analyse customer preferences and personalise meal choices. In future, Boldt hopes its “data-driven menu” will be able to curate boxes to manage specific health issues such as diabetes, obesity and hypertension, in a shift from “reactive” to “preventative” medicine.
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Linda Ellett, head of consumer markets at Big Four accounting firm KPMG, adds that food boxes are considered better value for money than other “luxury” experiences. “Doing all your grocery shopping via recipe boxes would be expensive,” she says. “But it’s a cheaper or healthier alternative to going out for dinner or getting a takeaway.”
Subscriptions also help to reduce food waste, Boldt argues, due to precise portion sizes and forecasting algorithms that predict supply needs in fulfilment centres, while supermarkets are estimated to waste 190 million meals a year on average. However, excessive packaging will be a consideration for sustainability-sensitive consumers in 2022. “If something with a lot of packaging arrives on your doorstep every week, consumers are going to notice, even if it’s recyclable,” says Ellett. “These businesses need to get ahead and make sure that packaging is minimised.”
Changing working patterns will be another challenge for fresh food boxes, says Ellett. A return to normality means less consistency, with more spontaneous nights out or late nights at work. “People will be less planned in their consumption and may feel the pressure of regular boxes,” she says. “These businesses need to think about how they can flex to that behaviour.”
Hobbies and experiences
Hobby and craft boxes also surged in popularity during the pandemic. Caroline Haegeman and her partner Jai set up Box 42 in May 2020 as the ultimate “date night in”. With venues and restaurants shut, there was a gap in the market, she says: “We’d watched every movie and cooked each other dinner 500 times and needed something else to do. We realised that other couples must feel like this too, and people would enjoy the convenience of a regular date night sent to them with no planning involved.”
Such boxes have allowed people to find new hobbies within the privacy of their own homes, says Ellett, as a life-drawing class or a shared pottery wheel might feel intimidating to an amateur. “People were happy to experiment with things they wouldn’t necessarily do outside,” she says. “It was a great way to explore in the safety of your own environment.”
Box 42 delivers monthly themed boxes, ranging from murder mysteries to pottery evenings. The pair have done everything themselves, from product sourcing to shipping and marketing, putting in £1,000 to get the venture off the ground and reinvesting profits as they’ve gone along. The start-up has since grown sales by 300 per cent, and is now selling 2,000 boxes a month with 500 regular subscribers.
At £32 per month, Haegeman says the products are intended to be reused and have been sourced from local businesses rather than retail giants such as Amazon. All the packaging is either biodegradable, compostable or recyclable, which also increases the price point. “This is a shift we’re seeing in a lot of companies,” says Haegeman. “There is more customer sensitivity to sustainability and quality.”
She thinks that hobby boxes helped to fill the gap in immersive real-life experiences created by the pandemic but is nervous about a potential dip in popularity now that things have fully reopened and says they have started tailoring for regular subscribers rather than the broader approach they took at the start. “People now have more appreciation of a nice night in, and I don’t think that will go away,” she says. “But we need to look in detail at who our subscribers are through market research and customer service channels. One big challenge for any small business is the need to constantly re-evaluate how you do things.”
People’s reignited interest in personal projects is unlikely to change, adds Ellett – but Box 42’s tailored approach is crucial for success. “I think people have re-fallen back in love with creativity, whether that’s craft or cooking, and they will continue to advocate for it,” she says. “[Subscription services] are already data-driven so they need to use that to focus on metrics like order frequency, average order cost and preference.”
The pursuit for mindfulness
In people’s pursuit for “mindful” or solo activities, reading became a much more popular hobby while people were confined to their homes, with sales of fiction books growing by more than £100m – 16 per cent – during lockdown despite bookstores being shut.
A Box Of Stories was set up by Aasha Chauhan in 2018 to stop lesser-known books being destined for destruction due to a lack of sales – millions of items, including books, are thrown away each year by Amazon and other retailers.
The subscription service is “rated by lovers and curated by code”, says Chauhan – data analysis is used to sift through thousands of online reader reviews to curate boxes with the least-known but highest-rated books. This helps it compete with online giants and traditional bookstores, which tend to highlight “top-of-shelf bestsellers”, she says.
The start-up grew its subscribers by 3,000 per cent during the pandemic, when bookstores and libraries were closed and online retailers focused on delivering essential goods. “By default, it was the book subscription businesses that were lean enough to continue supplying to book lovers,” says Chauhan. “They could source and deliver. Users benefit from the ease of online purchasing while challenging themselves beyond their usual reading habits.”
For a subscription to be successful, entrepreneurs should pick a sector where customers want “frequent refurbishing” and “regularly consume” the product, she adds – hence why recipe boxes are also popular. “Focus on retaining customers more than acquiring new ones because that will tell you a lot about the long-term feasibility of your idea.”
The self-care trend
Natalie James set up Tingle as a solution for those who were not able to buy beauty products during lockdown. As the brand has grown, she has changed direction to self-care and wellness.
James funded the venture herself through an initial £300, selling 200 boxes in her first month and has since gone on to ship worldwide to more than 1,000 monthly subscribers. Tingle’s success can be put down to its affordability – £10 per month – and contacts made through her main job in public relations (PR), helping her source subsidised products and compete with bigger players like Birchbox.
To thrive, she says that small businesses need to keep up with changing trends, competition and expand into new products; James recently launched limited edition Christmas and Black Friday boxes, and has listed subscriptions on partner websites such as Virgin Media Days.
As a first-time entrepreneur, she used virtual networking platforms like Clubhouse for advice from other business owners, and says she feels the government should have a clear, simple forum for financial and business advice, adding that she witnessed many entrepreneurs turning to social media for guidance instead. “This information is not necessarily accurate,” she says. “Hearing it first-hand from the government would have been a big help.”
The future of the market
Subscriptions have evolved – originally associated with mundane monthly outgoings such as phone bills, the market has been reinvigorated, fuelled by streaming services such as Netflix and the online shopping boom. Treating yourself is no longer a one-off but a commitment.
But as the pressures of rising rent and energy bills set in, they could be considered an unnecessary luxury and will need to position themselves as vital, says Ellett, whether that’s through wellness, sustainability or value for money. An empathetic customer approach will also be crucial, with clear instructions for cancellation and being mindful of individuals’ financial health.
Most importantly, they will need to adapt. As we settle into a hybrid mix of socialising and domesticity, in order to thrive, subscription businesses will need to offer something not only more desirable than traditional retail, but more flexible.