Consumers turn to sign-up products to better manage finances as cost-of-living increases

By Gaia Lamperti

Despite a dip in consumer spending on subscriptions overall, two-thirds of Brits remain signed up to at least one digital or direct-to-door service and increasingly use subscriptions to manage their finances as cost-of-living rises.

The third annual study from UK-based Barclaycard Payments, a POS solution provider, found that two-thirds (67%) of British consumers remain signed up to at least one product, and almost 35% cited them as an important tool to help manage finances, particularly referring to value for money and convenience as the most appealing subscriber benefits.

The ‘subscription economy’ buzz grew during the pandemic and the impact it continued to have on consumer spending during an inflation period sheds light on how demand for sign-up products and services is evolving.

While proprietary Barclaycard data shows spending on subscriptions declined 4.2% in June 2022 when compared to May 2022; almost four in 10 Brits believe subscriptions offer good value for money, and 37% feel they help them to be more organised.

Three-fifths of Brits say they are signed up to subscriptions for exclusive access to content. Meanwhile, 45% believe subscriptions offer a personalised experience. Other benefits appealing to shoppers include the ability to try new items which they may not normally purchase, convenience and reassurance that key products will be delivered regularly.

Flexibility and convenience

As the cost of living continues to rise, almost four in 10 (38%) consumers cited good value as the most important factor when signing up to new subscriptions, followed by a free trial (32 per cent), free delivery (27%) and flexible contracts (21%).

Barclaycard Payments found that the average UK household spends £41.70 a month on subscription services, compared with an average of £51.65 in 2021, and £45.50 in 2020.

Despite consumers cutting back on non-essential spending, analysis of subscription categories over the last three years found that most sectors are stabilising after substantial growth during the pandemic – when restrictions meant more time was spent at home.

At the same time, consumers shall also be wary of subscriptions in times of cost of life rising as they could turn out to be a main cause of unmonitored spending, with and should start to be more selective about the services they truly use.

Businesses’ response

As consumer preferences change, the research found that subscription providers are responding to the challenges of the rising cost of living in different ways. While over half (51%) of businesses offering subscriptions plan to cut prices on their products, almost as many (47%) intend to increase them due to rising inflation and supplier costs.

“As the cost of living continues to increase, we’re seeing consumers engage with subscriptions in new and smarter ways. Our data not only shows the importance consumers continue to place on subscriptions but also highlights how the benefits of recurring payments play an important role in the management of day-to-day finances,” commented Harshna Cayley, Head of Online Payments, Barclaycard Payments.

“Value for money, convenience and control will continue to be important factors for cost-conscious customers. This means to remain successful in the subscription economy, businesses need to focus on going beyond these current demands. Added extras, such as exclusive content, may no longer cut it, so providers need to ensure contracts and delivery models remain flexible too.”

Key stats:

• Two-thirds of Brits remain signed up to at least one digital or direct-to-door service, despite a dip in consumer spending on subscriptions overall
• Over a third of consumers are using subscriptions to help them manage their finances as the cost-of-living rises (34%)
• As the cost of living continues to rise, almost four in 10 (38%) consumers cited good value as the most important factor when signing up for new subscriptions, followed by a free trial (32%), free delivery (27%) and flexible contracts (21%)
• The average UK household spends £41.70 a month on subscription services, compared with an average of £51.65 in 2021, and £45.50 in 2020