(Bloomberg) -- British consumers are spending less on subscription services as the cost of living crisis and the end of coronavirus lockdowns make people more cautious about non-essentials.
Barclaycard, which processes a third of the credit and debit card payments in the UK, said revenue for services like entertainment streaming and grooming kits fell 5.7% in May from a year ago.
The figures suggest that the golden age of subscriptions, which took off when consumers were told to stay at home during the pandemic, has given way to concerns about rising inflation and the cost of everyday goods.
“Many consumers are re-evaluating their discretionary spending and cutting back on some products and services they no longer deem essential.” said Kirsty Morris, managing director of Barclaycard Payments.
About 7-in-10 consumers have become more selective about their spending, trimming entertainment, beauty and grooming services. About 36% of those surveyed said they cancelled at least one service to cut fat from their budget.
Netflix Inc. said last month that it had laid off another 300 employees as the streaming giant seeks to bring costs under control amid uneven subscriber growth. Netflix is retooling its operations after the departure of 200,000 subscribers during the first quarter.
In spite of this, subscriptions retain their appeal for many people, who cite convenience, flexible payment structures and value as reasons to buy. Most companies that offer subscriptions expect growth in the coming years, Barclaycard said.
The report said 47% of companies are set to increase their subscription cost while 51% will offer them at a cheaper rate to plug their leaking consumer base. Also, 61% will launch more affordable subscription plans.
“Retailers adapted quickly during the pandemic,” said Morris. “Those which continue to evolve their subscription offering respond to this new set of challenges will be best placed to benefit from increased consumer loyalty and satisfaction.”
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