AI-driven subscription models reshape retail landscape: Study

“Subscriptions are no longer just about free shipping or occasional discounts — they’re a powerful tool for creating a continuous relationship with consumers,” said the study’s author, Dinesh Gauri, Melvin H Baker professor of marketing and faculty director of the centre for marketing analysis in the School of Management.

Gauri surveyed nearly 1,800 shoppers last fall as research for his study, ‘Subscribing to the Hype: AI in Retail.’

The study revealed, among other things, that hybrid shoppers — those who divide their purchases between online and in-store channels — are the most active users of subscription services, with Amazon Prime leading the market at 66 per cent penetration. Walmart+ follows at 26 per cent, while wholesale club memberships maintain a solid foothold at 56 per cent.

The report highlights how AI-powered tools are revolutionising subscription services through such features as personalised shopping lists, smart carts, virtual try-ons and tailored promotions.

Busy parents, particularly those with young children, emerged as significant adopters of AI tools, with 55 per cent using AI to create shopping lists compared to just 8 per cent of non-parents.

“Retailers that leverage AI tools to deliver seamless cross-channel experiences and hyper-personalised value will be the ones to succeed in an increasingly competitive market,” Gauri added.

Walmart+ was found to resonate more strongly with in-store shoppers, while Amazon Prime excels with hybrid shoppers seeking both in-store and digital benefits. The report recommended that Walmart+ refine its online grocery offerings and that Amazon Prime continue enhancing cross-channel conveniences.

The study also found that retailers must address ‘subscription fatigue’ by continually demonstrating value.

As generative AI technologies continue to evolve, their integration into subscription services promises to redefine customer engagement and loyalty.

Fibre2Fashion News Desk (RR)