By all economic standards, 2022 was not a good year for consumers. The price of life skyrocketed beyond the point of belief and people in all brackets were left struggling with growing levels of debt and a yearning to maintain their lifestyles – hence the debt.
Mishaan Ratan, co-founder of on-demand subscriptions platform Rentoza, believes 2023 will be the year that subscription provides a light at the end of the tunnel for consumers.
Of course, nobody can be blamed for the macroeconomic storm that set us all adrift on our financial journeys, but it made consumers question the system they had all been embroiled in for far too long.
The South African Reserve Bank’s most recent quarterly bulletin revealed that the debt burden in this country is continuing to rise. In fact, it showed that household debt accounts for 62,8% of disposable income in the average South African household. Yet, we continue to accrue more debt to fund the latest tech and appliances.
It is about time that we all question this incessant need to buy and own the best tech and invest in appliances that not only put us out of pocket or deeper in debt but can break at any moment.
This is a trend that has been felt the world over, which is why new and improved ways of accessing a lifestyle are being propagated around the world, especially on e-commerce platforms. Just look at the rise of Buy now, pay later payment schemes, which has fast become the preferred payment method with younger consumers.
A recent American study by research company, PYMNTS, suggests that nearly 60% of consumers say they prefer buy now pay later over traditional credit options. While this trend is interesting and challenges the status quo, it still leaves us all indebted and burdened with the price of ownership.
Yet, if you look at software and streaming services, you’ll find that ownership is almost a thing of the past. People no longer horde collections of DVDs or go to their local electronics store to buy Microsoft Office. No. They subscribe to Netflix or Office365 and pay monthly fee that grants them access to these products and services in perpetuity. This is now the norm and consumers wouldn’t have it any other way.
Software as a service has experienced incredible growth over the last year, as have streaming services experienced and influx of subscribers. Over the last year, the same upward trend is happening for physical goods like mobile phones and appliances which is evidenced by tech giant Apple announcing that it was also developing its own hardware subscription model in March 2022.
At Rentoza, we have experienced rapid growth year on year with 70% of our subscriber base accessing the smartphone they could never afford otherwise. Second to this are fridges, which have become our most popular appliance subscription choices.
In 2023, we see the growth in subscriptions increasing. the word is getting out about subscriptions as a superior method of consumption across South Africa and other emerging markets.
But in South Africa, 2023 will no doubt see another product set explored by consumers which will bolster the tangibility of subscription models – one born from pure necessity. Load shedding is set to be with us for most of 2023, and consumers are eager to get off the grid.
This has given rise to solar subscription services that allow homeowners to pay a subscription for solar electricity without the need to invest their lifesavings to buy and install it. This sector of the subscription market is in for a good year as energy solutions are made more accessible for more South Africans through the magic of subscription.
Energy crisis aside, the economic decline felt by all consumers has, and will continue to, decrease access to the lifestyle many of us are accustomed to and yearn for. Access and affordability are the doorways to subscription as it generally circumvents traditional banking and credit structures that act as a barrier for consumers. Subscription is giving people options and 2023 will be a year where those options will be widely appreciated.