Fill ‘Er Up: Will the Refill Economy Be the Sequel to the ‘Buy Local’ Movement?

refill economy

Amid rising prices, refill commerce is taking over, offering consumers discounts while securing sales for brands.

Consumers are looking for options to save, while retailers are looking to retain shoppers’ loyalty. That is where subscriptions come into play. Take, for instance, Amazon’s Subscribe & Save, which promises up to 15% off items when consumers enroll in scheduled, automatic deliveries of eligible products.

Taking a tip from the eCommerce giant, direct-to-consumer (D2C) brands have been offering the same, driving frequency by offering discounts for subscribing.

In an interview with PYMNTS, Adam Deremo, founder and CEO of caffeinated chocolate brand Awake, said the company “started focusing on [subscriptions] this year” on its D2C site.

“We've actually grown our subscriber group almost 3X this year,” Deremo said. “That said, we were starting from a really low place, but I’m quite encouraged at how that’s going.”

This kind of increased focus on regular replenishing spells bad news for traditional retailers, given that it remains for now largely the purview of eCommerce players, though a small handful of have tried their own takes on the model, especially across the pond.

In October, German discount retailer chain Lidl rolled out refill stations in three U.K. stores where customers can bring their empty laundry detergent bottles and pouches for a top-up, offering a discount of £0.20. Other retailers in the U.K., including Aldi, Asda, Marks and Spencer, Morrisons, and Waitrose are all piloting various versions of dry goods food refills.

In a recent look-ahead prediction post, PYMNTS’ CEO Karen Webster went as far as saying the burgeoning refill economy could be among this year’s top trends. As it stands, billions of prescription are already being refilled each year, and consumers are increasingly comfotable and accustomed to recurring purchasing models, and businesses are taking advantage of this to build loyalty.

“Innovators using APIs and payments technology can now turn any consumer product in the medicine cabinet, kitchen pantry, refrigerator, mud room, garage, shed or basement into an auto-refill — including the items of clothing and accessories that consumers frequently refresh,” Webster wrote. “The refill economy will cause traditional retail to suffer death by a thousand cuts, particularly the department and grocery stores that are already under attack.”

She highlighted PYMNTS research finding that nearly 1 in 4 consumers has shifted to purchasing items they used to get at the grocery store from another provider, and the nearly 10% of U.S. consumers who participate in Subscribe & Save are a testament to that shift.

This subscription option could soon be made available to brands off of Amazon’s website as well, further compromising traditional retailers, given the way the eCommerce giant has been expanding its technology. The company announced Tuesday (Jan. 10) that it is is opening its invite-only Buy With Prime program to a much wider merchant pool, making it available to all eligible U.S. merchants. From there, it is not difficult to imagine Amazon extending the Subscribe & Save option as well.

Indeed, recurring payments by offering discounts are especially appealing to consumers right now, with inflation prompting consumers to seek out cost-saving opportunities. Findings from PYMNTS’ recent study, “Consumer Inflation Sentiment: Perception Is Reality,” notes that 69% of consumers have altered their grocery shopping lists based on inflation.

It is not only grocers — other kinds of traditional retailers could also suffer from the shift to refill- and recurring-payments-based models. Take, for instance, the pharmacy. Research from PYMNTS’ recent study, “The Instant Payments Transformation Guide: Grocery, Pharmacy And Convenience Retailers,” created in collaboration with ACI Worldwide, which draws from a survey of 300 U.S. and U.K. retailers, notes that pharmacies may struggle to compete with the convenience offered by digitally native newcomers.

“Mobile-only online pharmacies present a significant challenge to in-store retailers on several levels,” the report notes. “Mobile-only pharmacies also may allow consumers to subscribe to delivery services where a batch of prescribed medications can be delivered regularly, or delivery can be a one-off experience.”

Moreover, recurring models are catching on not just when it comes to products but also services. In an interview with Webster for the J.P. Morgan Payments Global Innovators in Payments Series, Jobber Payments and FinTech Lead Ryan Robertson spoke to the potential of recurring models to drive growth for service providers when it comes to scheduling.

“A really good example of that as we often see is in commercial cleaning or reoccurring lawn care seasonally,” he said. “Those are things we can set up. Those are recurring jobs with attached recurring invoices that get sent out. Going back to the conversation around working capital, it’s predictability.”