A new study from the US University of Buffalo’s School of Management indicates that the integration of AI and the implementation of subscription services are becoming increasingly prevalent strategies among retailers aiming to bolster consumer retention and stimulate business expansion.
The survey, which analysed 1,800 shoppers in the autumn of 2024, reveals that consumers who combine their shopping habits between digital platforms and physical stores are the predominant subscribers to these services.
Amazon Prime dominates this space, with two-thirds of this segment subscribing to its offerings.
Walmart's subscription service trails with just over a quarter of market penetration. Memberships at bulk sale clubs remain robust, capturing slightly more than half of the segment.
The research, entitled Subscribing to the Hype: AI in Retail, was authored by Dinesh Gauri, Melvin H Baker professor of marketing and faculty director of the Centre for Marketing Analysis in the School of Management.
Gauri stated: “Subscriptions are no longer just about free shipping or occasional discounts — they’re now a key tool for building lasting customer relationships.”
The study also shows that AI-powered tools, such as personalised shopping lists, smart carts, virtual try-on and tailored promotions, are reshaping the subscription experience.
Among the most notable adopters of these tools are parents, particularly those with young children.
55% of parents use AI to create shopping lists, compared to just 8% of non-parents.
“Retailers that leverage AI to create seamless, cross-channel experiences and hyper-personalised value will have the edge in this highly competitive market,” Gauri added.
To stay competitive, the report suggests that Walmart+ should focus on strengthening its online grocery offerings, while Amazon Prime should continue enhancing its cross-channel convenience.
As subscription services become more widespread, the study warns of the growing issue of subscription fatigue. It suggests retailers must work to continually demonstrate value to keep customers engaged and prevent churn.
With generative AI technologies continuing to evolve, their integration into subscription services is expected to further redefine how retailers engage with customers and build loyalty in the future.
