Consumer services have experienced strong growth over the last few years and, besides travel and leisure, have been further supported by changing consumer trends during the pandemic.
While consumers have not been able to spend on travel and local activities (e.g. bars and restaurants), the overarching preferences for experiences over products have remained, resulting in strong tailwinds for businesses that create or improve at-home experiences for consumers. However, it remains to be seen, which businesses that grew strongly during the pandemic will manage to sustain their strong performance and potentially accelerate it with PE investment.
Convenience trend is here to stay, enabled by busy lifestyles, higher incomes, and urbanisation. This is driving increased uptake of subscriptions that make our everyday lives easier, ranging from food and drink (ingredients, meal kits, and cooked meals), to beauty and personal care, household staples, pet food, plants, printer cartridges, as well as entertainment (music, video, gaming), education and home services (e.g., servicing for home appliances) and many others.
Subscription based models further benefit from consumer desire for variety, with consumers being willing to pay a premium for a curated selection from a trusted brand. A number of business capitalising on this trend have emerged, offering either products (e.g., Virgin Wines, Beer Hawk, Birchbox) or services (e.g. fitness apps such as Down Dog, Fitness+); however, it is still unclear which of these businesses will develop a loyal and stable customer base that will sustain long-term growth, and which will experience customer churn once the novelty of the service wears off.
Another area of strong growth in consumer services has been businesses that aim to improve the shopping experience for consumers across both products and services. As the number of options for any given product category have continued to increase, the importance of businesses that provide reliable information (e.g., reviews, suggestions, price comparison) has also increased. The increasing number of options that consumers consider has been further supported by services that make purchases more affordable (e.g., Klarna, Laybuy, Clearpay) by enabling customers to spread out the total cost, enabling consumers to purchase products that previously they might not have considered due to the high sticker price.
Fairgrove team has experience of the following sub-sectors within Consumer Services in both the UK and internationally:
- Comparison Websites (e.g. Price Comparison, Product Reviews)
- Home Services (e.g. Boiler Services, Removal Services)
- Subscription Boxes (e.g. Skincare and Cosmetics)
- Platforms (e.g. Transportation, Events)
- Education (e.g. Languages, Driver Education)
- Funerals (e.g. Pre-Paid Plans, Low Cost Options)
- Accommodation (e.g. Hotels)
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