Square Data Finds Multi-Hyphenate Businesses Continue to Rise
As subscriptions grow in popularity, businesses on average see 22% of revenue come from this channel
Consumer spending has been hard to predict in recent quarters. While a much-feared recession has not yet materialized, economic uncertainty paired with inflationary pains have posed challenges to sellers. In response, businesses have realized they need more than one game plan to succeed, and have taken steps to diversify their operations.
Whether it’s wineries with tasting rooms, bookstores combined with cafes, or beauty salons selling retail items, the most successful businesses are tapping into new revenue streams to be able to better adapt and compete, both now and in the future.
Sellers across industries, size, and complexity are enlisting Square’s software to unlock and power new sales channels, all backed by one, integrated platform. To uncover how these businesses are thriving, Square analyzed tens of millions of transactions from millions of sellers on its platform across the restaurant, retail, and beauty sectors.
Subscriptions have quickly become a growth engine
Across all industries, sellers have been offering subscriptions to continually engage and bring back customers, while leveraging technology to automate recurring payments for memberships, donations, and more. Examples include restaurants bottling and selling their house sauce, wine stores selling quarterly shipments, or beauty salons offering a monthly subscription for a set number of services.
Compared to last year, 74% more sellers now offer subscriptions. Total sales from subscriptions grew 136%, outpacing seller adoption and showing the power of subscriptions as a sales driver. In Q2 2023, businesses that sold subscriptions saw approximately 22% of their revenue result from this sales channel.
“Since introducing our monthly dozen subscription box, both sales and customer satisfaction have soared, “said Ashleigh Ratchford, Owner or Ashleigh Bakes Daily in Durham, NC. “I foresee this evolving into a significant revenue pillar for my business, and I’m excited to expand options in response to growing demand.”
Subscriptions have become a reliable source of recurring revenue as more than half of subscriptions were still active after 6 months. This finding highlights consumer appetite for this approach to commerce, no matter the type of business.
Retailers bring new meaning to experiential commerce
Square’s Future of Commerce report found that 32% of retailers planned to leverage mixed-use retail experiences, such as coffee or wine bars in-store. As of the end of 2022, Square observed a 68% year-over-year (YoY) increase in retailers actively using Square for Restaurants to elevate the customer in-store experience by selling food and beverage items.
Retailers are also setting themselves apart by offering events and classes, with an 11% increase in sellers teaching their trade. Retail sales for tickets, events, and classes were also up 10% in Q2 YoY. To enable customers to book and schedule these experiences, as of the end of 2022, Square found a 16% YoY annual increase in retailers actively using Square Appointments.
Businesses within this sector have also offered items – or even their spaces – for rent in order to grow revenue. Square data found that 12% more retailers added rental items or space to their operations.
Beauty businesses create branded product lines
Following shelter-in-place measures during COVID-19, beauty and personal care sellers gained deep experience in building out new areas of their business to both survive and thrive. This industry has leaned into a number of new revenue streams, like selling merchandise, with 84% more sellers doing so when comparing Q2 2019 to Q2 2023.
Square also found that 11% of retail items sold in 2022 from beauty and personal care sellers used the business’ name, suggesting that sellers in this industry launched their own product lines using their branding.
“We launched our own product line right when we opened because as a small business and new concept wellness start-up, it was important for us to control as much as we could around the value of our business model,” said Damien Zouaoui, Co-Founder of Oakwell Beer Spa in Denver, CO. “Our retail line has been a huge hit with customers thanks to its uniqueness and its ability to help us deliver The Beer Spa experience at-home. We’re planning to expand this part of our business and even rebrand our cosmetic line and market it as a standalone brand.”
When looking at 1H 2023, beauty businesses who sold both services and retail items like shampoo and dry conditioner, versus services alone, saw 14% larger ticket sizes. When offering products for sale, clients typically added 1 to 2 retail items when checking out, ultimately driving increased cart sizes. Consistent with these findings, beauty and personal care businesses who sold both services and items, rather than just services, saw 56% more in annual sales.
As vertical lines continue to blur, beauty businesses like The Laya Center in downtown Kansas City have also built out food and beverage components to attract clients.
Restaurants serve up cooking classes and catering
Beyond offering dine-in and take-out, Square data found a 10% increase in restaurants incorporating catering services into their offerings. Similarly, catering sales grew 5%. Restaurants have also built out experiential components as 13% more food and beverage sellers offered events and classes, with a 13% increase in sales for this revenue stream.
The London Tea Merchant in St. Louis, MO not only sells teas and retail items, but has an experiential space to offer events. Peter James, Operations Manager said, “We’ve been open for more than 15 years, and over time, we’ve continued to add more elements like subscriptions and sampler boxes so that we have a little something for everyone. We then opened our sister company, The London Tea Room so we could offer in-person experiences that create memorable moments for attendees whether it’s private events, afternoon tea, or any of our themed experiences. We’ve seen notable impacts on our revenue from all of these different components since we’re better able to draw customers in.”
To extend their brand, since 2019 the number of food and beverage businesses offering merchandise like shirts or hats has doubled. Restaurants also leaned into offering retail items like cookbooks and wine packs, with a 7% increase in restaurants adding this non-core offering when comparing Q2 2023 versus 2022.
To help sellers build new revenue streams, Square is teaming up with Printful to offer the Square community exclusive benefits. This will allow Square users to start selling merchandise through Printful’s platform and take their business to the next level. Square sellers can find more information on Seller Community.
Printful is a print-on-demand company that helps people turn their ideas into brands and products. Printful fulfills and ships custom clothing, accessories, and home and living items for online and in-person businesses around the world. Printful seamlessly integrates with Square Online, further enabling sellers to easily manage their inventory and track orders all from one place for omnichannel operations.
Square offers a suite of software solutions to enable sellers to build new revenue streams like Square for Restaurants, Square for Retail, Square Appointments, Square Subscriptions, and more.
About Square
Square makes commerce and financial services easy and accessible with its integrated ecosystem of solutions. Square offers purpose-built software to run complex restaurant, retail, and professional services operations, versatile e-commerce tools, embedded financial services and banking products, buy now, pay later functionality through Afterpay, staff management and payroll capabilities, and much more – all of which work together to save sellers time and effort. Millions of sellers across the globe trust Square to power their business and help them thrive in the economy. For more information, visit www.squareup.com.
Methodology
Square analyzed sales in the restaurant, retail, and beauty sectors in the second quarter of 2023 in the US. All monetary metrics are displayed in USD. Unless specified, sales growth metrics refer to the change in number of transactions. All data presented are unaudited and subject to adjustment.