2013.35 | subscription retail

closet-sciSubscriptions represent both a valuable service to consumers as well as a valuable retail sales opportunity.

Instead of selling a single item with a single sale, subscriptions allow for an ongoing revenue stream from that same sales effort.  Amazon has offered Subscribe and Save for regularly consumed items like toothpaste, cereal, razor blades, and diapers for some time.  Combined with Amazon Prime with its unlimited free shipping, Amazon presents a formidable offering of ease of purchase and the convenience of not having to buy staples on an ongoing basis.

While these subscription offers were primarily a concern for food and drug retailers in the past, subscription services for specialty and apparel items are becoming increasingly common. Here are just a few representative offerings:

Bonobos recently released Closet Science.  Prospective clients receive an email with a link to an entertaining questionnaire about their lifestyles that drive a style profile.  Based on the established profile and opting in to price range options, customers are AUTOMATICALLY sent a new outfit of shirt and pants each month.

Manpacks exists to allow men to avoid the oft ignored ritual of purchasing new socks and underwear on a regular basis.  Users register online with their preferences and receive regularly scheduled shipments of socks, underwear and other personal sundries.

hunt-club

Birchbox is a product discovery service that provides a monthly subscription service of cosmetic and other samples to registered users.    The service costs $10 for women and $20 for men.  Users can opt in to purchase items based on their favourite discoveries from the subscription service. (thanks Greg!)

Frank & Oak offers the Hunt Club.  Join and you get a “crate” every month of three items try.  Clients select their items by a certain date each month and the items that are sent to them in their crate.  Clients can buy them or send them back if they don’t work out.

This business structure is both a threat and an opportunity for retailers with actual stores. With the right infrastructure in place, competitive challenges like this can be addressed swiftly and advantages that online retailers do not have can be leveraged. Some strategies to address subscriptions include:

  • In low velocity and interactive retail sales areas of stores, enable simple subscriptions for items such as cosmetics. These offers can be enabled with currently available Offer Management solutions by enabling either a recurring offer or associate message for specific types of items once they have been purchased once. Ensure that the customer can opt out, and cashiers can note the client preference if they do not want an ongoing reminder or purchase. Retailers with both online and store presence could enable an automatic online shipping order
  • Let store staff provide the human touch to transactions by leveraging a clienteling solution to make recommendations to suit customer taste. Leverage current web based implementations of wish lists, social media, and web based recommendation engines on associate tablets. Web sites have to guess what consumers want, but your people can suggest and verify with them in real time.
  • Sizing is so important and a tremendous challenge for apparel. A great deal of profit in online retailing is lost to free returns as consumers uncertain of the right size for their frame enter online orders with multiple sizes of the same items and return non-fitting items at no charge. Leverage store staff knowledge of product to help clients get the right fit in store and help them translate fit to other lines or seasons of products. Clients could visit the store to try on their monthly outfit to ensure it fits and adjust their order in stores as needed if the fit or drape is not right. Capture information on sizes for clients and on product types and update the clients’ profile for future notice.
  • Enable simple checkouts on tablets – allow untethering from checkstands to talk to clients on the store floor. No scanning is necessary with the right solution, and a credit card on file from the website could be used to process charges. It’s important to emulate the simple transactions enacted on websites with the press of a button as much as possible to remove any friction from transactions.
  • Establish subscription services that provide the best of both online and store environments. Department stores are not limited by brands or products and could offer an array of subscription services by segments with clubs for each. Specialty retailers could offer in-store pickup of a monthly package or in store return for items that don’t suit.
  • Ensure that customer data is gathered centrally and made available for use by all stores, departments and organizations. That data is not just about marketing. It’s not just for eCommerce. The data needs to be accessible by operational store systems at every client and associate touchpoint so that it can be used to sell. With a central repository of information, all parts of the organization can be responsive to clients and corporate marketing initiatives by changing operational touchpoints, sales efforts and more for this challenge, but for all future competitive challenges. Consider a very simple example. With subscription based services in place with thousands of customers opted in, buyers could get a new perspective on how much of certain sizes to purchase based on the subscription base.

While subscriptions are certainly a threat to traditional retailers, with the right tools, and some well thought out strategy, it is possible to enable the same features that make those services so great and augment them with the best of personal interactions.  Take advantage of new trends and consumers and retailers alike reap the benefits.

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