You may know subscription services more from your streaming account or perhaps from beauty or personal care, but retailers across many categories are increasingly embracing the concept as a way to generate repeat business.
Writing in a recent analysis for The Robin Report business newsletter about what he calls “the subscription economy,” journalist Arick Wierson cites a study by C+R Research, reporting that Americans spend an average of $219 per month on subscription services. Subscriptions accounted for $650 billion in 2020, with UBS estimating that the entire subscription economy will skyrocket to $1.5 trillion by 2025.
He provided ten ways businesses, including retailers, can get into that subscription economy
Retailers can offer subscription services that go beyond tangible products, providing customers with unique experiences, events, or access to exclusive perks. Disney is one company doing this through its Disney+ program.
Retailers can introduce subscription services with ongoing benefits like free shipping and returns, exclusive discounts and personalized recommendations. The key is to go beyond the basic product delivery model. Amazon Prime is the best example.
Offering subscriptions for individual products consumers regularly use guarantees a consistent revenue stream for retailers while providing convenience for customers. Dollar Shave Club uses this model.
Retailers can bundle exclusive content or premium services with products, creating a more immersive and valuable subscription experience, including sampling. Glossybox’s beauty program is a good example.
Integrating subscription-like features into loyalty programs adds value for customers, fostering trust and generating recurring revenue for retailers. Starbucks Rewards uses this technique.
Exploring rental subscriptions for temporary needs, like fashion items, tools or electronics, provides sustainable and cost-effective alternatives for consumers. Rent the Runway makes this one work.
Leveraging subscription models to provide personalized experiences, such as curated product recommendations, enhances customer satisfaction and loyalty. He cites Stitch Fix here.
Adopting subscription-based models for software services enables retailers to stay digitally relevant and meet evolving customer needs. Adobe Creative Cloud offers this service.
Encouraging customers to join auto-replenishment programs ensures a steady stream of revenue. Nespresso has made this a foundation of its business.
Joining forces with other brands or service providers to create joint subscription offerings broadens the subscription appeal and provides customers with comprehensive packages. Apple One bundles multiple services under one umbrella.
Not every retailer can take advantage of the subscription service model but it does offer great potential for those who can.