shopper

How Can Subscription Innovate Beyond the Box?

Why brick-and-mortar may have the advantage

It's not so much the convenience of a [curated] box, nowadays, but it's the appeal and excitement of what that entire package is, for the customer. And a lot of customers want that homework done for them, so to speak.

In some sense, subscription box services are like a dating service. “Let’s see how this works out,” says the customer. And the brand does its best to get to the second (and seventh) date. With the option for unlimited returns and the flexibility to pause or cancel delivery whenever they want, customers have access to more trial and less commitment. It can be a challenge for these services to sustain the customer relationship, introducing fresh concepts while maintaining the integrity of the original idea. 

No one’s written the book on subscription retail, but it’s growing fast.

It’s no flash in the pan. A McKinsey study shows the subscription market growing over 100% each year for the past five years, hitting $2.6 billion in 2016 sales by the biggest retailers.  By and large, retail subscription falls into two types of purchases. Amazon Subscribe and Save and Dollar Shave Club lead the pack as “auto-replenish” programs, leaning towards basic necessities, while beauty- or fashion-oriented brands like Ipsy and Stitch Fix focus more heavily on exploration and discovery.

This isn't to say that subscription has been entirely smooth sailing. Since its IPO last June, Blue Apron’s shares have dropped by as much as 80%—likely why they’re turning to brick-and-mortar options. They now sell certain meal kits at 17 Costco stores, and in a crowded field of subscription meal/grocery services, there appears to be some opportunity here. But this tactic by Blue Apron might have limited success in its own right, given the move by legacy grocers to start selling their own meal kits in-store.    

Even so, the strength of both auto-replenish and discovery may be that customers prefer not to be tasked with lots of decisions in a crowded retail market. They can either “set it and forget it,” so to speak, or count on retailers to do the upfront work and point them in the direction of fresh, appealing products. The same McKinsey study reveals a key preference in customer behavior: 55% of all subscriptions are curation-based.

 Nicole Leinbach Reyhle, the founder of Retail Minded, sees curation as follows:  

It's not so much the convenience of a [curated] box, nowadays, but it's the appeal and excitement of what that entire package is, for the customer. And a lot of customers want that homework done for them, so to speak. They want someone to say, "This all goes together," or "This is a great assortment of things that you could use, that complement each other." 

What if consumers subscribed to your storefronts and not just the box?  

The upfront cost for legacy retailers to launch a subscription strategy can seem daunting. But the key to competing with smaller subscription players may, in fact, be tying the subscription model directly back to the brick-and-mortar experience—which can drive further incremental sales.  

Some retailers have already found a way to fuse the two. Sephora’s “PLAY!” subscription goes well beyond the box to offer more than just curated items and beauty samples. Members also get access to one-on-one tutorials in a physical store as well as online how-tos for items they’ve purchased. Store associates themselves can be an influential force in the opening and personalizing of new subscriptions.   

Longtime subscription player Birchbox has gone “from boxes to bricks,” newly launching physical stores in New York, Paris, and London. Their London store, in particular, is being used as an opportunity to test display strategies more closely aligned with online habits, with items arranged by product type instead of by brand. Visitors to the store can touch and trial items in-person, of course, but then “pic-n-mix” assorted products and assemble their own box. This real-time experience, in turn, helps inform ongoing subscription boxes.  

Can tech give your store the same excitement as a curated box?

Curation is clearly one of the main disruptive forces that subscription provides. But so is discovery, which is something that can be paid through in full with brick-and-mortar. The tactile, exploratory, in-the-moment aspect of the store can give added life to existing subscriptions and help attract new sign-ups. With the help of AI, the in-store environment can also offer more personalized recommendations for customers based on data gathered from their subscriptions—both in the form of a self-serve kiosk or mobile app AND advice from sales associates.

While not yet connected to a subscription service, SuitSupply empowers its associates to know who customers are the moment they enter the store. Customers can peruse and buy suits on their smartphones and also enter video chats with a stylist. When they set foot in a store, their mobile device syncs with tablets that give associates all the info they need.  

Even if a retailer isn’t inclined to run a subscription model, they will benefit from rethinking the store layout to mirror online buying habits and enable customers to pull together complementary products. Are subscription best-sellers given high visibility, for example? Is in-store inventory laid out in such a way that customers are led toward trying new items? Are associates equipped to give users an experience that reflects who customers are?

In effect, the store can be seen as a more powerful means of curation, regularly evolving to show customers that the retailer is looking out for their best interests. Brick-and-mortar can also scale in a way that boxes can’t, using the space to audition new items without having to ship and giving customers an even more personalized array of selections.

The new mantra for 2019? Sign up for the store, not the box.

Click the button below to stay up-to-date on The Next Brick and the future of Your Shopper. 

Subscribe

Updated Jan 10, 2019 | Originally published April 2018

Popular

Millennials Have the Most Buying Power of Any Generation

Watch this video to learn how to reach Millennials, and why the store matters..

AI: Bringing Your Most Profitable Bees to the Hive

Pulling in quality, not just quantity.
Nicole Reyhle’s FREE Webinar: How to Build Your  Customer’s Ideal Journey. Register now.

Share this article via

   

Add Comment

Most Recent Articles

store

Your Store May Be Scaring Off Millennial Customers

Settle for the Old Tricks At Your Peril
shopper

How to "Out-Amazon" Amazon: Product Reviews and Development

Next Gen ways to reflect reviews across your storefronts Amazon may set the gold standard in online product reviews,..