The retail gift that keeps on giving: subscription services

  • Opinion
  • March 14, 2016
  • Juanita Neville-Te Rito
The retail gift that keeps on giving: subscription services
New Zealand based subscription service, My Food Bag.

In last week’s blog I covered off at a high level of what I believe are the top five trends to impact retail in 2016. Over the coming few blogs, I’ll dive deeper into the retailers who are delivering on these trends in many and varied ways. Indeed, they usually exemplify all 5 trends and that is why their retail experience and offer is relevant, engaging, seamless and inspiring.  

First up is retail subscription services, which can be a powerful offerings marrying together all of the key trends. From Dollar Shave Club and closer to home, My Food Bag, to the biggies of Amazon Prime and Netflix, it is proven that a compelling product and outstanding customer service can result in an amazing business proposition.

I often hear retailers saying, "If only I could figure out how to make a part of my offer subscription based, I wouldn’t have to work so hard as I would have a dedicated base of customers.”

However, the good things are usually balanced by the not quite so good.  Subscription services give shoppers a taste of something new and different, often tapping into an unmet need. However, if the product doesn’t ultimately cater to that, the appeal wears off. For me that was My Food Bag which, at the time, had no gluten free offer.

Subscription offers start with a bang and rise on a rapid wave of shoppers who are eager to try new things. After a while, interest wanes as customers realise they don’t actually need the new thing, or their life has not been improved. A massive sustained effort is required by the retailer to figure out how to reactivate lapsed shoppers and find new ones. Innovation and newness are key for evolution.

Vigga – what if clothes could grow with your child?

I was delighted to hear from the founder of Danish brand Vigga at The Big Show who not only embraces many of the key trends in their offer but is also one of the hottest subscription service ideas in the world.

Vigga offers parents the opportunity to dress their kids in high quality, recycled designer clothing, made from sustainable materials, at the cost of only DKK 359 per month (US$52).

The start-up was founded by Vigga Svensson and was based on her values system and belief that we can take better care of our planet by sharing with each other and recycling as much as possible.

She started out as clothing retailer for eco-friendly kidswear, but realised she wasn’t solving the real problem, which is that using clothes only a few times incurs huge costs and resources. And if you have kids, you know just how quickly they grow between the ages of 0-2 and how much life these garments can have beyond your child.

The subscription model ensures that outgrown clothes are reused in an eco-friendly manner.

Image: Vigga

Vigga’s clothing is produced in high quality cotton, in close collaboration with GOTS (the Global Organic Textile Standard) and are original. According to Ebbletoft Group, which recently awarded Vigga with an innovation award, “With the aim of ‘closing the loop’, the brand keeps to a zero waste policy, with the idea that the clothes recirculate while remaining attractive and in good condition, thus the focus on high-quality cotton. Garments are always checked for faults and washed at eco-certified laundries when changing owners. Users are advised to handle the clothes in an eco-friendly fashion as well. Finally, when items are worn out, they are sent to recycling.” 

The collections are adaptable to suit children’s growth, with trousers and sleeves that can be rolled up or down and necklines that can accommodate various head sizes.

This clever, earth-friendly concept offers parents a whole new way to consume and provides a high-end experience that brings the sustainable circular economy up to the next level. Vigga has ambitions to grow globally and I hope they achieve that goal.

Peloton Cycle – the first and only cycling studio streaming live into your home

Now this is so very, very cool and something which would be embraced in many corners of the world. In my youth (well, pre-children) I used to be one of the Lycra clad pack of Auckland cyclists. If you understand Auckland weather and traffic, this can be a less than an enjoyable experience, but a step up from the tedium of cycling alone at home.

I discovered spin classes post-kids which were great, but the timetable never really suited me. Enter Peloton Cycle, a well-taught cycling class with trained instructors pushing you hard, in a group environment but in the comfort of your own home.

Founder John Foley developed this experience, available to riders anywhere through a touchscreen tablet mounted on a bike. Choosing from an on-demand service or a live streamed class you can see the instructor, hear the students in the room, ride to the music and monitor your performance. The leader board keeps you pumped to work harder.

Getting a signature Peloton bike will set you back $1995 (US) and a monthly subscription fee for on-demand content is $39/month. On top of that you can buy packs of classes that start with a first pack ride of $20 for new riders ($30 on-off ongoing) up to 20 pack at $650.

If you think about the sheer numbers of people who are moving towards riding a bike as a low-impact workout, then this is gold.

The glitter and the glamour

There’s a bunch of pluses to subscription experiences. They can drive frequency of use and hence increase consumption, versus having to source from a bricks and mortar environment.

Being part of a “club” builds a wonderful sense of community and can increase a shoppers’ stickiness and advocacy, which is invaluable. Getting packages and engaging in the process builds anticipation and can make a shopper feel really, really special.

The best of these ventures tap into unmet needs whether it be convenience, exclusivity, being elitist, conscious consumerism, whatever.

So you think you’ve got the next ground-breaking product or service just ripe for the market? I picked up these 3 questions to use as a litmus test to determine if you are going to be the next Nespresso pods.

1. What kinds of products are ripe for change? In addition to existing categories such as nappies, what’s for dinner tonight, razors, what emerging product areas can adapt the disintermediation model? Any product that can support an experience that replaces the in store experience through a different channel has potential.

2. Why and how shoppers are choosing you? Through online surveys, social media, apps and loyalty programme data, you can tap into and assess why your best customers choose your product. Ongoing research can help you track how consumers purchase the products over time to identify the potential of other delivery methods. Don’t assume that an online channel is suitable for all categories. Shoppers are likely to grab their golf balls when checking out golf clubs.

3. What’s the real opportunity here?  So your insights are telling you your idea/product can be used to create a new service delivery approach. Great. But if I can get the products I want with the same quality experience from a retailer I already shop with, why would I switch to a new, unknown product or service?

Be clear on what the purchase process is and probe whether it needs to be reassessed each time it’s purchased.  (If so, it’s unlikely to be a fruitful opportunity). Timing is crucial (I can’t solve that one for you).

But if it passes those two qualifiers and if no one is, then perhaps you should.


This was republished from the Hotfoot blog, Retail Geek.

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