Large brands and retailers expand the subscription economy
The subscription economy continues to grow and innovate. Many people peg its growth to huge subscription-based digital businesses like Netflix, Spotify and Adobe. However, the subscription retail space is also evolving at a rapid pace. The most common retail companies referenced are:
- Original disruptors like Birchbox, LootCrate and Dollar Shave Club;
- Recent innovators like Stitch Fix, IPSY and Blue Apron;
- Media companies like Popsugar and Allure;
- Amazon with Prime, Wardrobe and its subscription section, which started as digital-only and will now expand to physical boxes.
Another trend, however, is emerging under the radar — the launching of subscription programs from large brands and omnichannel retailers. Adidas, Sephora, Gap and Under Armour are joining the game along with existing beauty and sample subscription programs from Walmart, Target and Amazon.
Adidas with its Avenue A program targets a growing niche for female athletes with a quarterly curated box of higher end products, ranging from shoes to apparel. The Play by Sephora box is a beauty assortment, similar to Birchbox and IPSY, that has an additional goal of driving subscribers to exclusive in-store and digital experiences as a membership benefit.
Gap is now starting to promote a customized and curated subscription program it launched quietly earlier this year for baby apparel, with curation that grows with the baby. Under Armour is positioning its ArmourBox as having “exactly what you need to perform better, look better, feel better. All in one box.”
What is driving these new subscription initiatives? The promise of recurring revenue and an ongoing connection to the consumer are obvious motivations. Brands and retailers also have an incentive as public companies to show the Street that they are part of the recurring revenue financial world. In the era of Amazon retail dominance, a subscription channel can do even more in creating a real sense of community and belonging that is missing across much of retail.
- Gap Quietly Launches Outfit Boxes for Babies – Internet Retailer
- Under Armour launches ArmourBox subscription service – Retail Dive
- Subscription Businesses Are Exploding With Growth – Forbes
- Should all retailers offer subscription services? – RetailWire
DISSCUSSION QUESTIONS: What do you see as the key motivators for large retailers and brands launching subscription channels? Which of those currently available do you think has the best chance of long-term success and why?