Healthy snacks. Personal grooming. Eyewear. These are few of many businesses leveraging the subscription-based service model that has become such a success in recent years. Thanks to the dominance of mass Internet access and digital-word-of-mouth marketing, subscription providers can benefit from recurring revenue and order predictability, as well as a cultivation of loyalty and consumer retention.
Consumers benefit from more personalised product ranges, or simply enjoy that brands beat the paradox of choice. There’s an element of indulgence and permissible treat; the NPD group describes subscriptions as “the only way to buy a gift for yourself without knowing what the gift is going to be”.
From functional, plain black socks delivered each month (Socked) to more lifestyle-y quality men’s shaving products (Harry’s), convenience and accessibly are key.
Yet in the past few months, subscription brands – including category leaders such as Graze and Birch Box – are reverting to traditional, physical retail to drive brand awareness and diversify sales.
While subscription format delivers to-the-door convenience, modern lifestyles dictate that the majority of our waking time is spent on-the-go, so there’s demand for hyper-convenience that only brick-based retail can satisfy.
Healthy snack-box subscription, Graze, have just announced expansion into retail, with ranges sold at checkout point of sale stands in Sainsbury’s, Boots and WH Smith. In response to this shifting definition of convenience, Graze can deliver the on-the-go snacking that Millennials so demand. Shoppers can be much more impulsive, with purchase options that deliver instant gratification.
With this change in channel, comes a change in physical packaging. While plain-box packaging works for home delivery, on shelf consumers need product visibility. Graze have integrated a die-cut window that sits in harmony with their informal illustrations, marrying environment-specific functionality with brand-specific personality.
The need for immediacy is a key driver. Millennials have spent great proportions of their lives surrounded by the Internet and instantaneous access to information, so have come to expect speed and immediacy online, and more broadly in life.
Pop-up retail format is one such manifestation of how brands are meeting this desire for temporary, experiential touch-points. Online eyewear company, Warby Parker, has made it’s way onto Fortune’s Unicorn List thanks to a five stylish years in the subscription retail channel. “When we launched, we had no plans to open physical stores” says Dave Gilboa, Warby Parker co-founder & CEO.
Warby Parker now has 12 shops in the U.S., with plans to open eight more this year. “While you can easily buy Warby Parker frames without ever stepping foot into a store — and many people do — we found that many of our customers still crave a physical experience” [NPR]
The physical interaction consumers crave is clearly here to stay. Birchbox – the beauty subscription company that’s built an empire on personalised sample bottles, to prompt purchase of the product’s full-size equivalent – opened its first store in New York this spring. Founders Beauchamp and Barna confirm that while consumers do purchase full size products (30% of the company’s revenue) the majority opt to buy from physical beauty retailers such as Sephora, over ordering online via birchbox.com. “There’s still something tangible that you can’t replace, when you’re walking into a store, engaging all five senses,” Gilboa says.
That’s not to say immersive experiences can’t be delivered by post. Recently launched BIY (blend-it-yourself) make-up subscription service, Loli, aims to ‘reconnect women to the beauty ingredients and recipes that have been here for ever’. In blending the raw ingredients yourself, you have a much more tangible experience with the product, and therefore a greater connection with the brand.
For Graze to select a consumer-optimised 12-product physical retail range, from over 1,000 subscription-developed products, they relied on “half a billion pieces of customer preference data” [The Grocer]. Without their pre-existing subscription model, this retail-enhancing data would not exist.
Subscription-retail is still strong. These services continue to deliver convenience – along with great value and individual personalisation – to everyday consumers who place value in the accessibility of home delivery.
But modern, on-the-go lifestyles demand a new calibre of immersive convenience; one of anytime, anywhere spontaneity that’s not limited to subscription-only home delivery. Paired with continued demand for tangible engagement, it seems the future of subscription marketing is a well-balanced, digital-physical hybrid.