The rise and rise of subscriptions.

Each week, we’ll distill industry and expert intel on a particular topic.

There’s no doubt that the retail industry is experiencing a shake-up, but lockdown isn’t proving to be an obstacle for digital-first eCommerce brands. Digital-first brands are seeing a surge in demand, which is actually showing retailers that digital is a frontier that they need to conquer to stay fresh, relevant, and to survive in the new world of retail.

One of the areas of the eCommerce landscape that’s particularly interesting right now is the subscription economy. A few years ago we might have had a handful of subscriptions; magazines, gym membership, and a cable package, now we have subscriptions for everything from beauty to TV shows to food and even the clothes we wear. And it seems to be growing even more since the pandemic hit; we’ve seen the number of subscribers to current brands grow during lockdown and we’re also seeing brands pivot their offering to include a subscription offering.

So what’s the deal with this relatively new way of buying online and has this changed during lockdown?

Value and convenience.

Consumers are attracted to the subscription model because it gives them unique goods at low prices. Take Beauty Pie, dubbed the ‘Netflix for Makeup’, they’re shaking up the beauty industry with a new subscription business model. Beauty Pie brings exclusive products direct to consumers without the usual extortionate prices that come with traditional advertising and branding. You simply pay a monthly subscription to have access to top-line beauty products at low prices. They’ve seen a rise in subscriptions during lockdown as people are spending more time on self-care. This is also true of other self-care brands like Harry’s who have seen a massive demand surge. According to Matt Hiscock, vice-president of the grooming brand, the changes in demand and shopping behaviour are aligned with the importance placed on daily routine and self-care during changeable times.

It’s personal.

Customers expect a more personalised approach. This will drive the need to adopt the use of artificial intelligence and new data points to understand what customers want for a more customised service. Look at Stitch fix, their model is curated for you. You simply tell them your fit and style preferences and they send you clothing straight to your door. And they’re doing incredibly well. We expect this to rise as customers are less able and inclined to go to physical retail shops, and more businesses adopt a data style model to make it personal.

Subscriptions allow more purposeful purchases.

Apart from the obvious need to turn digital, the pandemic has provided people with time to slow down, stop and reflect. We’re seeing a change in the way consumers think about purchase decisions and we’re seeing people wanting to belong to something. Hurst, an independent London-based publisher launched a new subscription scheme aimed at strengthening ties with readers, keeping connected through the crisis. They predict that this new way of engaging with customers could give their business 6 years growth in just 6 months. We’re seeing this community effect in other industries too, particularly in times of crisis people need a sense of belonging.

It’s likely that post-COVID-19 we’ll still see a rise in the subscription market, and retail brands will need to leverage their existing assets to launch an add-on service to what they already offer. Strong brands can use their established and well-known assets to launch other strong brands. That’s an advantage of what they have over a new startup. Some businesses already have this in motion. At Fluxx, we’re working with a well-known digital publisher on a new subscription offering in order to adopt a new community of readers at a different price point and one that attracts a community of business activists. We also worked with Vogue to launch Vogue Business, an online fashion industry publication, proving you can launch a business within a complex fast-moving organisation.

Natalia Walters is a consultant at Fluxx. Stay tuned with all that’s Fluxx by following us on LinkedIn or signing up for our WTF Newsletter.

Are you curious as to how Fluxx has helped companies such as Condé Nast, Mars, Thames Water, HSBC, Addison Lee Group and many more? Learn the secrets for sustained, repeatable innovation models, from expert practitioners. Get in touch now Natalia.Walters@Fluxx.uk.com. Equally, if you have any thoughts on the piece above, I’d love to hear from you!