Netlixisation of retail
When the subscription mode becomes a norm
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In our current society, we are now used to subscribe to access diversified content and exclusive services.
When we want to consume unlimited contents online as music or movies or access specific personalized services, platforms like Netflix and Spotify provide us with a wide offer in exchange for a monthly subscription. Other powerful actors like Amazon are encouraging their customers to subscribe to get premium services.
These actors are the perfect illustration and even role models of this expanding subscription mode.
Indeed, nowadays this business model is impacting most retail markets and the competition is tough!
Food market turning to subscription mode
In late 2020 in the UK, Prêt à Manger offered a monthly subscription service to enable its customers to pay in a much easier way the coffees they consume daily.
Even earlier in 2020, Walmart launched a membership program, called Walmart + bringing together online and in-store shopping benefits. The membership costs $98 a year or $12.95 a month. Subscribers can then access to free deliveries from stores, exclusive discounts and even convenient tools that make shopping way faster.
Meals’ delivery platforms like Deliveroo are also encouraging their customers to pay a monthly fee to get access to free delivery anytime their order a meal.
Because of these long-term benefits, those subscribed customers are becoming brand’s community members and would then probably stick to these brands and not switching to competitors for a long period of time.
More recently, many grocers decided to reconsider their business model and to follow the same path.
Indeed, this last months, a lot of food retailers unveiled their new subscription offer. The standard principle is to subscribe in order to have access to free grocery shopping deliveries at home and to exclusive discounts or services.
In France, Carrefour is currently on trials for a subscription formula. The new offer is expected to be soon officially launched. For a monthly subscription of 5.99 euros, customers receive a 15% discount on the chain’s private label products.
Monoprix also launched its own membership offer called Monopflix, sounding a little bit like Netflix. The subscription will cost between 8,33 and 9,90 euros a month.
This new membership program will enable its members to get an immediate 10% discounts on their grocery shopping cart proceeding to checkout.
Members located in Paris and its outskirts will also get this discount online via Monoprix Plus. A dedicated customer service will also be available on Whatsapp to offer a personalized shopping journey to Monopflix members.
Many other food retailers will probably align their offer to this new subscription mode in order to keep up with this forever more competitive and convenient offer.
Other retail markets
JD.com is providing the same kind of offer. Members subscribed for 9.99 pounds a year will get unlimited free deliveries, an early access to special sales, and some gifts on special occasions. The aim is to build a community of loyal customers and to reward this loyalty to retain them.
Like a lot of retailers providing a subscription model, Selfridges is focusing on delivery benefits. However, the brand is going further by providing two kinds of subscriptions adapted to different ways of life, locations in the world.
Subscription is then also a way to personalize the offer.
Amazon Prime launched Prime Wardrobe, a service allowing customers to “try before to buy”. Indeed, customers select their items on the website and get delivered, then, they can try up to 8 items within 7 days at home, finally, they are only charged for the items they decide to keep. Returns are free thanks to a resealable box and a prepaid label.
This service is available to any eligible Prime member. However, if customers want to get even more personalization they can subscribe to “personal shopper by Prime Wardrobe” for a $4.99 fee by styling. According to various criteria like budget, style, size, etc., the platform’s algorithm will provide a personalized clothes selection for the shopper.
Why is it interesting?
Many disruptive actors are currently entering retail with appealing offers. Most of the time, they come with competitive delivery and prices options as well as a really convenient offer matching with today’s urban lifestyle.
To keep up the pace, traditional retailers are turning to a ‘Netflix-like’ model. It provides consumers with convenient and competitive services. It is a way to retain consumers as long as possible as well as attracting new ones. Of course, it is an easy way to prevent them from switching to other brands.
These offers are also providing personalization, an essential requirement to remain competitive on the market.
Another benefit for retailers is obviously the fixed income it provides them with each month.
We are currently witnessing a standardization of the services offer in every retail’s markets. The next challenge for retailers would be to bring an added value to their offer at the risk to disappear.
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