Should all retailers offer subscription services?
Through a special arrangement, presented here for discussion is a summary of a current article from the IMS Results Count blog.
I met my best friend Mike about 10 years ago. He did not own a smartphone or have any orders from Amazon.com. On my last visit, I found a very large heavy box on Mike’s porch. When I asked what was inside, Mike replied, “Oh that’s just my dog food subscription. I can get it $4 a bag cheaper online than in the store, and I don’t have to carry a heavy 40-pound sack to my car. Plus, it shows up the week when I need it.”
It’s not just my friend Mike — consumers worldwide are turning to the convenience of subscriptions across many categories. Well beyond the changes caused by music and video streaming, shaving blades, ink cartridges, diapers and a host of routine consumable products from dog food to toilet paper can be delivered to your door on schedule. Indeed, the very core of Amazon Prime is set up to appeal to your increasing preference for “subscription consumption.”
No, not everything will be purchased via a subscription model. But with each subscription, another sale transfers from the store to online. More importantly, a subscription eliminates store visits for that item.
Three key ways retailers must adapt to subscription consumption:
- Understand that the store is not bricks and mortar. Retailing today must transcend time and place. Retailers must find ways to offer their own “subscriptions,” especially services that differentiate.
- Customer relationships are the foundation of future success. Individual sales transactions at the cash register are still important, but it is relationships that bring customers back to purchase. Subscriptions are the new core building blocks of relationships and repeated customer contacts with the brand.
- Customers want personalization and choice. Smaller local retailers have the advantage of knowing their customers more intimately. They should be able to personalize subscriptions and services in ways that Amazon and Walmart can’t. Subscription deliveries are not based on speed of one-day delivery — subscription success requires reliability and accuracy within the reach of most any retailer.
DISCUSSION QUESTIONS: To what degree are subscriptions becoming a drag on store traffic? Should the majority of retailers offer subscription services? Can most retailers compete effectively in the space?