{"id":5681,"date":"2019-09-06T11:34:12","date_gmt":"2019-09-06T06:04:12","guid":{"rendered":"https:\/\/www.vue.ai\/blog\/?p=5681"},"modified":"2024-06-07T11:12:05","modified_gmt":"2024-06-07T05:42:05","slug":"retail-is-moving-to-subscription","status":"publish","type":"post","link":"https:\/\/www.vue.ai\/blog\/leaders-in-retail\/retail-is-moving-to-subscription\/","title":{"rendered":"Why Retail Businesses Are Moving Toward Subscription Models"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69de1ef082aeb\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69de1ef082aeb\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.vue.ai\/blog\/leaders-in-retail\/retail-is-moving-to-subscription\/#tackling-commitment-phobia-with-subscription\" title=\"Tackling Commitment Phobia With Subscription\">Tackling Commitment Phobia With Subscription<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.vue.ai\/blog\/leaders-in-retail\/retail-is-moving-to-subscription\/#subscribing-to-personalization\" title=\"Subscribing To Personalization\">Subscribing To Personalization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.vue.ai\/blog\/leaders-in-retail\/retail-is-moving-to-subscription\/#the-circle-of-halo-effect\" title=\"The Circle of Halo Effect\">The Circle of Halo Effect<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.vue.ai\/blog\/leaders-in-retail\/retail-is-moving-to-subscription\/#in-the-pink-of-financial-health\" title=\"In The Pink Of Financial Health\">In The Pink Of Financial Health<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\">7<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p><span style=\"font-weight: 400;\">In August 2019, American clothing retail company Banana Republic <\/span><a href=\"https:\/\/www.retailtouchpoints.com\/features\/news-briefs\/banana-republic-introduces-style-passport-subscription-but-will-it-draw-shoppers\"><span style=\"font-weight: 400;\">announced<\/span><\/a><span style=\"font-weight: 400;\"> its plan to launch \u2018Style Passport\u2019, an online rental subscription service for women. Developed in partnership with CaaStle, the service priced at $85 per month would offer a three-garment plan with free priority shipping, unlimited exchanges &amp; returns, complimentary laundering services and buy online\/pick up in-store (BOPIS) option.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With this new service, the Gap-owned company intends to connect with the millennials &amp; Gen Zs who love to experiment with fashion in a sustainable manner. The data-driven insights generated through Style Passport would also be used to design new products and experiences, <\/span><a href=\"https:\/\/www.businesswire.com\/news\/home\/20190816005020\/en\/Banana-Republic-Introduces-Style-Passport-New-Rental\"><span style=\"font-weight: 400;\">according<\/span><\/a><span style=\"font-weight: 400;\"> to the company\u2019s CEO Mark Breitbard.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Banana Republic is the latest retailer to hop on the subscription bandwagon. Department store chain Macy\u2019s <\/span><a href=\"https:\/\/www.cnbc.com\/2019\/08\/14\/macys-is-getting-into-the-clothing-subscription-and-resale-markets.html\"><span style=\"font-weight: 400;\">partnered<\/span><\/a><span style=\"font-weight: 400;\"> with resale marketplace ThredUp to test a pilot subscription project in August as well. <\/span><span style=\"font-weight: 400;\">Nike Adventure Club<\/span><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/ww.fashionnetwork.com\/news\/Bloomingdale-s-to-launch-online-subscription-rental-service,1127541.html#.XWDmeugzbIU\"><span style=\"font-weight: 400;\">My List at Bloomingdale\u2019s<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/www.retaildive.com\/news\/american-eagle-pilots-subscription-service\/548874\/\"><span style=\"font-weight: 400;\">American Eagle\u2019s Style Drop<\/span><\/a><span style=\"font-weight: 400;\">, and <\/span><a href=\"https:\/\/www.refinery29.com\/en-us\/2019\/07\/239119\/nuuly-clothing-rental-urban-outfitters-free-people-anthropologie\"><span style=\"font-weight: 400;\">Urbn\u2019s Nuuly<\/span><\/a><span style=\"font-weight: 400;\"> are just a few of the many big retail brands that have recently decided to embrace the subscription business model after sticking to the traditional retail format since its inception.\u00a0<\/span><\/p>\n<figure id=\"attachment_5682\" aria-describedby=\"caption-attachment-5682\" style=\"width: 750px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5682\" src=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/5c47c0a47f730ad1f23573fdb1864f08_XL-300x195.jpg\" alt=\"\" width=\"750\" height=\"487\" srcset=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/5c47c0a47f730ad1f23573fdb1864f08_XL-300x195.jpg 300w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/5c47c0a47f730ad1f23573fdb1864f08_XL-768x499.jpg 768w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/5c47c0a47f730ad1f23573fdb1864f08_XL.jpg 900w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><figcaption id=\"caption-attachment-5682\" class=\"wp-caption-text\">Source: Retail Touch Point<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">As we know, subscription as a business model has been around for centuries. From newspapers to cable television, from meal services to healthcare services, this recurring distribution model has helped many industries to diversify revenue streams. In the last five years, the industry has <\/span><a href=\"https:\/\/medium.com\/@levioliniste\/subscription-box-automation-ai-stylist-reduce-churn-retail-fashion-ecommerce-70ff5e2498c6?source=---------4------------------\"><span style=\"font-weight: 400;\">registered a two-fold increase<\/span><\/a><span style=\"font-weight: 400;\">, climbing up from $57 million to $2.6 billion. An eMarketer report <\/span><a href=\"https:\/\/techcrunch.com\/2019\/05\/22\/subscription-fatigue-hasnt-hit-yet\/\"><span style=\"font-weight: 400;\">also pointed out<\/span><\/a><span style=\"font-weight: 400;\"> that over the next two years, 34% of the US consumers are open to add more services to their subscription library. The <\/span><a href=\"https:\/\/www.cerillion.com\/Blog\/September-2018\/UK-subscription-box-market-worth-%C2%A31-billion-2022\"><span style=\"font-weight: 400;\">UK subscription box market<\/span><\/a><span style=\"font-weight: 400;\"> is also growing at an impressive speed and is expected to be worth more than $1 billion by 2022.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The success stories of Netflix, Spotify, Amazon Prime, FabFitFun, Loot Crate, and Dollar Shave Club illustrate how the tech-powered industry, in particular, has benefitted from subscriptions in our modern economy. It is one of the <\/span><a href=\"https:\/\/www.vue.ai\/blog\/trends-and-analysis\/top-5-ecommerce-trends-to-watch-out-for-in-southeast-asia-in-2020\/\"><span style=\"font-weight: 400;\">top ecommerce trends<\/span><\/a><span style=\"font-weight: 400;\"> that are set to dominate the retail industry in the coming years.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it was the success of <\/span><a href=\"https:\/\/www.vue.ai\/blog\/trends-and-analysis\/rent-the-runway-luxury-retail\/\"><span style=\"font-weight: 400;\">Rent the Runway<\/span><\/a><span style=\"font-weight: 400;\"> that convinced fashion clothing retailers to recognize the subscription model as a path to profitability. The luxury rental service company, which was launched in 2009, proved that consumers are as open to <\/span><a href=\"https:\/\/medium.com\/@levioliniste\/subscription-box-automation-ai-stylist-reduce-churn-retail-fashion-ecommerce-70ff5e2498c6\"><span style=\"font-weight: 400;\">subscribe for curation and access<\/span><\/a><span style=\"font-weight: 400;\"> to a rotating closet as they are open to subscribe for the replenishment of daily essentials and product discovery.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"tackling-commitment-phobia-with-subscription\"><\/span><b>Tackling Commitment Phobia With Subscription<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Rent the Runway was probably the first fashion business to identity the trend that <\/span><a href=\"https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Industries\/Retail\/Our%20Insights\/The%20State%20of%20Fashion%202019%20A%20year%20of%20awakening\/The-State-of-Fashion-2019-final.ashx\"><span style=\"font-weight: 400;\">McKinsey\u2019s The State of Fashion 2019<\/span><\/a><span style=\"font-weight: 400;\"> report likes to call the \u2018end of ownership\u2019. Millennials, Gen Z and Gen Alpha no longer believe in life-long commitments and blind loyalty to brands. They demand variety, quality, accountability, and beauty but without clogging the landfills. They are passionately turning the wheels of the <\/span><a href=\"https:\/\/www.vue.ai\/blog\/trends-and-analysis\/fashion-and-sustainability-in-2020\/\"><span style=\"font-weight: 400;\">sustainability revolution<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The McKinsey report had <\/span><a href=\"https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Industries\/Retail\/Our%20Insights\/The%20State%20of%20Fashion%202019%20A%20year%20of%20awakening\/The-State-of-Fashion-2019-final.ashx\"><span style=\"font-weight: 400;\">stated<\/span><\/a><span style=\"font-weight: 400;\"> that \u201cwe predict a notable increase in the number of \u201crental native\u201d brands born exclusively for rental or subscription models\u2026 Finally, more consumers will see a growing proportion of their wardrobes made up of pre-owned or rented products, especially for high-value items and accessories. While traditional players need not yet be alarmed, it will be essential to fully understand the emerging signals of what consumers prefer to own versus rent.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This prediction turned out to be true as \u2018<\/span><a href=\"https:\/\/www.vue.ai\/blog\/?s=resale\"><span style=\"font-weight: 400;\">resale\u2019<\/span><\/a><span style=\"font-weight: 400;\"> emerged as one of the top retail trends of 2019.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The subscription model enables retailers to connect with these consumers and speak their language of consumption. It has helped companies to re-imagine what consumer loyalty looks like in today\u2019s age and what is required to earn it.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When Rent the Runway\u2019s co-founder Jennifer Hyman <\/span><a href=\"https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Industries\/Retail\/Our%20Insights\/The%20State%20of%20Fashion%202019%20A%20year%20of%20awakening\/The-State-of-Fashion-2019-final.ashx\"><span style=\"font-weight: 400;\">understood<\/span><\/a><span style=\"font-weight: 400;\"> that \u201cThe average consumer cares about making smart choices\u2026that no one is going to spend a few hundred dollars or a few thousand dollars on an item that they\u2019re only going to wear once or twice\u201d, she launched the RTR subscription service. And their numbers reflect that it turned out to be one of the smartest business decisions. The company\u2019s subscription business not only has a healthy <\/span><a href=\"https:\/\/www.vue.ai\/blog\/trends-and-analysis\/rent-the-runway-luxury-retail\/\"><span style=\"font-weight: 400;\">160% year-on-year growth rate<\/span><\/a><span style=\"font-weight: 400;\">, but the average consumer uses their service 120 times\/days a year.<\/span><\/p>\n<p><iframe loading=\"lazy\" title=\"Nuuly: How it Works\" width=\"1778\" height=\"1000\" src=\"https:\/\/www.youtube.com\/embed\/ieuxWZC9Odc?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">Rental subscription service Nuuly is also banking on this consumer sentiment. For $88 a month, the <\/span><a href=\"https:\/\/www.refinery29.com\/en-us\/2019\/07\/239119\/nuuly-clothing-rental-urban-outfitters-free-people-anthropologie\"><span style=\"font-weight: 400;\">company allows its users<\/span><\/a><span style=\"font-weight: 400;\"> to rent six pieces that are a mix of size inclusive everyday dresses, classic denim, vintage pieces, and seasonal outerwear from brands like Urban Outfitters, Free People, Anthropologie, and 100+ third party brands.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the end of ownership, the emergence of sustainable living and growing popularity of pre-loved fashion, the era of personalization rushed in.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"subscribing-to-personalization\"><\/span><b>Subscribing To Personalization<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As the consumption patterns changed, <a href=\"https:\/\/www.vue.ai\/blog\/vuecommerce\/retail-personalization-in-2021\/\">retail personalization<\/a> and curation based on personal taste gained prominence; the two elements that are cornerstones of a subscription business model. It is a clever way of distribution that allows fashion and beauty retailers to customize its products and services and present an appropriate assortment, right from the price, product type, size, and colour.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Subscription boxes\u2019 customized offerings can help retailers to reduce customer acquisition and retention cost. As the cycle of consumption is short (weekly, monthly or quarterly) compared to a one-time purchase, retailers can make quick changes by setting up a transparent feedback and referral system.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Take, for instance, Birchbox.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The New York-based online monthly subscription service offers personalized makeup, skincare, and hair-care products to its consumers. <\/span><span style=\"font-weight: 400;\">Birchbox renamed its site<\/span><span style=\"font-weight: 400;\"> navigation and introduced genderless categories to become gender inclusive after receiving feedback from one gender non-confirming customer. The company also collaborated with Out Magazine to develop its June Pride boxes.<\/span><\/p>\n<figure id=\"attachment_5684\" aria-describedby=\"caption-attachment-5684\" style=\"width: 750px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5684\" src=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/BirchboxlaunchesgenderInclusivenon-binaryrebrand-300x202.jpg\" alt=\"\" width=\"750\" height=\"506\" srcset=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/BirchboxlaunchesgenderInclusivenon-binaryrebrand-300x202.jpg 300w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/BirchboxlaunchesgenderInclusivenon-binaryrebrand-768x518.jpg 768w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/BirchboxlaunchesgenderInclusivenon-binaryrebrand.jpg 1000w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><figcaption id=\"caption-attachment-5684\" class=\"wp-caption-text\">Source: Gender Jelly<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The subscription model has made it easy for Birchbox and similar companies to personalize each of its boxes and increase the speed of implementation. But scaling up at this speed and implementing changes wouldn\u2019t have been possible without AI.\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.vue.ai\/blog\/vuestyle\/subscription-box-automation-ai-stylist-best\/\"><span style=\"font-weight: 400;\">AI-powered tools help<\/span><\/a><span style=\"font-weight: 400;\"> to eradicate the pain-points associated with customizing subscription services and increase customer engagement. Automation via AI enables retailers to design a successful subscription business by assisting in relevant assortment selection, demand generation, localized merchandising, data-driven marketing, and seamless digital experience.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even the reluctant players have come to realize that AI is an irreplaceable arm of subscription retail.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cI used to say, \u2018Be careful when you put a machine in front of a human, because you\u2019ll lose something.\u2019 But I\u2019ve migrated my view on this a little bit. Now, I actually think putting a machine in front of the human \u2014 with the right context \u2014 is a great thing.\u00a0 Where I see AI working for us is in two ways; one, to enhance and turbo-charge customer experience, in terms of recommendations, different ways of doing search, different ways of engaging with our ecosystem, and two, improving the cost of handling all our customer queries and all our products through our entire end to-end business,\u201d <\/span><a href=\"https:\/\/www.mckinsey.com\/~\/media\/McKinsey\/Industries\/Retail\/Our%20Insights\/The%20State%20of%20Fashion%202019%20A%20year%20of%20awakening\/The-State-of-Fashion-2019-final.ashx\"><span style=\"font-weight: 400;\">admitted<\/span><\/a><span style=\"font-weight: 400;\"> Hyman.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"the-circle-of-halo-effect\"><\/span><b>The Circle of Halo Effect<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Personalized service inspires trust and loyalty within the brand-commitment-phobic generation, which helps to improve brand value. This, in turn, creates a <\/span><a href=\"https:\/\/www.vue.ai\/blog\/trends-and-analysis\/the-curious-case-of-halo-effect-in-retail\/\"><span style=\"font-weight: 400;\">halo effect<\/span><\/a><span style=\"font-weight: 400;\">, a retail phenomenon that illustrates a positive relationship between all business channels and touchpoints of a retailer.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Subscription model could help to boost sales across various categories and create cross-selling windows for retailers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cCustomers spend more money because of the convenience of the experience. There&#8217;s a relationship that develops, and they feel a level of commitment \u2014 it&#8217;s an intimacy between the brand and the retailer on the consumer. There are also chances to deepen that relationship with upsell and cross-selling opportunities. You don\u2019t just see spend increasing within the core categories they are subscribing to, but outside categories as well,\u201d <\/span><a href=\"https:\/\/www.retailtouchpoints.com\/topics\/omnichannel-cross-channel-strategies\/67-of-retailers-report-higher-revenue-after-launching-subscription-services\"><span style=\"font-weight: 400;\">asserted<\/span><\/a><span style=\"font-weight: 400;\"> Greg Alvo, founder of commerce platform Ordergroove.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Retailers can use this model to test new products, customer experiences, and third-party products\/services before launching it on a big scale across all platforms. The halo effect proves that brick-and-mortar outlet helps online-exclusive and DTC brands to connect with their customers. Similarly, monthly curated, replenishment and access boxes could help retailers to increase footfalls and traffic across other platforms and categories.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"in-the-pink-of-financial-health\"><\/span><b>In The Pink Of Financial Health<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">We have established that the fashion subscription industry got a boost from the growing anti-ownership sentiment. But it is ironical that the industry also helped to convert one-time customers into repeat buyers. By breaking down the consumption cost into nominal monthly instalments, retailers are able to reach consumers who thrive on the <\/span><a href=\"https:\/\/www.forbes.com\/sites\/gregpetro\/2019\/04\/12\/why-subscription-boxes-are-here-to-stay\/#200131807037\"><span style=\"font-weight: 400;\">\u2018motivating-uncertainty effect\u2019<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nike\u2019s Adventure Club<\/span><span style=\"font-weight: 400;\"> subscription service is an excellent example to understand this theory.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The sports brand\u2019s try-at-home subscription service for kids will offer three plans priced at $20, $30, and $50 per month. Under this service, the subscriber can upgrade the sneakers once in three months ($20 plan) to once every month ($50). By introducing this service, Nike will effectively encourage repeat purchases and increase its profit margins by luring young, trend-obsessed sneaker-heads. The expensive plan would fetch the company $600 dollars per customer, compared to earning $100-200 from a one time purchase.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Beside the benefit of repeat purchases, retailers can also improve their company\u2019s financial health with the help of this model as it minimizes inventory risk and predicts revenue. The <\/span><a href=\"https:\/\/www.retailtouchpoints.com\/topics\/omnichannel-cross-channel-strategies\/67-of-retailers-report-higher-revenue-after-launching-subscription-services\"><span style=\"font-weight: 400;\">findings<\/span><\/a><span style=\"font-weight: 400;\"> of the survey by Ordergroove and NAPCO Research support this fact.\u00a0<\/span><\/p>\n<figure id=\"attachment_5685\" aria-describedby=\"caption-attachment-5685\" style=\"width: 750px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5685\" src=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/Screenshot-2019-09-06-at-4.52.00-PM-300x200.png\" alt=\"\" width=\"750\" height=\"500\" srcset=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/Screenshot-2019-09-06-at-4.52.00-PM-300x200.png 300w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/Screenshot-2019-09-06-at-4.52.00-PM-768x512.png 768w, https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/Screenshot-2019-09-06-at-4.52.00-PM.png 792w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><figcaption id=\"caption-attachment-5685\" class=\"wp-caption-text\">Source: Retail Insight Network<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">The survey revealed that 67% of the retailers that adopted the subscription model witnessed an increase in revenue. 61% saw a positive change in profitability and 55% recorded an increase in customer loyalty. As far as revenue predictability is concerned, 50% of the surveyed retailers benefited from switching to the subscription model. Therefore, it comes as no surprise that big retails brands have dipped their toes into the subscription pool, in spite of the stiff competition and inherent challenges.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Marshal Cohen, chief industry analyst of Retail at NPD Group <\/span><a href=\"https:\/\/www.retaildive.com\/news\/why-retailers-are-going-all-in-on-subscription-services\/445971\/\"><span style=\"font-weight: 400;\">stated<\/span><\/a><span style=\"font-weight: 400;\">, \u201cResearch from The NPD Group\u2019s Checking Tracking service shows that the subscription model is working, and growing, and is one that some larger retailers have implemented with some success. Other retailers can \u2014 and should \u2014 also consider subscriptions as a way to boost performance.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As long as retailers focus on developing flawless customer experiences and a sustainable business model with the help of data, subscribers won\u2019t hit the unsubscribe button. It is realistically possible to <\/span><a href=\"https:\/\/medium.com\/@levioliniste\/subscription-box-automation-ai-stylist-reduce-churn-retail-fashion-ecommerce-70ff5e2498c6?source=---------4------------------\"><span style=\"font-weight: 400;\">keep the churn rate low<\/span><\/a><span style=\"font-weight: 400;\"> by personalizing the products through AI &amp; automation and by creating sustainable experiences.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\">7<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span> In August 2019, American clothing retail company Banana Republic announced its plan to launch \u2018Style Passport\u2019, an online rental subscription service for women. Developed in partnership with CaaStle, the service priced at $85 per month would offer a three-garment plan with free priority shipping, unlimited exchanges &amp; returns, complimentary laundering services and buy online\/pick up  &#8230;<\/p>\n","protected":false},"author":23,"featured_media":5687,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1160,1522],"tags":[209,23,327,374],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Retail Businesses Are Moving Toward Subscription Models | Vue.ai Blog<\/title>\n<meta name=\"description\" content=\"The success stories of Netflix, Spotify, Amazon Prime illustrate how the tech-powered industry has benefitted from subscriptions in our modern economy.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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content=\"2024-06-07T05:42:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.vue.ai\/blog\/wp-content\/uploads\/2019\/09\/Screenshot-2019-09-06-at-5.03.51-PM.png\" \/>\n\t<meta property=\"og:image:width\" content=\"716\" \/>\n\t<meta property=\"og:image:height\" content=\"549\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Vue.ai\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@vue_ai\" \/>\n<meta name=\"twitter:site\" content=\"@vue_ai\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Vue.ai\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutes\" \/>\n<script type=\"application\/ld+json\" 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