Large brands are attempting to box out the competition—literally and figuratively—by starting their own subscription box programs. Seeking to compete with services like LootCrate and Dollar Shave Club, retailers more traditionally known for brick-and-mortar locations are attempting to join the growing subscription economy and translate existing customer loyalty and brand-name recognition into new sales.

For example, the sportswear brand Adidas recently rolled out its new Avenue A program. This quarterly subscription box is filled with the brand’s higher end products, shoes, and apparel, and it specifically targets the growing market of female athletes. The popular makeup brand Sephora has rolled out Play! to compete for consumers currently served by Birchbox and ISPY. Its monthly subscription box features a variety of makeup and skincare items; when they sign up for a subscription, members also earn additional Beauty Insider loyalty points and access to special in-store events. At The Gap, the clothing retailer is rolling out a new subscription box targeted at new parents. Each box contains a variety of baby apparel specific to the gender and age of the baby, and then each subsequent box “grows” along with the child, providing increasing sizes, as well as merchandise specific to each season.

These retailers are jumping into the subscription box business to take advantage of recurring revenue, increase brand loyalty, and help create a deeper connection with customers. Furthermore, they hope that expanded name recognition in this growing market space might give them an edge over competitors and show Wall Street that they can compete with the best of the boxes.

Discussion Questions:

  1. Who are the main players in the subscription economy?
  2. Why are large brands and mainstream retailers offering subscription services?
  3. Why do some customers respond favorably to these subscription services?
  4. Do you subscribe to any subscription services? Why or why not?

Source: Jeff Miller, “Large Brands and Retailers Expand the Subscription Economy,” Retail Wire, November 3, 2017