Are we entering a new era for subscription retail?

Jan 07, 2021

As H&M launches its Singular Society retail concept, GDR’s Managing Editor John O’Sullivan explores the recent rise of membership-based retail propositions.

The H&M Group has launched an innovative subscription-based lifestyle brand called Singular Society selling items to members at cost price. Singular Society will make no margin from the “carefully curated assortment of high-quality, responsibly made” home and fashion products it sells. Rather, it is positioned to make money from the monthly membership fees it charges. Members paying €9.50 will be able to buy five items a month, while “Plus” members paying €19.50 per month, will be able to buy 25 items from its Stockholm-based store and showroom, or its ecommerce platform.

Looked at in isolation this is an interesting example of a brand rewarding loyal customers, while simultaneously tying them into their ecosystem. However, several examples have emerged in this space recently, suggesting to us that we are entering a new era of subscription retail.

 

The subscription surge

In September last year British cafe Pret A Manger announced that it was following in the footsteps of fellow JAB Holdings-owned company Panera Bread in launching a monthly coffee subscription. For £20 a month (the price of nine lattes) YourPret Barista members can now claim five hot drinks a day.

In the same month Walmart launched its Amazon Prime rival, Walmart+, which for $98 a year offers a wide range of perks, including free shipping. Target Shipt and Instacart Express are operating in a similar space (both with annual fees of $99).

Elsewhere, we’ve also recently written about membership-based DTC platform Italic, which takes an approach we’ve previously seen from the likes of Beauty Pie and Public Goods to promise luxury quality products at “true cost” prices, while, for £100 a year, Wholee promises the lowest possible prices to its members by connecting them directly with manufacturers.

 

Singular Society’s step change

Beyond the fact that Singular Society is the first example we’ve seen of an established retail player offering products at “cost” or “factory” prices, another thing that makes the execution stand out is the way it aims to fix the problems of a broken retail system.

The people behind Singular Society argue that the traditional retail model is no longer fit for purpose as it doesn’t serve fashion customers or brands well anymore. Its website says: “We are a group of industry insiders that having spent most of our adult life in fashion, lifestyle and luxury retail at some of the largest companies in the world, kept coming back to the same (obvious) questions: Why do we buy so many things we don’t need, or even want? Why is quality so expensive? Is it really necessary to add a 600% (sometimes even more) profit margin to make business work, and if so, why are so few retail companies turning a profit? Is anyone even winning here?

With this in mind, Singular Society attempts to build a new fashion and lifestyle model from the ground up that works for both customers and retailers, offering products that deliver on price, quality and sustainability.

The Singular Society website continues: “We started thinking: Is it possible to create a scenario where everyone wins instead? That at the same time can form a healthy and reliable long-term business? That has the potential for both short and long-term positive impact on themselves, the industry at large and sustainability?

“What we realised is this: If we change our business model to a subscription-based concept, we won’t be dependent on making money off what we sell, and can instead live off the monthly fees. That means we don’t have to chase cheap production, and can focus on quality and long-term relationships with our members.”

Innovations like these, which represent a step change in the way we consume products, are a key focus of The Economy section of The GDR Foresight Framework. To find out how our business futurists can use The GDR Foresight Framework to help you revolutionise your business, email rachel@gdruk.com

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