5-minute read
 

Thanks to the rising trend of subscription boxes, customers no longer need to browse the aisles to discover the latest drop from their favourite brand – discovery can now begin at their doorstep. So, let’s unwrap how these could provide the key to deepening relationships between the purveyors of fine goods and those with the means to enjoy them.
 

The subscription market

Subscription boxes have become all the rage, delivering everything from makeup to meal kits right to our doors. But careful not to dilute their prized image, luxury brands have been cautious about jumping on the potentially lucrative bandwagon. With, the global market for subscription boxes growing by 17.2% from 2023 to 2024¹ – and expected to be worth $71.77bn by 2028¹ – new research suggests discerning luxury customers are intrigued by subscription models.²

Understanding the consumer appetite

A YouGov survey, commissioned by Barclaycard, found that the subscription model remains a niche interest for luxury consumers, with only 13% saying they belong to a luxury subscription service or scheme.²

To appeal to luxury consumers and maintain their long-term commitment, it is crucial to cater to their different needs, such as providing perks like exclusive product releases and member-only events. Although meeting these expectations can be challenging, with 83% of consumers still not subscribed to any luxury services, there is significant growth potential for brands that can successfully meet this demand.
 

Subscriptions can be ‘extra’ too

High-end market factors such as exclusivity, inspiration, and brand affiliation carry great influence, meaning cost is unlikely to be the primary consideration when customers are weighing up a luxury subscription.

For example, the Hermès Tie Society³ is almost entirely built around these principles. However, Hermès sacrifices convenience from the very beginning for exclusivity: driving customers in-store and making it impossible to join online. Members get a new necktie, personally selected according to their preferences, every month or so. Member services are also available, such as laundering, reshaping and repairs, plus access to exclusive events – including tie collection ‘premieres’ at Hermès’ flagship NYC store.

Make your subscriptions easy

39% of subscribers in our survey cited the convenience of products arriving at home as a benefit, while 19% said the same about simple, automated payments.² While convenience may not be the key factor when deciding to sign up, it indicates that members are still likely to expect a seamless customer experience.

Barclaycard Payments’ Director of Strategic Account Development, Chantal Willis explains, “If retailers can’t provide this seamless customer experience, they’ll find it difficult to keep subscribers.” Therefore, it’s paramount to offer secure payment methods to meet customer preferences and manage recurring transactions smoothly, leaving clients blissfully unbothered, save for excitement of each new delivery.

Using data to personalise customer experience

By nurturing long-term relationships with customers, subscriptions can be a valuable way for brands to learn more about them. That knowledge can then ensure that retailers are providing the experience their customers’ desire.

Liberty describes its innovative cosmetics subscription, The Beauty Drop,⁴ as a ‘personal beauty bank account’, with subscribers depositing £20 monthly, which can then be spent or saved towards a larger purchase. Subscribers also get four ‘Discovery Boxes’ a year, stocked with specially selected products, and access to members-only offers, rewards and events. This data generated from each subscriber’s beauty spending then enables Liberty to fill each ‘Discovery Box’ with products that might pique interest, turning a subscription into the ultimate form of personalised direct marketing.

   What are the main benefits of a subscription service

Embrace the possibilities of sustainability

As consumers become more aware of the impact of their purchases, subscriptions allow luxury brands to showcase progressive values through sustainable models. Services like Rent the Runway⁵ appeal to those drawn to temporary ownership, while platforms like Selfridges’ RESELFRIDGES⁶ highlight pre-owned luxury. Curating renewable products and circular systems can bolster brand loyalty among eco-conscious consumers. The market is ripe for eco-friendly subscription models, appealing to those who believe luxury should not harm the planet, and can strengthen customer relationships through shared values.

Luxury subscriptions: challenges and opportunities

As we’ve seen, turning customers into subscribers could deepen your relationship – but only when it makes them feel understood through increased personalisation, empowers them to control their experience, and offers something they can’t get in-store or online.

For example, the member’s club chain, Soho House lets its members pay through its House Pay10 platform.⁷ This easier tracking of customer spend across its international locations, allows them to deliver deeply personalised recommendations that boost loyalty. For luxury retailers who can harness the power of data, there’s potential to provide the secure recurring payments necessary for a consistent customer experience.

The key takeaways

In the contemporary retail landscape, the subscription model is gaining popularity, particularly among luxury brands aiming to meet the exacting standards of their clientele. But the key to success lies in seamlessly integrating exclusivity, personalisation, brand connection, and an impeccable customer journey. This approach crafts a bespoke experience for each subscriber, where detail is meticulously considered. Gathering regular data on subscribers, enhanced by valuable payment insights, can significantly elevate the level of personalisation offered. While convenience may not initially attract luxury sign-ups, it is essential for maintaining subscriptions, ensuring seamless deliveries and payments without compromising on experience. Additionally, luxury clients demand the highest levels of discretion and security. Subscription payment systems must operate flawlessly behind the scenes, safeguarding their trust with top-tier data protection.

¹Source: Subscription Box Global Market Report 2024, ResearchAndMarkets, 2024.
²Barclaycard-commissioned YouGov consumer research (January 2024).
³Source: Hermès to Launch New Subscription Service, Forbes, 2017.
⁴Source: Liberty – The Beauty Drop.
⁵Source: Rent the Runway.
⁶Source: Selfridges – RESELFRIDGES.
⁷Source: Soho House – House Pay.

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