new luxury business model?

Tell me what you subscribe to and I’ll tell you who you are! It is impossible today to minimize the omnipresence of subscription services in our daily lives. And for good reason: if we can easily say that Netflix, Spotify and others have not invented anything in this area, they have nevertheless managed the feat of an experience so smooth that all the brakes traditionally attributed to the subscription were lifted in a handful of years. So much so that Gartner predicts that in 2023, 75% of companies will offer subscriptions to their customers, and that, mirroring this, 27% of consumers intend to increase their spending on these services (NCR, 2021). So, if ready-to-wear (Rent the renway), automobile (Audi) or even home sports (Fitbit) have been able to adapt, what will happen to luxury?

When money is (almost) no longer a question.

Who hasn’t dreamed of entering a store free from the pressure of the price of each item within sight? Similarly, what brand wouldn’t keep minimizing the transactional component of a visit? A fortiori in the luxury sector, where the service dimension must be at the heart of the journey. Hermès seems to have made this possible with its “Hermès Ties Society” program, which aims to offer member customers a personalized and ultra-premium service around the world of ties. If a first quiz makes it possible to define the terms of the subscription to be put in place according to the desires and needs of the customer, it is then a myriad of attentions which are proposed to him, such as maintenance, repair or even the personalization of the parts. The subject of the price being evacuated here, the concentration can be focused on the products, the know-how and the commitments of the brand.

©Hermès

Esteem and recognition, the new luxury.

There is no need to recall here the exemplarity that the sector must have in terms of the customer experience. However, the more the experience delivered is aligned with the experience expected by customers, the stronger the feeling of having had a good experience. Subscription (retail) services, because they allow an incredible collection of information on registration, but also on the sidelines of each visit, are therefore ideal for guiding brands in the animations and content they can imagine for them, at the right time.

This is how Chanel created its Beauty Workshop a few years ago. Once a member of the Atelier, customers of the double C house have the opportunity to access it whenever they want, and to test all the products as if they were in their own bathroom! To perfect this feeling, the brand has also relied on discreet experts, who only come to meet you on request, so as to offer a tailor-made experience.

A sense of belonging is cultivated every day.

A subscription can also and finally make it possible to offer two levels of experience depending on the customer, his loyalty or his average basket. At the stage of what could be deployed in Paris by CMG Sports Club, the Chanel brand, again, made the bet to open shops which will now be reserved for their VIP customers. Thus, the latter benefit from a higher quality experience, designed for them who know and already have a strong relationship with the house, rich in very special and adapted events and moments. It is also an opportunity for the brand to rely on qualified teams and profiles, with no doubt a strong “personal shopper” dimension.

In short, whether it’s economic performance (57% of customers started spending more money after taking out a subscription according to the Deloitte report “Demystifying the hype of subscription” 2022), loyalty strategy (40 % of customers who have taken out a subscription have reduced their visits to competing brands, again according to the study), or more simply by improving the customer experience, retail under subscription has many advantages for onboarding luxury brands, who must remain pioneers on each of these subjects. Moreover, while the phenomenon of possession seems to be gradually dying out with a generation that is also sensitive to a drop in production, the reinvented consumption that it necessarily induces from what we inspire.

Rémi Le Druillenec is the co-founder and managing director of Héroïne, co-author of the book “The store is it dead?”.

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