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 presence of subscription services in our daily lives. And with 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 with an experience so smooth that all the brakes traditionally attributed to the subscription were lifted in a handful of several years. So much so that Gartner predicts that by 2023, 75% of businesses will offer subscriptions to their customers, and that a similar 27% of consumers intend to increase their spending on these services (NCR, 2021). So if ready-to-wear (Rent the renway), car (Audi) or even home sports (Fitbit) have been able to adapt, what will happen to luxury?

When money is (almost) no longer an issue.

Who hasn’t dreamed of walking into a store free from the pressure of the price of every single item in sight? Likewise, what brand wouldn’t want to minimize the transactional component of a visit? A fortiori in the luxury sector, where the service dimension must be at the center 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 created according to the customer’s wishes and needs, then it is a myriad of attentions that are proposed to him, such as maintenance, repair or even customization of parts. The object of the price that is evacuated here, the concentration can be focused on the products, the know-how and the obligations of the brand.

©Hermès

Esteem and recognition, the new luxury.

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

This is how Chanel created her beauty workshop a few years ago. Once you were a member of the Atelier, customers in 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 invested in discreet experts who only come to meet you on request, to offer a tailored 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. Like what has been deployed in Paris by the CMG Sports Club, the Chanel brand has once again taken up the challenge of opening stores that are now reserved for their VIP customers. The latter thus benefits from a higher quality experience, designed for those who know and already have a strong relationship with the house, rich in events and very special and customized moments. It is also an opportunity for the brand to rely on specifically trained teams and profiles, undoubtedly a strong “personal shopper” dimension.

In short, whether it’s financial 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 took out a subscription has reduced their visits to competing brands, again according to the study), or more simply by improving the customer experience, retailing under subscription has many advantages for the onboarding of luxury brands, which must remain pioneers in each of these topics. Moreover, while the phenomenon of possession seems to be gradually dying out among a generation also sensitive to a decline in production, the reinvented consumption that it engenders necessarily has something to inspire us.

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

Leave a Comment