Should Small Retailers Offer Subscription Services?

Welcome to the age of subscription services, where everything from apparel, beauty samples, healthy meal kits, and pet products are sent directly to the purchaser’s front door.

“With McKinsey & Company reporting that subscriptions have grown 100% in the past five years, the business model has solidified its role as a revenue driver in retail.”

Source: Retail Dive

Many independent retailers are now exploring their own versions of box subscriptions as a supplemental revenue stream—as well as a way to influence consumer loyalty—and they’re making good headway, too, by capitalizing on the best features a subscription service can offer.

That Extra Something Special

When Washington D.C.-based candlemaker and small business owner, Amina Ahmed, launched her subscription box service in 2014, subscription services were still a unique concept.

Today, her company, Handmade Habitat, continues to deliver full-sized, eco-friendly soy candles to subscribers each month based on a theme. Ahmed still includes special handmade treats with each order even though her user base has expanded.

Ahmed believes subscriptions help her company encourage shopper loyalty while delighting them with her products:

 “I look at it as a way to reach new customers and build relationships with new people.” 

Source: Retail Dive

Whether retailers include a handwritten thank you note or a special unexpected treat, putting a little extra time and effort into adding a nice finishing touch to subscription orders is an easy and effective way to charm customers.

Bonding with Customers Through Personalization

“Bonding with consumers via subscription services may be one of the keys to retaining customers,” says Retail Dive. Unfortunately, this is an area in which large corporations are floundering. In fact, according to recent research from McKinsey, nearly 40% of subscribers ultimately cancel services.

Why? Because they’re not keeping their subscribers engaged, and that’s a sure way to fail in a market that has become saturated with subscription services for everything from clothing to coffee. Top-ten subscription services are faltering now that more players are in the market, including small retailers.

The best way for retailers to stand out from the crowd, suggests Marshal Cohen, chief industry advisor for retail at The NPD Group, is to offer subscription services that are focused on personalization.

“They must be more sophisticated. It’s not one size fits all. It’s not one product for the whole country or even the whole world at the same time.” 

Source: Retail Dive

Small retailers have the ability to build strong ties with a smaller consumer base. Retail Dive gives the example of independent book retailer, Politics & Prose in Washington, D.C., that has grown a specialized book of the month club by placing each subscriber’s personality at the center of their service. This is accomplished by picking out a book each month that is catered to each person’s personal taste.

It’s this level of consumer understanding that gives small retailers an edge over large box services.

“Understanding consumer needs must come to the forefront for businesses to retain customers and, ultimately, for financial viability.”

Source: Retail Dive


“Compared to the traditional model, sales-by-subscription offers nine times faster growth for the retail business, thanks to the creation of long-term relationships that provide the opportunity to obtain continuous sales,” says Open.

But those long-term relationships must be built on a foundation of engagement and personalization—something small, local retailers are excelling at.

Done well, subscription services offer small retailers a supplemental revenue stream, as well as a viable way to cultivate consumer loyalty.

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Sherene Funk is the author of the contemporary romance Autumn in Your Arms and two small business e-books. She is a voracious reader who owns more books than she can ever read in this lifetime. A graduate of Brigham Young University, she worked in advertising for many years before moving to her current writing position at Rain Retail Software. She researches non-stop to see what successful retailers do and loves to share what she learns with small business owners.