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Subscription-based models first emerged in the 1800s, starting with newspaper print services and, later, deliveries by milkmen. More recently, these models have become fashionable again and are being used across many sectors including entertainment, food, and even fashion. The concept of subscription and rental models is not complicated to understand – the customer makes regular, fixed payments to a business in return for a repeat service or regular delivery of products. What’s interesting is why this method works much better in some sectors than in others and leads us to ask “do subscription models have a future in retail?”.
How are subscription and rental-based models widely used today?
These approaches are used widely across the digital entertainment sector with the rise of streaming platforms such as Netflix and Disney+ providing access to their large repertoire of films and series for a monthly fee. As we continue to embrace digitization, it has become more of a custom to rent or subscribe to watch films, listen to audiobooks and play music rather than buy a physical disc and, with platforms such as Spotify and YouTube providing the option for customers to download content to access offline, there is certainly continued demand there.
With our desire to get to places quickly and without fuss, transportation rental services such as Uber or Bolt continue to be popular. Whilst they may be a more expensive option than most public transport services, they are still widely used.
In food, a number of subscription models have gained traction over the last few years. At a weekly cost, online grocery store, Hello Fresh, gives its customers the chance to pick recipes and have the fresh ingredients delivered straight to their door. Whilst this option scores high points for convenience by taking the long supermarket shop out of the equation and shortening the preparation time for getting meals ready (as all ingredients are delivered pre-measured), it’s rather expensive which makes it unlikely that customers will use this service consistently in replacement of their usual weekly grocery shop.
Do these models have a future in the fashion retail industry?
Within the realm of fashion retail, subscription-based company, Stitch Fix, offers a different approach to online shopping. Customers fill out a quiz about their personal style and, for a monthly fee, Stitch Fix then sends them a curated box of items each month that might match their preferences. You can try the items on at home and only pay for what you keep. Whilst the concept of unboxing clothes picked out by a personal shopper might appeal to some, the novelty doesn’t last – ultimately, people like to be in control of what they buy.
Luxury fashion rental, on the other hand, is a much more exciting space that has gained traction over the years as companies try to expand their audience and address the fashion industry’s environmental impact. HURR, a luxury rental platform, gives people the opportunity to rent their designer items out or rent designer items from others. This approach works well for luxury and designer goods; they’re considered desirable but are often out of reach for those with less disposable income. A rental market creates accessibility for those that can’t afford to pay £900 for a designer dress by giving them the opportunity to rent it for a fraction of the price.
Which industries do subscription and rental options work best in?
In the eyes of the consumer, a physical product is very different from a digital service or product. As humans, we tend to want to own physical items but are more relaxed with the idea of digital products like films or streaming services being temporary.
Within an industry like fashion or beauty where the choice of products is huge, subscription-based models alone are less likely to retain long-term customers. This approach limits the subscribers to a smaller selection of brands and items that, in most cases, you don’t get to choose yourself. It’s exciting to receive a mystery box on occasion but not something most would happily pay for regularly. A rental-based approach, however, does the opposite of this and provides more choice to people. It opens up the luxury fashion market to a whole new audience who are excited at the prospect of wearing pieces that would never have been available to them before.
What future do these models have?
Subscription and rental-based models have been used for centuries and, as recent trends have shown, they still have relevance in today's retail setting. The usage of subscription-based models is on the rise, however... it’s clear that they work much better in sectors like digital entertainment or travel where the demand is higher and we’re more comfortable to handover control. While it has become commonplace to rent films online rather than physical copies from a store, it’s far less likely for fashion to follow suit at that same scale because people’s relationship with clothing is far more intimate and personalized. Although a growing number of rental models are appearing in the luxury goods sector, this approach feels like less of a necessity and more of a novelty.
This article is part of our 2022 "Crystal Ball" Trend Predictions report. Download the report here and discover more exciting topics we'll be exploring throughout the year.