In search of more frequent consumers, many distributors have recently launched their subscription offers. Between services and discounts, what are the best retention strategies?
French retailers have multiplied their subscription offers in recent years. Whether Carrefour +, Casino Max, Darty Max or Monopflix, the formulas offered have invaded France, but not only. Across the Atlantic, Walmart has developed Walmart Plus, Hy-Vee, Hy-Vee Plus, and in Australia Woolworths has launched Woolworths Delivery Unlimited.
How is this proliferation explained? “Amazon accelerated in the feed during the pandemic, many retailers followed and many subscription offers emerged in 2020,” explains Michael Mansard, senior director of subscription strategy EMEA at Zuora, a platform specializing in managing subscription offers. “There has also been a rapid trade boom,” he continues.
According to UBS, the subscription market was 650 billion in 2020 and could reach $1.5 trillion by 2025. In the United States, Amazon Prime had 148.6 million users in 2021 according to data collected by Statista, that is, almost one out of every two households. Therefore, distributors reacted by offering subscriptions themselves to retain their customers during the health crisis. For the retail marketing expert Frank Rosenthal, “in the face of Amazon, the strategy of a Walmart, for example, is defensive, it is about preventing customers from going to Amazon as much as possible.” They usually offer free grocery delivery or price reductions. “In general, the American distribution is more at the service and its customers ask for more. In France, the price reduction is the dressing of the subscription offer”, continues Frank Rosenthal.
race at least saying
In this matter of price, Carrefour+ is the highest bidder. The brand has been testing in the Rouen region since September 2021 a subscription formula at 5.99 euros per month, which gives rise to a 15% refund on 7,000 Carrefour brand products, and another at 7.99 euros that gives a 15% rebate on all traditional fresh produce. Of all the subscription deals on offer, this is the cheapest and also the one that results in the biggest discount. The operation seems to take from the signal told France information that the average basket of its subscribers was 30% higher than that of non-subscribers.
In the United States, Walmart stands out by offering reductions on gasoline of the order of 5 cents per gallon. “Given the strong increase in the price of gasoline, the distributor it takes advantage of its territorial network to offer an advantage, explains Frank Rosenthal. There is also early access in stores, free click and collect, it is a program halfway between service and reduction, Walmart has a network and values it to face Amazon. “Delivery are the main levers of competition, but there is the risk of a race to the bottom,” he continues. Distributors should not lose sight of the fact that the objective is also to provide additional service to their customers.
|Carrefour||Carrefour +||September-2021||NORTH CAROLINA||€5.99/month or €7.99/month||Just around Rouen. With the first formula: -15% on 7,000 Carrefour brand products and with the second: -15% on all traditional fresh market products.|
|casino||casinomax||Jun-19||200-300k regular users (3 million downloads since launch)||€10/month or €90/year €30/year; €2.5/month for people over 65; soon €2/month for students||The subscription gives rise to -10% on the entire store directly on the ticket at the time of payment.|
|dart||Darty Max||19-Oct||500,000||3 formulas: €9.99/month; €14.99 / month; €19.99 / month||Unlimited repair, unlimited free delivery, purchase price refund, priority support and device maintenance, maintenance contract with dedicated video service.|
|fnac||fnac +||2020||NORTH CAROLINA||€9.99 the first year then €14.99||5% off books and select merchandise, unlimited free shipping and setup, access to private sales, 18,000 off shows, and partner discounts.|
|leading price||Le Club leading price||avr-21||NORTH CAROLINA||0 euros||Formula without product subscription commitment, on almost 1,000 everyday products (closet-level foods, hygiene), up to -15% on ordered products and free delivery, order possible through Whatsapp.|
|monoprix||monopflix||Aug-21||100,000||€9.9/month or €99.9/year||Immediate 10% discount on all food and hygiene purchases (more than 30,000 references available). Also valid online with free delivery in Ile de France and throughout France until the end of 2021. Available in formula for professionals.|
|Natural||subscription||mars-22||NORTH CAROLINA||€5.9 / month||Available in Lyon and Villeurbanne, it gives rise to a 10% reduction on all purchases.|
Loyalty, the ultimate goal
Retailers that are already well priced suffer less than deficit loyalty. “In France, those who are good with the price, like Lidl or Leclerc, do not need to offer subscription formulas,” says Frank Rosenthal. For others, subscription is a customer retention solution. “Our ambition is to make refueling easy and reward customer loyalty across all their food and hygiene purchases, Monoprix teams told us in writing. This new service addresses two main challenges for Monoprix: retaining and better engaging our everyday customers, and sustainably anchor our brand in their day-to-day activities”. Since the launch of its subscription in August 2021, the brand has registered more than 100,000 subscribers by offering an immediate 10% discount, free delivery for orders placed online or customer service available on WhatsApp. For Michael Mansard of Zuora, it is the Monoprix service that has the most potential because the brand has adopted the codes that make the subscription formulas offered by Amazon or Netflix successful.
The brands of the Casino group have also segmented their offer: on the one hand, Monoprix Pro is aimed at professionals with a -10% discount online and in store, a space dedicated to invoices, and the management of expense notes integrated into the Shine platform. On the other hand, Casino Max is offered to older people at a reduced price (30 euros per year compared to 90 euros for the normal rate). For Michael Mansard, “brands have every interest in accelerating by segment. Thanks to their data, they can create profiles with the corresponding services.” Personalization is one of the keys to successful subscriptions.
On the service side, Walmart offers its home delivery service: For $20 a month, a delivery person deposits purchases directly into subscribers’ refrigerators. He enters thanks to a connected lock and the Walmart customer can interact directly with him. “This service already has 4 million subscribers and Walmart is targeting 30 million in 2022,” says Michael Mansard.
Signs must set up subscriptions that correspond to their DNA. Darty, who has already excelled in the repair field with her identity tied to the trust contract, now offers the Darty Max subscription. The three formulas offered cover assistance in appliances and home appliances, with support for diagnosis, travel, spare parts and the labor necessary for their repair. “Retailers, before launching their subscription offer, must determine what makes sense for their customers, says Michael Mansard. With Darty Max, the brand plays to one of its strengths and will also position itself as a player committed to the sustainability of the products”. he concludes.