How subscription models could revolutionise retail

This article was first published in Retail Week on the 13th May 2015

“I wish someone would invent something just like Spotify but a bit more expensive,” said Alex Kapranos, the frontman of rock band Franz Ferdinand recently on Twitter. Kapranos was reflecting, perhaps, on Spotify’s payment structure that sees rights holders receive a maximum of $0.0084 per stream.

Other musicians have also raised objections to their share of the spoils from Spotify’s mixed advertising and subscription-based model. Last year Taylor Swift announced her decision to remove her music from Spotify.

As subscription models extend beyond music to other categories such complaints could become common from stores and the brands stocked in them. The evolution of subscription is likely to raise fundamental questions including “what is a retailer?” and “how do people shop?” as the ‘internet of things’, connected technology in the household and beyond, transforms shopping.

Spotify and equivalents such as Deezer have already placed great pressure on definitions of retail in a category where traditional ‘bricks and mortar’ retailers such as HMV have already had to face the disruptional industry challenges created by downloads, iTunes and piracy. Other sectors are seeing subscription-based services cutting out the retailer to go direct. Subscribers to the Dollar Shave Club in the US get all they need to shave delivered each month. Meanwhile HP’s ‘Instant Ink’ service uses technology in connected printers to arrange delivery of ink direct to people’s doors when they are running low.


As IOT (Internet of Things) becomes a reality, such services are likely to move to a more sophisticated subscription model that doesn’t necessarily include the supermarket or local retailer. Home and appliances will become truly connected and automation will lead to category management based on subscription.

There’s something of a ‘back to the future’ element operating because, decades ago, most UK homes received their daily milk via subscription in the form of the milkman. However, the issue for retailers and brand owners with the new model is that tech companies, appliance manufacturers and online platforms are blurring traditional boundaries.

Retailers and brands have already been disrupted by the rise of Aldi and Lidl showing they don’t need famous brands and extensive shopper marketing campaigns to grow. Now retailers and brand owners like Procter & Gamble and Unilever should fear an internet of things that manages our shopping for us.Dash-Button

P&G has reacted and Gillette now offers shaving subscription from its website in partnership with Amazon. P&G was also quick to jump in with Amazon Dash and its branded buttons that enables a consumer to order a product when it runs out automatically through Amazon Prime.

The likes of Amazon Dash might look good for brand owners now – providing another route direct to consumers in the home – but no-one worried about what brand the milkman delivered. Convenience was everything, so what can we do when full machine to machine automation of shopping begins to put brands and traditional retailers at risk?

Those retailers with data and logistical muscle will evolve into subscription as Amazon is already doing and we will see business models akin to the mobile phone category, with monthly subscriptions that bundle durable device and consumable. Ikea’s latest prediction is that we won’t have fridges by 2025 and our food will be delivered fresh each day by Amazon’s drones. But 10 years is a lifetime for technology companies and retailers, so by then our fridges might just be so smart that they’ve become convenience stores in our connected homes.


Forget Charlotte Street and look to the High Street – What politics can learn from retail

First published in Brand Republic on May 6th 2015

As we pull into the last few days of the 2015 General Election, I’m reminded of the main political parties’ lack of finesse when it comes to campaign communications. They only get to flex their marketing muscles every five years, so it’s not an area of expertise and their reflex action is to reach for a big blunt message and hammer it home repeatedly in traditional channels.

This time the approach is further exposed by voter cynicism and the rise of social media. So rather than looking to Charlotte Street for inspiration, maybe politicians should focus on the techniques of the High Street. It’s not as far fetched as you might think. There are plenty of similarities where retail techniques have worked in politics.

Politics is all about connecting emotionally with voters, which is something that the two main parties have failed singularly to do as their mid-30 per cent poll ratings show. The same has happened in retail where immovable monoliths like Tesco and Sainsbury have been outflanked by new consumer champions like Aldi and Lidl, who adopted a distinct tone of voice that spoke directly to the concerns of people.

Just as consumers have responded to this approach, so Nigel Farage and Boris Johnson have used humour and ‘telling it like it is’ to refresh the parts that other politicians can’t reach. Nobody is saying that you can laugh your way to electoral success, but a joshing aside disarms and opens doors to help your poke your real message through.

An area where retail really can teach politicians a thing or two is its attitude to ‘new’. It’s the most powerful word in marketing and supermarkets and brands apply it liberally. Yet in political marketing, the emphasis can be on defending the core vote, so ‘new’ is sparingly used. It’s worth remembering that one of the most potent political forces of the past two decades was ‘New’ Labour, which won three majorities before its sheen started to come off.

Reacting in real time is another area that retailers have taken up as their own. Aldi’s reactive adverts that poked fun at Morrison’s and Sainsbury’s were two great examples of how swift action can leave competitors leaden footed. In some ways political operators are starting to notice this too. Look at the Tories attack ads with Ed Miliband as a puppet controlled by Nicola Sturgeon.

In a tight election with little room for elaborate promises, making the most of the smallest differences is a strength. With price wars entrenched, stores thank shoppers on their till receipts reminding them how much they’ve saved by shopping with them. Could politicians do something similar to show how their policies would make a difference?

There is an ongoing trend in the retail sector of decentralising powers to local stores. You need only look at local supermarket stores on Facebook, or the fact that GAME hands over all Twitter power to their store managers. Local engagement gets people’s attention because it shows you understand what matters to them. This is the complete opposite to how political parties work where the powerful central hand makes local communications weak.

If humble retailers teaching our political masters a few lessons seems a bit far-fetched, it is worth remembering that one of our most successful Prime Ministers was a grocer’s daughter. Retail is detail which means leaving no stone unturned in the search for advantage. That’s something that Mrs T understood instinctively.