STORES Magazine - July 2015 - 40


n

BUSINESS OPERATIONS

"The key to
success is just
innovation.
You can't be
stale. You have
to be willing
to change
your business
model to
meet the
needs of your
customers."
- Sue Cho,
The Honest Company

40

STORES July 2015

have to go to the store, and don't have to update their wardrobe on their own. That could
create a really deep relationship with a brand
or retailer, where providing subscription services protects that core consumer and takes
a greater share of their wallet. You're taking
them out of the mall, if you will, when transitioning them over to the subscription model."

Bricks-and-mortar "is the old standby in
many ways, and yet it's being reinvented today
as brands use it as one of many touchpoints in
a customer relationship. That's certainly how
we are thinking of it, not just as a rich way to
bring our brand to life ... but also as another
way to deeply engage the customer who interacts with us online."

MANY TOUCHPOINTS
In the meantime, brands originally built on
the subscription model are making inroads in
the other direction. Consumers are introduced
to the scope of the brand's offering, they find
products they like - and then they can buy
those products on a more frequent basis either
through an e-commerce platform or a bricksand-mortar store.
Consider Birchbox, founded when there
were "no modern subscription services to
speak of, besides the classic wine- or book-ofthe-month clubs," says Deena Bahri, Birchbox
chief marketing officer. Though the core of the
company is still a $10-per-month box of personalized samples, Bahri is quick to say that
Birchbox isn't really a subscription service.
"We're a beauty and grooming retailer,
providing an efficient, personalized way to discover and shop for new products that are right
for you," she says. "Our model extends far beyond a monthly subscription service. The online shop has been a core part of that platform
from day one, and it's something that sets us
apart, as does our commerce-plus-content
strategy - we publish original editorial content about every product we sample and sell to
help customers really understand them."
In 2014, Fortune reported that 30 percent
of Birchbox revenues came from the sale of
full-size products. That same year, Birchbox
opened its first bricks-and-mortar store in
Manhattan's SoHo neighborhood.
"Brands like ours that want to be at the right
place at the right time for the right customer
need to think about integrating all the channels into the customer experience, from the
most novel to the most timeless," Bahri says.
"Mobile is obviously the novel channel
that is still evolving and being understood by
brands and consumers alike," she says. "We're
investing a lot there, whether it's in keeping
our app exciting and useful, or in staying in
front with the latest social tools that are native
to mobile."

EXPECTING QUALITY
As consumers have been given an increasing
number of choices in subscription services,
they've become more educated about what a
subscription service means - and as a result,
have high expectations about the quality of the
experience.
The Honest Company began in 2011 as an
effort to deliver "crucial family essentials"
like diapers right to the doors of busy moms,
with a focus on non-toxicity, sustainability
and social responsibility. Subscription services
include combination bundles of diapers and
wipes, or infant formula and vitamins. The
company's individual products are increasingly
found in bricks-and-mortar stores such as
Target, Whole Foods Market, Costco, A Pea
in the Pod and Nordstrom. But a recent focus
group survey showed that customers wanted
even more flexibility, says lead email marketing manager Sue Cho: They wanted to be able
to customize their bundles.
"The key to success is just innovation," she
says. "You can't be stale. You have to be willing to change your business model to meet the
needs of your customers."
The Honest Company recently worked with
Retention Science to improve the stickiness of
its email campaigns, and found that personalization was critical there, as well. A significant
lift in conversions has been the result. The
company, which recently has been valued at $1
billion, will continue to grow and adapt. Currently, 60 percent of its revenues come through
subscriptions - still catering to the needs of
those busy moms.
"Customers today are demanding a lot more
from companies, especially online," Cho says.
"They know what they want, and when they
want it. And they expect us to know that."

Fiona Soltes, a freelancer based near Nashville, Tenn.,
loves a good bargain almost as much as she loves a
good story.
NRF.COM/STORES


https://www.honest.com/bundles https://www.honest.com/bundles https://www.birchbox.com/shop/birchbox-1 https://www.birchbox.com/shop/birchbox-1 http://www.fortune.com/2014/04/21/exclusive-birchbox-banks-60-million/ http://www.fortune.com/2014/04/21/exclusive-birchbox-banks-60-million/ http://www.fortune.com/2014/04/21/exclusive-birchbox-banks-60-million/ http://www.recode.net/2015/03/01/how-jessica-albas-the-honest-company-thinks-it-can-build-a-healthier-johnson-johnson/ http://www.recode.net/2015/03/01/how-jessica-albas-the-honest-company-thinks-it-can-build-a-healthier-johnson-johnson/ http://www.NRF.COM/STORES

Table of Contents for the Digital Edition of STORES Magazine - July 2015

Top 100 Retailers
Retail People
No Flash in the Pan
Lost and Found
C2W
Editor's Page
President's Page
Retail Politics
NRF News
POV
NRF Communities Update
End Cap
Trends
Online
Technology
Human Resources
Social Media
Merchandising
Software
Finance
Marketing
Personnel
Operations
STORES Magazine - July 2015 - Cover1
STORES Magazine - July 2015 - Cover2
STORES Magazine - July 2015 - 3
STORES Magazine - July 2015 - 4
STORES Magazine - July 2015 - 5
STORES Magazine - July 2015 - Editor's Page
STORES Magazine - July 2015 - 7
STORES Magazine - July 2015 - President's Page
STORES Magazine - July 2015 - 9
STORES Magazine - July 2015 - Retail Politics
STORES Magazine - July 2015 - 11
STORES Magazine - July 2015 - NRF News
STORES Magazine - July 2015 - Trends
STORES Magazine - July 2015 - 14
STORES Magazine - July 2015 - 15
STORES Magazine - July 2015 - 16
STORES Magazine - July 2015 - 17
STORES Magazine - July 2015 - 18
STORES Magazine - July 2015 - Top 100 Retailers
STORES Magazine - July 2015 - S2
STORES Magazine - July 2015 - S3
STORES Magazine - July 2015 - S4
STORES Magazine - July 2015 - S5
STORES Magazine - July 2015 - S6
STORES Magazine - July 2015 - S7
STORES Magazine - July 2015 - S8
STORES Magazine - July 2015 - S9
STORES Magazine - July 2015 - S10
STORES Magazine - July 2015 - S11
STORES Magazine - July 2015 - S12
STORES Magazine - July 2015 - S13
STORES Magazine - July 2015 - S14
STORES Magazine - July 2015 - S15
STORES Magazine - July 2015 - S16
STORES Magazine - July 2015 - Retail People
STORES Magazine - July 2015 - 36
STORES Magazine - July 2015 - 37
STORES Magazine - July 2015 - No Flash in the Pan
STORES Magazine - July 2015 - 39
STORES Magazine - July 2015 - 40
STORES Magazine - July 2015 - Lost and Found
STORES Magazine - July 2015 - 42
STORES Magazine - July 2015 - 43
STORES Magazine - July 2015 - C2W
STORES Magazine - July 2015 - Online
STORES Magazine - July 2015 - 46
STORES Magazine - July 2015 - 47
STORES Magazine - July 2015 - Technology
STORES Magazine - July 2015 - 49
STORES Magazine - July 2015 - Human Resources
STORES Magazine - July 2015 - 51
STORES Magazine - July 2015 - Social Media
STORES Magazine - July 2015 - 53
STORES Magazine - July 2015 - Merchandising
STORES Magazine - July 2015 - 55
STORES Magazine - July 2015 - Software
STORES Magazine - July 2015 - 57
STORES Magazine - July 2015 - Finance
STORES Magazine - July 2015 - 59
STORES Magazine - July 2015 - Marketing
STORES Magazine - July 2015 - 61
STORES Magazine - July 2015 - Personnel
STORES Magazine - July 2015 - 63
STORES Magazine - July 2015 - 64
STORES Magazine - July 2015 - 65
STORES Magazine - July 2015 - Operations
STORES Magazine - July 2015 - 67
STORES Magazine - July 2015 - 68
STORES Magazine - July 2015 - 69
STORES Magazine - July 2015 - 70
STORES Magazine - July 2015 - 71
STORES Magazine - July 2015 - POV
STORES Magazine - July 2015 - NRF Communities Update
STORES Magazine - July 2015 - End Cap
STORES Magazine - July 2015 - Cover3
STORES Magazine - July 2015 - Cover4
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