Amazon Prime, long the benchmark for retail subscription programs, has 150 million members globally paying a monthly or annual fee for access to services ranging from free delivery of products to digital media content. Prime’s customer proposition is one of the key ingredients in Amazon’s success. As Amazon CEO, Jeff Bezos, once said:
“We want Prime to be such good value, you’d be irresponsible not to be a member”.
Many omnichannel retailers have followed Amazon with their own subscription programs. Walmart+ members, for example, will pay slightly lower subscription fees than Prime to receive free delivery, a discount on fuel and other benefits such as access to Walmart’s scan and go app instore.
What’s striking about most retail subscription services, including Walmart+, is how they follow Amazon’s lead by placing free delivery of online products at the heart of their proposition, rather than the value delivered to customers shopping in their stores. Online shoppers receive the lion’s share of value in Walmart+ for example.
Enter Pret a Manger
UK coffee shop chain Pret a Manger has just launched “YourPret Barista,” offering up to five drinks a day for £20 a month. It has hit the headlines because of its amazing customer value at a time when store retailers are looking for ways to win back customers. Pret manages the potential for gaming the scheme by buying coffees for all your friends with a condition that each drink must be bought at least 30 minutes apart.
Pret’s offer sets a new benchmark for a store retailer subscription program. So, why have so few store retailers introduced compelling subscription programs? Most retailers with stores are held back by their legacy systems. In particular, point-of-sale (POS) systems lack the flexibility to handle the real-time redemption and personalisation needed to manage subscriptions. Pret however manages its program in the cloud, using Eagle Eye’s AIR platform. When a YourPret Barista member presents at the checkout, Pret’s POS calls Eagle Eye AIR in real time. AIR checks the member’s entitlement and responds immediately to confirm that the POS should apply the appropriate discount (or not).
The matrix below highlights where most omnichannel retailers sit relative to digitally connected retailers such as Pret a Manger.
In the bottom left, #1 quadrant sit “Every Day Low Price” retailers with no loyalty program and limited ability to connect digitally with their customers, since there is no incentive for the customer to identify themselves. Aldi is an example that faces exactly this challenge. With no loyalty program or online channel, it has almost no opportunity to create digital connections to its customers.
Most retailers with loyalty programs sit in quadrant #2 – they have a direct connection with many of their customers, through the loyalty program, and also have analytics teams who can provide insights from sales and loyalty data about customers. However, they are held back from capitalising on the digital opportunity by legacy systems that stop them building a personalised digital connection with customers. If they wanted to run a one-to-one subscription service, like YourPret Barista, most would find their existing technology does not allow them to deliver it at the checkout.
Pret a Manger combines the ability to analyse customer-level data with real-time personalisation, allowing them to deliver personalised digital marketing, such as subscription programs, to customers shopping instore as well as online. As Pret a Manger CEO, Pano Christou, recently put it:
“This is just the first step in our plan to bring Pret to more people. We now have the building blocks to establish Pret as a multichannel, digitally-led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.”
A one-to-one digital connection to the customer at the checkout puts Pret in a unique position because it can target individual consumers with personalised digital offers. Pret now has access to the same digital marketing tools that Amazon and the ecommerce pureplays take for granted.