“We have entered a new world of retail where...subscription services are the newest player"

“We have entered a new world of retail where...subscription services are the newest player"

Traditional apparel retailers are facing new competition from online subscription services that send customers boxes of handpicked fashion items to choose from or offer auto-replenishment of fashion basics.

Apparel subscription services such as Stitch Fix and Trunk Club, as well as the recent launch of Amazon's Prime Wardrobe, are examples of the latest shopping channel in the swiftly evolving US$217.6bn US apparel market, according to global information company The NPD Group. 

Amazon's Prime Wardrobe is offered as a benefit included in Prime membership. Featuring 1m items, including brands outside of Amazon's private labels, such as Adidas, Calvin Klein, Levi's and Hugo Boss, the service lets customers order clothing, shoes and accessories at no upfront charge, take seven days to decide if they want them, and pay only for what they keep.

Amazon to offer "try before you buy" service

This evolution in the US apparel retail market is evidenced by the fact that both Amazon and the apparel subscription service, Stitch Fix, were among the top ten retailers last year in terms of online apparel wallet share, according to NPD's online receipt mining service, Checkout TrackingSM E-commerce.

"We have entered a new world of retail where the traditional leaders are faced with unconventional channel competition, and subscription services are the newest player," says Marshal Cohen, chief industry analyst, The NPD Group.

"Consumers are more critical about the purchases they make today and no longer purchase just for the sake of purchasing. The personalised approach of subscription services complements the shift toward more prioritised spending."

As well as being a threat to traditional retailers, NPD believes subscription services offer an up-and-coming opportunity – particularly in the fashion industry.

A recent NPD survey found only 15% of consumers have ordered subscription boxes, another 14% haven't yet ordered them but plan to, and 35% don't even know what these services are.

The subscription method of shopping for apparel is still in its infancy, but its consumer reach is expanding, NPD says.

Stitch Fix, Trunk Club, and Le Tote subscription membership grew to nearly 5% of online shoppers, and their average annual spend per purchase increased 5% to $170. Stitch Fix subscribers gave one-third of their online apparel wallet to Stitch Fix, while Trunk Club subscribers gave 40% of their online apparel wallet to Trunk Club.

"There is a great deal of room to grow within the subscription model, and the competitive field will continue to expand as online retailers develop subscription services and options for auto-replenishment of fashion basics," adds Cohen.

"This kind of innovation, delivering personalisation and convenience, will continue to change the face of retail for fashion."