Nike takes advantage of consumer demand for subscription loyalty programs

Nike's recently announced Adventure Club, a subscription service allowing parents to pay a monthly fee in exchange for regular kids’ shoes deliveries, is a clear response to changing consumer demands toward more subscription programs and premium loyalty packages.

In fact, according to a new study by Clarus Commerce, about one in three shoppers are willing to join paid loyalty programs specifically for clothes and accessories.

According to the Clarus 2019 Premium Loyalty Study, 39 per cent of consumers say frequency of benefits has the biggest influence over their decision to renew a paid loyalty membership. With Nike’s Adventure Club structured in paid tiers, the brand is guaranteeing a specific number of shoe replenishments, catering to shoppers’ demand for recurring products at their doorstep. Each box includes physical and digital kids’ content, like activity guides and journals that encourage outdoor play.

Clarus' report also found 30 per cent of consumers are looking for subscription programs that offer personalised benefits, which Nike is delivering with custom shoes boxes.

“In providing footwear, we’re always trying to answer, ‘What do kids want?’” director of product experience and retention for Nike Adventure Club, Dominique Shortell, said. “But an equally important question is: ‘What kind of experience are we providing for their parents?' We want to make shopping for footwear as convenient as possible for them."

Nike's first subscription shoe service for kids brings the latest silhouettes to their doorstep, and is targeted at kids age 2 to 10. Subscribers can choose between three tiers of subscription services, ranging from four pairs a year to 12 pairs a year, and from more than 100 different sneaker styles. If subscribers like the shoe, they can keep the pair, while if they're ready to replace shoes, they send them back and Nike Adventure Club will either donate or recycle the returned sneaker.

In addition to shoes, the subscription service comes with exclusive adventure guides featuring outdoor games and activities parents can do with their kids. The guides are a collaborative partnership between Nike and KaBoom, a national non-profit focused on encouraging kids to lead active, healthy lifestyles. Nike's subscription service commenced on 12 August.

Clarus Commerce CEO, Tom Caporaso, said the Nike Adventure Club sneaker subscription is set up to establish stronger, more direct customer relationships, especially during a time where the apparel market is ripe for programs that challenge the status quo, spanning monthly rentals, recurring subscriptions or premium loyalty programs that reward customers for repeat purchasing.

“In fact, our recent study found over one-third of consumers [34 per cent] are willing to pay for premium loyalty programs for clothes and accessories, and parents in particular are in high demand for convenient options that will meet the needs of their growing children,” he told CMO.  

“The subscription’s pricing tiers allow parents and kids to personalise their shipped-boxes to match current styles and needs, making it more likely customers will renew their subscription without a second thought. And if the program is successful, this subscription could be a stepping stone for Nike to test other recurring models, such as a premium loyalty program or varying tiers for its current Nike Plus membership."

Caporaso believed the program will enable Nike to drive higher customer engagement and long-term loyalty that will be passed down from one generation to the next.

“For now, Nike is clearly listening to its customers for seamless replenishment and delivery, and by meeting this demand with a flexible subscription," he said. "While the subscription will hook parents onto the brand from their child’s early age, kids will also develop a comfortable familiarity with Nike that will continue as they grow.”

It's clearly becoming more difficult for retailers to maintain customer loyalty and consistency. In the Clarus report, nearly 70 per cent of consumers agreed loyalty is more difficult for a retailer to maintain than ever before. What's more, 88 per cent said retailers could do more to earn their long-term loyalty.

More than half of all survey respondents (58 per cent) currently belong to a premium program while just under two-thirds plan to join one in the next 12 months. Eighty-six per cent of consumers who are satisfied with the special benefits offered by a retailer’s paid loyalty program will likely choose that retailer over a competitor that is offering a lower price.

In addition, 39 per cent of respondents said frequency of benefits has the biggest influence over their decision to renew a paid loyalty membership.

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