It’s back to school season and just on time, Nike has rolled out the Nike Adventure Club for ‘Generation Alpha’ – for those ‘consumers’ aged 2-10. When you think about subscription services, you likely think about tech or tech-adjacent brands. Amazon has Prime and AWS Cloud Computing, Microsoft has Office 365 and Azure, Apple has iCloud and Apple Music. There’s any number of permutations of ‘XaaS’ (Whatever-as-a-service) models.
In business, the ‘XaaS’ model can significantly impact cash flows, representing a shift from capital expenditures in which large sums of money are spent at a single time to operating expenses which essentially distribute the expense over time. But also, for consumers too. A new mobile device might represent a significant expense that will likely be obsolete in a few years, whereas a subscription service might entitle you a new device every two years, without having to pay cash up front.
Nike’s service will allow kids to select Nike and Converse shoes “for the right-fitting shoe as their feet – and tastes – evolve.” In addition to shoes, the subscription service comes with adventure guides, filled with outdoor games and activities that parents can do with their kids. Pricing tiers are range from $20/month for 4 pairs of shoes, to $50/month for a new pair every month. Parents will have the option to upgrade, downgrade, or pause the subscription at any time.
As reported by The Motley Fool, “In providing footwear, we’re always trying to answer, ‘What do kids want?‘” said Dominique Shortell, director of product experience and retention for Nike Adventure Club. “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.”
While it may seem like this approach could lead to wasteful consumption, Nike says shoes that have been worn as part of the Nike Adventure Club will be assessed once they’ve been returned. Those in good condition will be donated to a nonprofit and given to kids in need. Those that are unusable, will be recycled via Nike’s Grind program, which grinds up old athletic shoes and turns them into playgrounds or running tracks. This ensures that used shoes don’t end up in the landfill.
Mara Signer, research and insights manager for consulting firm Smarty Pants, explains the trend, “Not only are families relying on convenience-driven subscription services ranging from streaming content to dinner solutions to apparel, but there is also a dramatic increase in these services designed specifically for children. Yumble is sending weekly kids’ meals to their doorsteps; toy subscriptions like Tinker Crate, Little Passports and Kiwi Crate are delighting kids with new playthings and adventures each month; and Rockets of Awesome and FabKids are making sure new outfits arrive each month.”
She adds that positioning the subscription as part of an adventure club is smart on Nike’s part since less than a third of generation Alpha consumers find the brand exciting, adventurous, or fun. “Including an activity in each shoe may be the ticket to boosting kids’ perceptions of the brand as being all of those aspects.”
The subscription model may also be an effective way for premium brands to hedge against a global economic slowdown. If prices continue to rise and incomes aren’t keeping pace, consumers will be looking for new models that help them access the brands they want without having to overextend themselves. And as long as brands can offer their products and services ‘as-a-service’ without being wasteful, they may provide a more accessible way to grow relationships with consumers.
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