Fortnum & Mason. Selling loyalty back to you.
Fortnum & Mason has launched its first loyalty scheme in 318 years, and customers pay 100 pounds a year to join. The money flows the wrong way round.
THE GIST ON FORTNUM & MASON: "Hampered"
What has Fortnum & Mason launched?
Fortnum & Mason just launched its first loyalty programme in 318 years. Customers pay 100 pounds a year to join. They're selling loyalty back to their customers.
Fortnum's opened in 1707, has been a Royal Grocer since 1910, and is famous for tea, hampers and supplying Buckingham Palace. The scheme is Friends of Fortnum's: 100 pounds a year paid upfront, a 50 pound welcome parcel, free delivery and seasonal gifts.
Why is it backwards?
Every other scheme in Britain is the brand paying the customer. The Clubcard gives you points off your next shop. Boots Advantage gives you points for every pound. Pret's coffee subscription is self-explanatory. The brand subsidises your visits to keep you loyal.
At Fortnum & Mason, the customer pays the brand, 100 pounds upfront. The financial flow is running backwards.
What is breakage economics?
Gyms make money because most members don't go after February. Pret's subscription works because most of the time you forget you've got it. Subscriptions print money when customers stop using them.
Fortnum's is thinking the same way. They get the cash flow and hope they never have to ship the goods.
What is Fortnum's really after?
Subscription businesses get higher valuation multiples than retail. So Fortnum & Mason is trying to reclassify itself from luxury retailer to luxury subscription business. Different industry, different valuation, more cash. The market values predictable cash flow much more than it does hampers. Do you have a loyalty card in your wallet that's actually charging you?
Would you pay to join a shop's loyalty scheme?
Your take. One tap, then see how everyone else voted.
Quick answers
How much does Friends of Fortnum's cost?
100 pounds a year, paid upfront, with a 50 pound welcome parcel, free delivery and seasonal gifts.
How is it different from other loyalty schemes?
In most schemes the brand pays the customer, as with Clubcard points. At Fortnum & Mason, the customer pays the brand.
What is breakage economics?
Subscriptions make money when customers stop using them, as gyms do after February. Fortnum's gets the cash flow and hopes it never has to ship the goods.
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