American Eagle subscribes to growing trend in apparel retail

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American Eagle subscribes to growing trend in apparel retail

By Dan Berthiaume - 02/21/2019
American Eagle Outfitters is joining the ranks of retailers with a subscription service.

The specialty apparel chain is piloting a subscription service called American Eagle Style Drop that offers unlimited access to clothing items for a flat monthly fee of $49.95. Members can browse an assortment that is updated every week and includes new styles that are previewed before being offered to the general public. Items are shipped free and customers can keep them as long as they want, including permanently.

When customers are ready to return an item, they can ship it free in a prepaid envelope. Subscription includes unlimited exchanges. In addition, customers can ship clothing to have it laundered and returned, free of additional charge. Customers can cancel at any time.

The Style Drop site advises customers they will need to stock at least eight items in their virtual closet to receive a box, and should stock at least 20 pieces to ensure seamless shipping. Customers can prioritize their top picks, which American Eagle will try to ship first. Customers can also notify American Eagle when they are preparing a return to speed up exchanges.

American Eagle is falling into line with a January 2019 fashion retail prediction made by Canaccord Genuity consumer analyst Camilo Lyon, who said in an investor note more brands will offer subscriptions. However, American Eagle may want to tread carefully, as Lyon also predicted most of these ventures will fail.

“In our opinion, subscription models, if successful, are the holy grail, largely due to the predictability of cash flows, low incremental expenses, and greater customer loyalty, which in turn translates into higher multiples paid to these models,” said Lyon. “(B)ut most will fail because their relationship with their consumer is likely based on discounting.”

American Eagle operates more than 1,000 stores in the United States, Canada, Mexico, China and Hong Kong, and ships to 81 countries worldwide through its websites.