U.S. Markets closed

Indigo launches $39 subscription program for loyalty members

Indigo is launching a subscription program for its Plum loyalty members. (Photo by Roberto Machado Noa/LightRocket via Getty Images)

Another Canadian retailer is launching its own Amazon-style subscription-based loyalty program.

Indigo Books and Music Inc. (IDG) announced Wednesday that it is launching a subscription program for its Plum Rewards loyalty members, offering perks such as free shipping and access to exclusive events as the retailer undergoes a strategic shift aimed at improving profitability.

For $39 per year, Plum Plus subscribers will have access to several perks, including free shipping, a 10 per cent discount on “almost everything” at Indigo, Chapters, Indigospirit and Coles stores, and “VIP access” to promotions and events. The existing Plum Rewards program, which is free, will run in tandem with the new subscription program.

Indigo had initially tested the subscription service earlier this year in Edmonton and Ottawa before rolling out a pilot program in Manitoba and British Columbia in the summer.

Samantha Taylor, Indigo’s chief marketing officer, said the initial response from customers had surpassed what she called “pretty aggressive targets.”

Indigo would not disclose what these targets were, but said the results were double of what they had initially anticipated.

“The intention was to test the waters and talk to customers about the benefits they would like,” Taylor said Wednesday. “Both of those things far exceeded our expectations in both markets.”

Taylor also said that the company was able to get feedback from users about what assets of the program they found beneficial and what they wanted more of.

While Indigo did not make drastic changes from the initial pilot program, Taylor said there was significant feedback from users about access to unique experiences and events, including themed after-hours shopping opportunities.

“That was a very important piece of the value proposition for our customers,” Taylor said.

The loyalty program comes as the book retailer grapples with declining sales amid a strategic shift that has seen it “reduce promotion activity to improve profitability and eliminate unprofitable sales,” the company said.

Indigo’s comparable sales fell 7.6 per cent in the first quarter of its 2020 fiscal year. At the same time, the retailer reported a net loss of $19.1 million, or 69 cents per share, compared to a loss of $15.4 million, or 57 cents per share, over the same period last year.

“This decline in profitability was attributed to the decline in sales and restructuring costs, partially offset by lower selling, administrative and other expenses as the company continues its cost-cutting initiatives,” the firm said in a news release last month.

Indigo is not the only company that has turned to subscription loyalty programs. As retailers grapple with the success of e-commerce behemoth Amazon and its popular Prime service, more retailers have been launching their own subscription models in an attempt to retain customers and build loyalty.

Loblaw Companies Ltd. announced last year that the grocer would be launching an Amazon Prime-esque, $99-a-year subscription program for its loyalty members, offering perks such as free shipping and online grocery pickup as the company continues to aggressively invest in e-commerce.

Sign up for the Yahoo Finance Canada newsletter.

Download the Yahoo Finance app, available for Apple and Android.