With the cost of raising a child in the UK now estimated to be over £225k, parents are increasingly looking at ways of saving money, presenting opportunities for innovative retailers to boost revenue through reconditioning and subscriptions.

Retailers such as eBay and second-hand specialists such as Preloved and Buggy Revival have successfully capitalised on the growing second-hand baby products market. This concept is nothing new in retail, with electronics manufacturers (e.g. Dell, Apple, Dyson), mobile phone companies and car dealerships all competing with third-party resellers to ensure they keep revenue and margin benefits. Some manufacturers themselves are now looking to internalise this potential extra revenue stream.

Mamas and Papas, a retailer and manufacturer of pushchairs, furniture and baby products has launched a trade-in system called Loved For Life where they offer gift cards to buy back a pushchair, service it and then sell it as a reconditioned model. Parents can recoup some of the initial outlay on a relatively expensive purchase without hassle and it allows other parents to buy nearly-new items at a reduced cost, with the confidence in safety and guarantee that the manufacturer provides.

Doing this in-house gives the business an additional post-purchase revenue stream, which, if the buy-back price is competitive, should allow margin benefits whilst also reducing environmental waste and increasing long-term brand loyalty. It may also open a customer segment that may otherwise have been priced out of the market, however businesses must be aware of cannibalisation of full-price sales.

A further model is subscriptions; Danish retailer Viggahas an innovative approach to the problem of young children outgrowing clothes quickly. For a monthly fee, a parent receives 20 items of baby clothing in the right size which they then swap as their child grows. Vigga inspect, clean and launder the clothes and they are then sent out to new customers. This subscription model provides a regular, predictable and upfront revenue stream, which, in an industry with many age-specific products, would seem to have significant potential as a business model.

Safety is a must-have for the Millennial generation of parents but sustainability and a demand for on-trend products are also important. Subscription models and reconditioning with a manufacturer safety guarantee increase the acceptance of buying or using second-hand and therefore present significant opportunities to increase lifetime value of a customer for retailers in both the baby products sector and in wider industries.

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Jessica Williams