Asia-Pacific retailers tap subscribers to drive growth

Subscription services are a constant source of revenue during a downturn.

Retailers in the Asia-Pacific region have turned to selling subscriptions over traditional products as they brace for an economic downturn where consumers think twice about spending.

The subscription model is increasingly becoming a way for retailers to ensure stable revenue streams and deeper consumer engagement, according to Erik Almadrones, consulting customer and growth leader at Ernst & Young Asia Pacific, told Retail Asia.

“Subscription businesses are growing at a much, much faster rate than traditional product-based businesses,” he said. “Stability and predictability become key to the value proposition for subscription services.”

Almadrones said retailers should consider offering stable pricing for the first few years of a subscription to attract cost-conscious consumers during uncertain times. Subscriptions replace one-off purchases, allowing brands to engage with consumers continuously.

He noted that subscription businesses can achieve-two-and-a-half times the lifetime value of traditional retail customers, highlighting the potential for long-term customer loyalty.

Consumers in the region are increasingly choosing subscription services to save money and get discounts, according to a study released in June by KPMG International Ld. and GS1.

These services, which involve a fixed monthly fee for regular product deliveries, address key retail challenges such as the need for consistent reordering. Consumers in countries like Australia, Vietnam, Indonesia, Malaysia, Japan, India, and Thailand value “exclusive access to products or deals.”

Subscription adoption is the highest in Mainland China (63%), Hong Kong (57%), the Philippines (53%), and Vietnam (51%), according to the study. Japan (21%), Malaysia (26%), and Australia (29%) had the lowest adoption rates.

The trend covers not only fast-moving consumer goods but also digitally delivered services like media and entertainment.

Almadrones said subscriptions allow continuous engagement with customers, shifting the relationship from a one-time transaction and deepening retailers’ understanding of customer preferences and purchasing behaviours.

He said the goal is to “get a loyal customer” who is familiar with the brand, fostering long-term relationships. This allows retailers to nurture loyalty and develop targeted marketing strategies based on individual consumer data.

Almadrones said retailers know their consumers better than manufacturers do, allowing them to craft subscription offers that align with consumer habits.

“For example, if you are a beauty retailer, you'll very well know that a foundation [makeup product] needs to be replaced every couple of months, but a manufacturer may not have that sort of understanding of the consumer,” he said.

“The key opportunity for retailers is using and leveraging their understanding of consumers to better craft subscription offers that best meet the needs of customers," he added.

However, Almadrones warned against a one-size-fits-all approach. For instance, a water filtration system may not be as valuable in Japan where water quality is high, compared with countries where water purity is a concern.

He said retailers could combat “subscription fatigue” in markets like India and Southeast Asia by understanding customer preferences and offering complementary products. Continuous innovation in subscription offers is needed to keep them fresh and relevant.

“Get to know your customer,” he said. “Get to know adjacent categories so that you make relevant recommendations to complement existing subscriptions.”