Subscription services on the rise amongst South Korea's groceries

The service has helped Emart 24 boost sales of its ice cup vouchers.

Subscription services have become a key marketing strategy for grocery retailers in South Korea to build shopper loyalty, recruit new customers and maintain the existing ones, according to a report from IGD.

Shinsegae Department Store recently launched fruit subscription services in the district of Gangnam for its VIP customers, with a basket of three to five kinds of fruits delivered to the customer's home weekly. Lotte Department Store also has been testing subscription services of bread, wine and coffee at its branch in northern Seoul since April.

“Due to the disruption caused by the coronavirus outbreak, retailers are competing for loyal customers through tailored and highly differentiated services,” IGD’s senior retail analyst Jiong-Jiong Yu said.

The service has proved to be effective: convenience store chain Emart 24 saw sales of its “ice cup” vouchers shoot up as soon as it launched the subscription service in June. Shoppers have the option to buy one-week or two-week vouchers via the mobile app.

With discounts of up to 50% and offers of home delivery, the report noted that these make an appealing proposition in the post-COVID period when shoppers remain wary about visiting physical stores and careful on how they spend the money.

IBK Securities analyst Kim Tae-hyun said that the pandemic has served as a catalyst for the subscription economy’s growth, as the rising number of one-person households driving convenience stores to offer more subscription deals.

Experts also expect a rise in the use of subscriptions to buy food online, Yu said. Globally, the subscription economy is expected to reach $530b in 2020, more than double from $215b in 2000, according to Credit Suisse.