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Retail Going Global The first A S Watson Global Retail Day reveals to suppliers the A S Watson Group’s bigger picture By Mark Redvers

28 Sphere Virtually every day, an A S Watson-owned the retail business. store opens somewhere in the world. Emerging “The aim is to markets, in particular fast growing , have open 250 to 300 seen spectacular growth in recent years, as newly quality stores affluent customers splash out on beauty and a year in the healthcare products. Mainland, which More – much more – growth is anticipated, is about one third as the A S Watson Group (ASW) embarks on a of the total new major expansion plan, which will see the company stores we plan to reach the milestone of 10,000 stores next year. open annually in Delegates at the first A S Watson Group Global our 34 markets,” Suppliers Conference and Awards were given this said Malina Ngai, determinedly upbeat assessment, and appraised of Director Group Op- ambitious future plans that will reinforce ASW’s erations, Investments undisputed position as the world’s leading inter- and Communications national health and beauty retailer. Annual ASW and Head of International turnover currently stands at USD15 billion with Buying. plans to expand vigorously, notwithstanding the “We understand the market contemporary recessionary climate. very well after 20 years of operat- The 110 delegates to the conference, who hold ing experience. Our Watsons health and senior positions with the largest health and beauty beauty chain has 680 stores in over 101 cities, and manufacturers, were told how ASW, through its our PARKnSHOP food retail chain has 39 stores, Opposite: own name Watsons stores in and its various mainly in Southern China. Later this year, we will Delegates gathered from all European wholly owned outlets such as Super- have a Watson’s Wine Cellar retail store opening around the world; drug, and Trekpleister, has plans to in Shanghai. above: the very latest increase trade in mature and established markets “In the Mainland, with the impact of Internet, Watsons stores in Asia and also in the developing nations of Eastern Eu- the health and beauty market has been made more – known as G5, or fifth rope, and other parts of Asia. and more dynamic. The high penetration rate in generation. Delegates used the conference, held under the Internet usage among the younger generation banner title of Global Retail Day, as an opportu- means customers are more trend conscious. For nity to pool experiences and ideas, all of which example, they follow what celebrities wear in will ultimately benefit the consumer. A S Watson terms of clothing and make-up, both local and senior executives were also able to give insights international Hollywood stars. And they are able into the company’s future requirements, and its to educate themselves on cosmetics and skin care style of doing business. needs on the web and will shop at Watsons to “One of the things we are looking for is dif- discover the products.” ferentiation,” said Dominic Lai, Group Manag- In a Watsons outlet, customers benefit from ing Director of ASW. “This may be expressed in the fact the goods are displayed and promoted innovative merchandising, category management, properly by zones, rather than in the haphazard an offer of exclusives or unique pack sizes. manner that is so common in less sophisticated, “We also expect operational excellence when it locally owned stores. comes to working with manufacturers. At ASW, China is already the world’s second largest we need to provide a quality service level and economy behind the United States, and has had an maintain good systems to ensure loss prevention. annual growth rate of more than 10 per cent for The other factor is excitement, through more at- most of the past 30 years. Watsons opened its first tractive marketing events, customer relationship store two decades ago, and now has more than management and continuous staff training.” 680 stores in 101 cities; it is even venturing into Delegates were particularly fascinated to hear the so-called fourth-tier cities, as the more remote of the changes afoot in the Mainland, in particular parts of the vast nation benefit from the sustained the phenomenal increase in disposable income economic boom. among the middle classes. China was barely affected by the economic cri- Mainland China has a total of 1.3 billion peo- sis of two years ago. ASW-owned stores in Europe, ple, most of them neophyte consumers, a scenario likewise, weathered the storm well, even manag- that offers tantalising opportunities for anyone in ing to increase turnover and boost profits.

Sphere 29 At ASW, we expect operational to mention helpful sales assistants, who can offer expert advice. Said Ms Ngai, “Retail patterns tend to be dif- excellence when it comes to ferent based on the economic status of markets, that is, mature markets, developing markets and working with manufacturers emerging markets. In mature markets like the UK or the Netherlands, consumers are gener- ally demanding on both prices and innovation in “That was thanks to a very dy- products. namic management team across our “In emerging markets like or the 34 markets,” said Ms Ngai. “We made Ukraine, customers aspire to beauty products as a the choice to focus on cost discipline way for them to feel good. Despite their rela- and process optimisation. We have tively lower income level, consumer spending of embarked on an aggressive cost pro- disposable income is often higher than those in gramme since the beginning of 2009 as mature markets. a major tool to weather the economic “In terms of differences in taste, demand is tsunami. high among Asian consumers for skin care, while “The discipline helps us to keep the Western consumers in Europe spend relatively tight financial control while continuing far more on fragrances,” said Ms Ngai. “Hair to work on value offers to keep attract- colourants are in higher demand in Europe as well ing customers to shop with us. With as bronzing products, while whitening products strong financial backing from Hutchi- are in higher demand in Asia. son Whampoa, we were also able to “In the ASW portfolio of 34 markets, we capture opportunities during the crisis found that ‘value for money’ continues to be situation in identifying good store a major consideration among all consumers, locations. We therefore maintained especially following the global economic crisis at investment in new store openings in the end of 2008.” both Asia and Europe, ending 2009 One of the aims of Global Retail Days – which, with over 550 new stores.” following the success of the inaugural event, will ASW has long had the e-commerce now be held every two years – is for delegates to option in place in its key European share their experiences in these markets, and gain markets, and in selected businesses in more insights into the way ASW is able to lead the Asia, such as wine and food. The In- ternet is also a key tool for showcasing products and stores. “The Internet provides an ad- ditional touchpoint to enhance the customer experience,” said Ms Ngai. “With fast The Internet is a key tool development on the Internet space, for showcasing products we do see the need to continue and stores. to upgrade our models accord- ing to internet user behaviour. E-commerce also forms part of our strategy in building and retaining customer loyalty.” Because of the global nature of the Internet, there are certain patterns that are common to all users; its speed and convenience are prized universally. Handy though Internet shopping may be, it cannot begin to replicate the experi- ence of going to a spacious store with a dazzling array of enticing products – not

30 Sphere health and beauty business in Asia and further afield. It is a success story that every major name wants to be a part of – Procter and Gamble, L’Oréal, Unilever, Johnson & Johnson, Kao and Shiseido – a fact that ensured an impressive turnout of CEOs and other high-powered execu- the com- tives. Senior representatives from ASW stores in pany’s reputation as Europe and Asia were also in attendance. market leader. The emphasis is on giv- There were also invaluable insights into the ing customers the best advice to ensure they keep next big market – China. Tiny though it may be, abreast of all of the latest products. remains the gateway to the Middle Clear window displays and large signage help Kingdom, the place where hundreds of multina- shoppers locate the stores and plan their way tionals prefer to have their regional headquarters. easily around the interior. Wider aisle space and Watsons has a track record in the Mainland shorter shelves provide a spacious environment. that is the envy of many other companies. Experts To date, 1,800 of the G5 stores have made their agree that China is not an easy market, with debut, with 400 more opening every year. its own idiosyncrasies, bureaucratic rules and Constant updating of presentation, reinforce- regulations. Cracking it takes time, experience ment of customer service training and refreshing and a deep knowledge of the consumer and total of product assortments are the reasons ASW is so confidence in the product. Watsons carefully de- far ahead of the health and beauty curve. A close signed its China stores to appeal to young female working relationship with suppliers ensures that shoppers, starting with the instantly recognisable they are fully in tune with the needs and wants of pale turquoise logo. Inside, the style is deliberately Watsons, now and in the future. feminine, using light colours that appeal to young, The first A S Watson Group Global Suppliers beauty conscious women. Conference underlined that commitment and No other giants of the health and beauty world proved to be a big success. By the time of the can boast anything like the expertise of Watsons. next conference, in 2012, the number of ASW Nor are they as fast at reacting to changes in stores will have passed the 10,000 mark, a major consumer tastes. The very latest Watsons stores in achievement in a retail area where competition is Asia – known as G5, or fifth generation – cement extremely tough.

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