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Japanese cosmetics company Shiseido and A.S. Watson have partnered to launch an exclusive derma skincare range under the “D Program” brand.

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A.S Watson will invest HKD1bn (US$128m) on digital innovation over the next ten years as it continues to step up transformation across the business to enhance the shopping experience.

Staying ahead of competition

A.S. Watson continues to invest in technology and ecommerce. By next year, the retailer will have spent approx. HKD1bn on digital and technology since 2012. Over the next ten years, it plans to invest another HKD1bn. In recent years, A.S. Watson has invested in self-checkout machines, virtual technology make-up service, predictive modelling technology and facial recognition for payments. It has also launched a Technology Partnership Programme to build a network of strategic partners.

Investment in personalisation

Looking ahead, the retailer plans to roll out machines for skin analysis, digital panels to let customers choose products and technologies for customising product positioning in different stores. It continues to introduce new initiatives to offer greater personalisation, as well as partner technology start-ups in countries such as Canada, the U.S. and Australia to accelerate digital transformation.

In 2017 for example, A.S. Watson partnered with Toronto-based Rubikloud as part of its investment in big data capabilities. At some of its stores, the retailer has developed a traffic management system that uses big data analytics to help it choose future store locations.

A.S. Watson FY18 results: sales up 10%

Click here to see A.S. Watson’s FY18 results.

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

Rossmann, the German drugstore part owned by A.S. Watson, will begin selling products in South Korea in May, with products shipped directly from Germany.

Direct-to-market model

Rossmann plans to make “full-scale inroads into the domestic health and beauty market” of South Korea. A direct-to-market business model will be adopted, rather than stocking goods in stores. It is not clear when Rossmann will open its physical stores in the country.

The direct market plans to provide stable services to consumers by establishing a faster logistics system and organisation through a direct-market platform linked to its headquarters in Germany, while expanding the range of choices by handling healthcare and lifestyle products needed for all ages, as opposed to existing local drugstores’ focus on beauty products,” reported Korea Bizwire.

The brand’s marketing plan includes quiz events on its social media platforms until the 8th of April, and prizes including Starbucks coupons and Rossman Korea goods for winners.

Watson’s rapid international expansion

Rossmann is 40% owned by A.S. Watson. The company was established in 1972, with 2,100 stores in Germany and 3,930 stores in Europe. The reason why Watson chose its German brand to enter South Korea is because “Korean consumers were a match with the company’s meticulousness and strictness on their products, where both parties value safe, good quality products offered at reasonable prices”, according to Korea Bizwire.

A.S. Watson entered South Korea with its well-known Watson brand before. It sold its stake to convenience store retailer, GS Retail, in 2018. Since then, GS Retail rebranded all Watson stores to ‘Lalavla’. 

The Hong Kong headquartered company is expanding its international network rapidly, currently opening a new store every seven hours and just opened its 15,000th store in Malaysia in March.

 

 

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A.S. Watson Group has opened its 15,000th store in Kuala Lumpur, Malaysia.

500th Watsons store in Malaysia

The world's largest health and beauty retailer continues to rapidly expand its store network, opening a new store on average once every seven hours across Asia and Europe. Earlier today, the Group opened its 15,000th store globally. This also marked the 500th Watson store in Malaysia. There are over 7,200 Watsons' stores in 13 markets in Asia and Eastern Europe.

A.S. Watson FY18 results: sales up 10%

Click here to see A.S. Watson’s FY18 results.

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

The world's largest international health & beauty retailer has posted a strong set of annual results.

Results summary - growth across all H&B divisions

At the end of 2018, A.S. Watson’s retail division had 14,796 stores across 24 markets, a 6% increase compared to the previous year. Total sales for the Health and Beauty segment increased 10% to HKD138,987m, with comparable stores growing 2.1%. Total revenue, EBITDA and EBIT of HKD168,991m, HKD16,164m and HKD13,078m increased by 8%, 9% and 8% respectively.

H&B Asia: comparable store sales up 7.1%

  • Health and Beauty Asia results were particularly strong, with an 20% increase in EBITDA driven by a 10% increase in store numbers, but also a comparable store sales uplift of 7.1%
  • The Philippines was a key market for new store openings for the Watsons banner. Together with its joint venture partner SM Retail, they opened more than a 100 new stores

H&B China: sales up 4%

  • Health and Beauty China trading under the Watsons banner continued to perform strongly, reporting a 7% growth in EBITDA and a healthy EBITDA margin of 19%
  • Store network expansion continued, but sales did not grow in line with space, growing 4% in local currency

H&B Europe: EBITDA growth of 6%

  • Health and Beauty operations in Europe delivered another solid performance with EBITDA growth of 6%
  • H&B Western Europe accounted for 50% of total H&B sales for the retailer, but growth remains subdued
  • H&B Eastern Europe is A.S. Watson’s smallest H&B division. However, it continued to show strong growth potential, reporting an 8% increase in sales growth in local currency
  • Click here to see Rossmann’s FY18 results
  • Kruidvat, Trekpleister, Prijsmepper, Ici Paris XL and Pour Vous have posted a 3.6% increase in turnover to €2.9bn. Turnover in the Netherlands increased 3.5% to €2.2bn. In Belgium, sales amounted to €687.2m, €9.1m from Luxembourg, €2m from Germany and €3.5m from France. The number of stores increased from 1,633 to 1,675

Loyalty and exclusive sales important

A.S. Watson continued to expand its online and offline customer base. It has 132m loyalty members from around the world. The retailer continues to develop and add to its range of exclusive products - sales accounted for 34% of total H&B sales (HKD138,987m) last year.

Areas of focus

A.S. Watson has cited several macroeconomic uncertainties, including trade disputes, Brexit outcome, fluctuations in commodity and currency prices that could impact the business. In retail, it has outlined several key areas of focus:

  • Adding digital and delivery capabilities to drive offline and online integration
  • Introduce initiatives to help personalise customer experiences
  • Enhancing store formats

Want to know more?

Subscribers can read more on A.S. Watson's Strategic Outlook here.

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