Find out about the retailer's strategic priorities, commercial focus areas, channel and country presence.

See data on the retailer’s performance and forecasts for its operations by channel.

This in-depth guide to Hong Kong explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

We review A.S. Watson’s retail outlook over the next five years and the key markets to watch, as it continues to expand around the world.

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A.S. Watson has expanded its Watsons One Pass loyalty program to cover over 660 stores in China’s Greater Bay Area.

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SM Retail and A.S. Watson’s joint venture, Watsons, will open 100 new stores in the Philippines this year.

Opening community-based stores

Of the 100 planned new stores, 80% will be community-based stores. The aim is to provide greater accessibility to shoppers as it recognises that not all shoppers go to malls. These stores will be approx. 200 sq m, with three quarters of the space used as a selling area.

Health and wellness growing alongside beauty

Watsons has been investing in growing its store network and training its pharmacists to grow its health and wellness segments alongside beauty. With shoppers beginning to follow beauty and health care trends more closely, the Philippines is a key market for further growth.

Watsons Philippines ended 2018 with 750 stores, and its network has seen a CAGR increase of 18.3% since 2015.

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

A.S. Watson working closely with brands

A.S. Watson partners brands to drive innovation. Last month, we outlined how it is partnering L'Oréal's AI and AR firm ModiFace have launched a virtual makeup service.

The retailer's latest initiative is to launch a new derma skincare range in Thailand, Taiwan and China. Masahiko Uotani, Shiseido's President and CEO, said, "A.S. Watson is the largest health and beauty retailer in the world that acts with speed, innovation and vision making them the perfect retailer to bring Urban Damage Care to the high street.”

The two businesses have co-created a range that maximises their respective strengths, A.S. Watson’s strong distribution network and customer insight and Shiseido’s expertise in R&D and innovation. The project started with a customer survey on a selected panel of Watsons members 18 months ago.

1,300 new stores this year...

A.S. Watson continues to expand its store network across the world. Like in 2017 and 2018, this year it has committed to opening more than a 1,000 stores. Sales growth remains higher than store network growth, with the retailer performing strongly in 2018. The retailer also has a strong and growing base of returning customers, with approx. 135 million members worldwide. Dominic Lai, A.S. Watson's Managing Director, said, "Continuing this momentum, we will be expanding at the speed of one store every seven hours. In 2019. we target to open over 1,300 stores, around one-third will be in China."

To drive offline and online integration, it has been investing in digital transformation in order to connect its customers through different channels. Click and collect, which links 13,000 stores to the respective localised ecommerce sites plays an important role in the retailer's O2O strategy. It allows customers, for example, to browse online and pick up in any of the stores the next morning. This helps drive more purchases when customers visit the store. Malina Ngai, A.S. Watson’s COO, said, “So on average, 20 to 30% of the shoppers will buy something else [...] in some markets, like Taiwan, that rate grows as high as 52%."

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Subscribers can read the latest news and insight on A.S. Watson here.

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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