AS Watson puts faith in physical stores – and data

AS Watson’s plan to open a further 1300 new stores worldwide this year demonstrates it is confident brick-and-mortar stores will maintain relevance in an increasingly digital age.

This year will be the third in a row the Hong Kong-headquartered company has opened 1300 stores, which – as Group MD Dominic Lai mentioned at the recent opening of the CKC18 concept store at Hong Kong’s Central – averages one store every seven hours. It already has more than 14,300 stores in 24 international markets, of which 6600 carry the Watsons brand.

Health and beauty and pharmacy banners represent the majority of its network. There are 1000 Kruidvat stores in the Netherlands and Belgium and 800 Superdrug stores in the UK and Ireland.

Watsons stores can be found in 12 Asian and European markets, including Russia, where the first opened this month. Closer to home, the first Vietnam store is scheduled to open later this year.

The other brand is ParknShop supermarkets, 340 of which trade in Hong Kong, Macau and Mainland China.

But despite its physical store growth plan, AS Watson maintains it is embracing digital transformation, through a program launched in 2010 with its first customer strategy.

“Digital transformation in organisations so often focuses on technology investment and new digital applications, and ignores the human touch,” says Malina Ngai, group COO.  

“When 70 per cent of your colleagues are Generation Y and Z it’s vital to talk to them in the right way, to enable them to service today’s customers.”

AS Watson’s customer strategy document recognised that the digital evolution was changing customer behaviour – not just the way they sought inspiration, but how they communicated with brands and what their expectations were. The company believed the use of analytics, surveys, digital analysis and social listening would help it stay close to customers and put into action their views and feedback.

Eight years on, the business now has more than 130 million members in its loyalty program globally. Last year, revenue rose 6 per cent in its core health and beauty business.

“Growth in terms of store numbers is just part of the picture. We are well aware that offering the best customer service and ensuring customer satisfaction is key to our continued success.  

“The way that our customers shop is continually changing and we know how important it is to keep at the forefront of changing trends and innovation by the effective use of big data.”

Communication revolution

The AS Watson business has also changed the way it recruits and communicates with colleagues across the business, including using mobile apps for training to replace traditional learning.

Across the various markets, each business’s social media platforms are run and managed by young colleagues who can converse with their peers in a way they relate to.

And last year, AS Watson announced plans to invest US$70 million in building big data capabilities to enhance its customers’ experiences as well as business efficiencies. The roll out is in partnership with Toronto-based Rubikloud, a company that specialises in software platforms for retailers.

“AS Watson continues to invest in technology, to allow it to build on customer insights and create innovative digital platforms,” adds Ngai. “This investment is backed by a program of collaborations with suppliers who are pioneering technology expertise in their fields. This close collaboration is helping AS Watson ensure their customers are being served with cutting edge store systems, artificial intelligence and e-commerce.”

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