• 2021-03-29
  • 阅读量:2329
  • 来源|CBO
  • 作者|Li Jianzi

Watsons needs to "reconcile" with its new clientele in a new way, and with a new approach.

On March 18th CK Hutchison Holdings Ltd., the parent company of Watsons, unveiled the financial statements of Watsons for FY 2020, reporting HKD 159.619 billion (about RMB 133.699 billion) in revenue, down by 6% on a year-over-year basis.
 
According to Watsons, though it has not yet fully gauged the market stability and sentiment in 2021, the beauty and health products are daily consumables, so they will accelerate both online and offline strategic measures developed within the retail division to drive a return to peak performance.
 

01

FY 2020: 19% Decline in Chinese Market

As per the financial statements, by the end of 2020 Watsons has been running 16,167 retail stores in 27 markets around the globe.
 
It also indicated that in Chinese market Watsons sales decreased 19% (down to HKD 19.984 billion, or about RBM 16.739 billion, a much more marked decline rate than general retailers), and decreased 21.8% in same store sales.  Comparably, its first positive sales growth in the most recent 5 years was 2% positive growth in 2019.
 
The number of Watsons global stores has increased 2%, from 2019, which is an addition of 373 stores. In the mainland Chinese market the stores suspending operations peaked to 2500 stores in February 2020. In 2020 year-over-year sales decreased 78%. As the Covid pandemic eased almost all the stores resumed operations by the end of April.
 
However, the epidemic has taken its toll: the global Covid-19 outbreak has caused Watsons to lose 62% of its pretax profit in the first half of 2020 and 11% of global sales revenue.
 
Despite the mounting stress of declining performance Watsons keeps extending its network of bricks and mortar stores.
 
The financial report shows that by December 31, 2020 Watsons was running 4115 stores across nearly 500 cities in China's mainland, growing by 4% annually. In 2019 its number of stores increased by 9%. 
 

02

Marketing to Younger Generation + Online Service Transformation: TheRight Remedy to Save Watsons?
 
Since its entry into China's Mainland 32 years ago Watsons has been maintaining its market share as a beauty cosmetics retail chain. However, Watsons has been increasingly questioned by customers for its dated products and forceful sales approaches. 
 
On February 28th, 2021 Watsons engaged August Cai (Cai Xukun), a top up-and-coming young star, to make its way to wider band of young consumers. This is not the first time Watsons has tried to utilize youth oriented marketing strategies. 



On July 26th 2019 Watsons launched its first virtual idol spokesperson Qu Chen Xi (Wilson).  Before that Watsons worked with "Onmyoji" to launch the "Summoner of Beauty" campaign in its 3600 stores in more than 470 cities and towns around China. Watson also worked with "line friends" to promote its presence among young clientele.
 
Watsons' more transformative strategies were accomplished online.
 
In 2017 Watsons started to provide services such as Pick Up in Stores, and Lightning Speed Delivery.  In 2018 Watsons partnered up with Cainiao and ELEME to expand delivery services. In 2019 Watsons upgraded eight service areas including Lightning Speed Delivery, Pick Up in Stores, Scan QR Code to Buy, and Free Make Up Appointments for Members. Through these efforts Watsons membership exceeded 100 million members in 2020.
 
During a sweeping digital transformation in beauty industry accelerated by the epidemic, February 2020 saw the debut of Watson's official cloud store as a WeChat applet.  
 
By integrating all the offline store resources, Watsons offered lighting delivery within 1 hour, live-stream shopping, one-to-one personal beauty consultation, intelligent product recommendation and coupons. According to a relevant officer at Watsons, such impressive digital retail scenarios are supported by its long-established footholds in China's mainland.



Thanks to the store locator provided by Watson's official cloud store, users can get the items they ordered in just 1 hour which is a clever move to change the stores and e-commerce storage across China into front warehouses and a community-based convenient shopping environment. It is reported that by the end of 2020 the sales revenue of Watson's official cloud store exceeded RMB 1.2 billion.


03

How Can Watsons Maintain its Edge in the Fierce Offline Retail Competition?
 
While Watsons was busy with its transformation, emerging cosmetics boutiques are also expanding their retail footprints.
 
2019 found a bunch of cool, stylish, new brands mushroomed as strong competitors with remarkable social currency, including THE COLORIST, Wow Colour and HARMAY, as well as others. These stores gradually have become strong competitors to traditional beauty retailers.
 
Wow Colour Miniso, For example, is one such major new competitor that has opened 300 stores in one year as franchises, supplying the affordable domestic beauty products ranging from RMB 20 to RMB 300 in unit price. HARMAY, featuring chic warehouse & industrial style, is another new competitor that provides curated personal care, makeup and perfume products across China for high-end customers.
 


At the same time, such China chic brands as Perfect Diary and Judydoll are going all out to expand their chain stores. By September 2020 Perfect Diary had opened more than 200 offline flagship stores, also snatching a part of the market share from Watsons.
 
To fend off such competitors, Watsons are subtly reforming their current portfolio that has a higher percentage of self-branded personal care and daily necessities products, and very few make up products and imported trendy products.

Meanwhile, Watsons proactively works with foreign giants to become their offline channel for their new products debut in China. For example, in May of 2019 Shiseido's "D program" chose to work with Watsons when they first landed in China. In December 2020 Amorepacific's inner beauty brand "CUBE ME" also entered Chinese offline channels first through Watsons.

From building their WeChat Official Account to leveraging digital tools, Watsons has managed to upgrade its shopping environment and to some degree fix its shortfalls of services. These actions help remedy the complaints from consumers about Watsons notoriously aggressive sales approaches.

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