Covid-19: AS Watson talks retail strategy during a global pandemic

AS Watson is currently the world’s largest health and beauty brand, and includes a number of well-known retailers within its portfolio, such as SuperdrugSavers and The Perfume Shop. With its headquarters in Hong Kong, and a strong presence across South-East Asia as well as the UK and Europe, the brand was exposed early on to lockdown measures imposed by authorities to contain the Covid-19 outbreak. Its businesses in South-East Asia therefore had to react fast to find new ways to continue supplying its customers during this new reality. The brand also had to take a range of approaches due to the variety of its retail portfolio. For instance, while some of its shops, such as Superdrug and Savers, are designated as essential and have stayed open, others have been forced to close by governments around the world.

The worst of the virus now appears to have passed in South-East Asia, and much of the region is beginning to return to a semblance of normality. Meanwhile, most of Europe remains in lockdown, or else in the early stages of easing restrictions. With this in mind, Essential Retail spoke to Malina Ngai, COO at AS Watson and CEO of the group operations in Europe, to find out about the approaches the group have, and continue to take during the crisis.

Ngai firstly explains how across the vast AS Watson portfolio, there were varying degrees of demand during the early stages of the crisis. “When Covid-19 started to spread across the globe, many physical stores in the markets affected by the pandemic were temporarily closed due to lockdown restrictions. As a result, customers had no choice but to shop online and their needs were skewed towards personal care and hygiene products, as well as health products. On beauty needs, since there have been no or less social activities during Covid-19, naturally the demand for cosmetics and perfume significantly reduced, while basic skincare demand was maintained,” she outlines.

Expanding eCommerce

With eCommerce taking centre stage, AS Watson took action to ensure its online platforms would not be overwhelmed. This primarily revolved around its IT systems, ensuring its websites could handle the exponential growth in traffic that so many retailers have experienced during the crisis.

Ngai explains: “Our next development phase, which was to introduce cloud technology for eCommerce, was already planned to take place later this year, therefore with the plans already in motion we were able to fast track these and bring the implementation forward. This technology is being used globally to help us meet increased demand, for example the introduction at Superdrug enabled the business to facilitate 50% more online orders a day.”

Being placed in a queue when visiting the websites of retailers will be a familiar sight for many consumers. The issue of not being able to cope with sudden surges in demand in online shopping has been highlighted previously on occasions such as Black Friday. Yet progress has generally been slow in this area, and the limitations in IT capacity many online traders have has been exposed during Covid. Implementing systems such as cloud computing is likely to be high on the list of priorities of many retailers post-Covid.

“During Covid-19, we have been able to handle up to three-times more online traffic to our website and mobile app, and up to three-times more transactions in some of our markets,” notes Ngai.  

One positive feature of the Covid-19 crisis in regard to retail has been the levels of innovation seen. This includes the use of platforms other than websites in order to improve service efficiency and convenience for customers, something AS Watson have been quick to implement. Ngai highlights how Marionnaud France helps customers order products using WhatsApp.

Re-opening of stores

Despite the understandable current emphasis on eCommerce, A.S Watson has also observed a willingness for customers to return quickly to its non-essential physical stores once social distancing rules allow for it in some regions its businesses operate in. Should a similar trend occur all over the world, it is critical for non-essential retailers in countries like the UK, who are preparing to potentially re-open their stores shortly, to therefore cater to this desire, reassuring customers that it is safe for them to return to the high street.

Ngai notes: “As market activities gradually re-opened, customers had the urge to be back in retail stores, especially the ones where they know the store personnel, as they looked for that human connection again. Initial signs in China, the Netherlands and Italy following the lockdowns being lifted show that customers are returning to stores for beauty products.”

Helping the community

As well as adapting approaches to continue serving customers during this unprecedented period, helping the community during this period of crisis is, in addition to being morally right, an effective way to forging a meaningful connection with customers. Displaying such care and authenticity could serve as a basis for the recovery of many retailers post-Covid, with consumers likely to remember acts of kindness in the long-term as a fresh sense of localism and community spirit emerges from the crisis.

“Across all of the countries we operate in, a priority has been to help and give back to those in need,” says Ngai. “A couple of initiatives include the donation of 150,000 masks to the elderly in Hong Kong and the donation of RMB 2 million worth of products to Wuhan. And in the UK, The Perfume Shop donated personal care products to the London Nightingale Hospital while Superdrug donated products to NHS front line workers, the London Nightingale Hospital and Beauty Banks.”

She adds: “Although it is a very difficult time for us and all other retailers, we believe that we will emerge from the crisis stronger than before. Covid-19 has brought our people, customers and communities much closer together as we fight against the pandemic. It reminds every one of the importance of love and care.”

Understanding customer needs

Overall, for Ngai and AS Watson, its strategy as the business emerges from the Covid-19 crisis must at all times be dictated by the customer, with efforts focused on understanding evolving needs in this new world. It’s an approach that she believes should be embraced throughout retail, an industry which has sometimes been criticised for being too slow to adapt.

“Customers’ values are shifting and we have to determine the best way to serve the needs of customers in the new and changing world. At AS Watson Group, we’ve asked all of our operations to re-imagine the business, using data analytics and insights to understand this new demand, customer relevance, expectations and shopping patterns. We expect this crisis will change the way our businesses are run and how we interact with our customers,” comments Ngai.

Retailers in countries like the UK, which are preparing to gradually release lockdown shackles, will be looking for examples such as that of AS Watson of how to adapt their operations through the different stages of the crisis. Covid-19 is almost certain to boost eCommerce in the long-term, and therefore improving the way they can serve customers online will be critical. However, this does not mean focus should be shifted completely away from the high street, and enticing people back into stores will also play a crucial part in the sector’s recovery. The most important step retailers should take, according to Ngai, is to understand customers’ evolving needs as we enter a very different environment to that of pre-Covid.