The Covid-19 pandemic has hit many global retailers, but A.S. Watson Group against all odds is doing even better. Dominic LAI, Deputy Managing Director of CK Hutchison and A.S. Watson’s Group Managing Director, explains why.
When the bells rang in the New Year at the start of 2020, few retailers knew that Covid-19 would soon sweep across the globe and bring the world to a halt.
Though the situation has calmed down in many regions, it looks like the virus may be here to stay. As retailers anywhere battle to survive in a battered economy, many have started to think out of the box to find ways to cope with the new normal.
Companies are also developing strategies to re-emerge in a post-Covid-19 environment, should humanity defeat the virus. This is especially true for retailers, who have taken the brunt of the economic downfall. Not only will retailers have to rethink their brand positioning, they will have to think about how to meet changing consumer behaviour in a post-pandemic world.
Focus on Customers
Crisis does not occur frequently, but when it happens at the current scale a paradigm shift is inevitable; somehow, from the history you will learn that not many companies could survive after big crisis and emerge stronger than before. A.S. Watson Group, celebrating its 180th anniversary next year, is one of the very few companies that weathered many storms in its ongoing journey – from the World Wars to the 2003 SARS epidemic, and has a track record of managing mega crisis like this.
According to Group Managing Director Dominic Lai, A.S. Watson’s success is down to the fact that the business is agile and customer-focused. This enables it to respond quickly to changing demands, and transform its business structure and process.
“We asked all our operations to re-imagine the business, using data analytics and insights. We tried to understand the new demand, our relevance to customers, and customer expectations and shopping behaviour,” Lai explains. “This is a crisis situation like no other. So we had to work out how to turn a bad situation into opportunities,” Lai says.
Earlier this year, Watsons Hong Kong developed within a week an online reservation platform for customers to register for face masks, instead of queuing or snapping up in stores. This platform can handle up to 30,000 registrations in ten minutes, with one in every five Hong Kong residents in its virtual queue at its peak.
With an aim to integrating its online and offline services and using cloud technology to offer a seamless shopping experience, the group’s efforts in digital transformation since 2012 pay off. The company is able to handle up to three times more online traffic on its website and mobile app during Covid-19, and up to three times more transactions in some of its markets.
As one of the world’s largest international health and beauty retailers, with over 15,700 stores in 25 markets, the company had a slight advantage. It was in a strong position to draw on its global network and source products internationally.
Even so, the company was not immune to problems. It was affected by lockdowns and social distancing measures, which meant that sales in physical stores were going to take a hit. So it had to rethink its strategy quickly to find a new way to meet customers’ needs.
A.S. Watson Group’s customer-centric approach enabled it to understand changes in consumer sentiment, new purchasing trends, and product needs, and it responded quickly to the new situation.
Strategies for Success
Strategies included an online registration system for face masks, and the introduction of Watsons WeChat Work platform, enabling beauty advisors to provide one-to-one consultation and order service to its customers. Equity in the brand soared. From the start of 2020 to mid-February, according to a recent report by YouGov, Watsons Hong Kong’s Recommend Score has risen from 9.9 to 16.9 and its Buzz Score has tripled the original score (8.6 to 25.4). A.S. Watson Group’s success highlights some key lessons for businesses struggling to navigate the Covid-19 business environment.
Firstly, it is absolutely key to put customers first, says Lai. “Customers’ demands, their views, and the way they communicate with the brands have changed,” says Lai. What is the change in their purchasing behavior? What apps are they using at lockdown? How are they shopping online now? And what kind of products are they looking for? These are the questions that companies should be asking, he says.
Secondly, a thorough investment in digital technology is needed. This doesn’t just mean implementing an app and being active on social media. “Digital transformation is not just about investing in hardware and software. It is about changing your mindset,” Lai says.
If you look at the profits statement of a retail company during the pandemic, you will probably see that, while physical store sales have dropped, online purchasing has increased dramatically. Is your brand prepared for the change? And has there been a proper investment in digital transformation?
“The process has accelerated, so if your brand has not adjusted, and you can’t adjust at the C-suite level, you will certainly drown,” Lai says, referring to some big retailers who used to be a market leader.
An investment in digital transformation means investing in human resources, changing the company culture, and learning from the young, he says.
“Customers are looking at apps, and using technology as a way to connect with the brand. So it’s important for brands to invest in technology to connect with the customers,” Lai says.
Digital transformation needs to happen at all levels. “I have a mentor who is 20-something, and she teaches me social media and social marketing,” Lai says. “I also ensure that the management team knows all about it, and knows what’s going on.”
Success in a crisis is equally down to good leadership. “Have passion and a big open heart,” Lai says. “A good leader must be passionate about his or her organization, job and people. A good leader also needs to have a big and open heart to invite and accommodate a diversity of talent, irrespective of their nationality, personality, academic discipline and background. I am still learning how to be one,” he says.
“Covid-19 has brought our people, customers and communities much closer together as we fight against the pandemic,” Lai says. “It reminds us all of the importance of compassion. With love and care, we believe we will get through this together.”
“With love and care, we believe we will get through this together.”
Online + Offline
A.S Watson conducted a survey in over 20 markets in Asia and Europe in May 2020. Of the 22,000 customers who responded, 98% said they would go back to physical stores, while over 80% said they would also continue to shop online (delivery speed is their top priority). The findings reaffirm a core strategy of the group - Online and Offline (O+O). Although online purchase continues after Covid-19, an in-store shopping experience remains irreplaceable, the group believes.