Japanese drugstore Welcia-BHG outlines five-year expansion plan for Singapore market

Welcia-BHG Singapore is a joint venture between AEON-owned Welcia Holdings and Chinese retailer Beijing Hualian Group (BHG).

It is the second overseas joint venture for Welcia Holdings, which previously expanded its drugstore business into Shanghai, China under the brand Sakura Kobo.

Steady and stable growth

Since expanding into Singapore in 2017, the company has been experiencing steady growth. It’s first two outlets have seen 20% yoy growth and its latest outlet in downtown Singapore has been performing very well.

“It’s been less than a month since opening in Suntec City and it has been successful. We are very satisfied,”​ said Masato Ishii, director of Welcia-BHG Singapore.

Ishii added that the company planned to continue launching outlets in central Singapore.

“So far, we have been experimenting. We have four types of stores – urban model, suburb shopping centre model, residential model and low-cost model. We have learnt that the urban model is the best for Welcia-BHG, that’s why we want to open in urban areas. We want to target ladies that are 20 to 30 years of age that have a certain amount of money to spend and are looking for good quality.”​

Even though the company is performing well in Singapore, Ishii remarked that there are currently no plans to expand in South East Asia or beyond.

While Welcia’s partner, BHG, is based in China, Ishii does not think Welcia-BHG will expand into China any time soon.

“The regulations and laws make it difficult to import products. The wall is too high and we don’t know when it will come down. The company’s mission is to develop Singapore first, that’s why we don’t have any other overseas plans so far,” ​he said.

Setting itself apart

According to Ishii, Welcia-BHG’s biggest strength is its logistics chain, which allows it to offer competitive pricing for its products.

“We have our own internal logistics which means we can complete import and export without any third-party. Because of our low logistics cost, we can reduce the cost and the products we bring to Singapore are very competitive in terms of price. Even if we import the same item, it will be at a lower cost compared to our competitors.”​

Coupled with the firm’s ability to quickly select and bring in products for the Singapore market, Welcia-BHG has been able to differentiate themselves in the eyes of their consumers, said Ishii.

Currently, the company has registered roughly 1,500 SKUs. Among those, about 200 to 300 SKUs are exclusive to Welcia-BHG.

Ishii estimated that beauty and personal care sales make up half of the drugstore’s sales and said the company was constantly looking for new beauty products to introduce to Singapore.

“In other Asian regions, whitening beauty products are the most popular. In Singapore, however, hydrating products are the biggest part of the market. So we bring in exclusive products for hydration, such as Akaran, an all-in-one gel and lotion. We will talk to the consumer as much as possible so we can introduce more good quality Japanese items to Singaporeans.​ ”

Additionally, unlike other drugstore chains, Welcia-BHG offers beauty advisor services to consumers.

“We train our own beauty advisors. They go through a test and get an internal qualification at the end of it. We have beauty advisors at our stores because we don’t think consumers are satisfied with service in other drugstore,” ​said Ishii.

He added: “Our competitors only have brand promoters, but our beauty advisors give you product recommendations based on consumers’ skin problems.”​

Challenges in Singaporean market

While Ishii is optimistic about the performance of the business, he admitted that the company has been affected by the slowdown of the Singaporean retail market.

“Since last January, we’ve seen signs of slowing down. Even our [Great Singapore Sale] sales were not as strong as last year,” ​he said.

Despite this, Ishii said the company would not be changing its plans to expand the business.

“Even if the economy goes up or down, we are doing what we should be doing. What we can do is monitor customer trends, target the right customer and import suitable Japanese products that are not sold by other retailers,” ​he said.

Despite being one of the largest drugstore chains in Japan with around 1,800 outlets, the Welcia brand is not as well-known as its competitors in the Singaporean market, said Ishii.

“Brand awareness is an urgent issue for Welcia-BHG,” ​said Ishii. “We now have a Facebook and we are building a website. We also have a ‘Stamp and Collect’ programme for the store but we want to improve on this area. We want to have a digital point system and digital coupons… these tools can help us develop our branding.”​