‘Future of modern retail’: A.S. Watson targets Gen Z beauty consumers to drive growth

According to the firm, this cohort will influence consumer spending more than any previous generations and will be the driving force of retail trends as they come of age.

“Generation Z is shaping up to have great spending power and they are the future of modern retail. It’s important to stay relevant to them, not only focusing on the products they want but also the stories and experiences that go with them,”​ said Malina Ngai, Group COO of the A.S. Watson Group.

Born between 1995 and 2009, Gen Z is currently the largest consumer segment. It accounts for 32% of the global population.

The company analysed its network of over 15,200s in 25 retail markets and recorded that Gen Z’s spending power rose by 23% in 2018.

Insights also showed that Gen Z were the biggest beauty spenders. On average 86% of Gen Z consumers were beauty shoppers and over 70% of their spending was on beauty.

Gen Z different from millennials

According to Ngai, Gen Z consumers are unlike their millennial counterparts. While they may be digital natives, insights show that prefer shopping in-store for the personal experiences.

In fact, 99% of Gen Z consumers shop offline and they like shopping in “destination stores”​ – outlets in shopping malls and city centres.

However, technology still plays a key role in their lives. For instance, Gen Z consumers tend to research products online while browsing in-store.

To keep them coming back, the introduction of in-store technologies such as Artificial Intelligence and Augmented Reality are “key drivers to sales success”.​

Another important factor is the integration of online and offline experiences through social media or mobile applications.

Early this month, the company rolled out a new digital service to enhance the shopping experience at The Perfume Shop in Europe.

The service connects online shoppers with its consultants via a live video chat, enabling them to get a personalised consultation and browse the store in the comfort of their own home. Since the launch, The Perfume Shop has seen a conversion rate increase of over 155%.

However, going digital is not enough to foster a connection with Gen Z consumers. The firm highlighted that creating a “fun and engaging shopping experience”.​

Earlier this year, Watson Taiwan collaborated with Pantone to launch the #BeautyMyWay campaign to drive the offline to online experience.

The retailer held a pop-up make-up and fashion show installation in Ximending shopping district. Consumers were encouraged to share photos on social media in exchange for coupons and free lipstick.

Sustainability: The big factor

A.S. Watson highlighted that sustainability concerns were a big factor for Gen Z customers, which is why it had been doubling down on green initiatives.

“[Generation Z] is reinvigorating the retail industry with their desire for experience and activities, while at the same time helping shape a more sustainable future with their emphasis on the environment and doing good,” ​said Ngai.

In the UK, it launched a vegan beauty pop-up shop under the Superdrug brand, offering consumers 1,000 vegan beauty essentials.

Further initiatives have been launched to offer reduce plastic bag use.

The firm claimed that The Perfume Shop stopped seven million plastic carrier bags being introduced to the UK.

Savers also introduced a reusable bag which was bought by almost a million consumers. The retail has recently upgraded its standard carrier bag which will remove the use of 14 million single-use plastic bags each year.

Watsons Thailand, for instance, is running No Bag Day Campaign on the 4th of every month. Members who opt out of plastic bags are rewarded with bonus points.