Bouncing back: A.S. Watson’s China business sees improvement following COVID-19 outbreak

By Amanda Lim contact

- Last updated on GMT

A.S. Watson has observed a strong recovery in China after over a month of store closures. ©A.S. Watson
A.S. Watson has observed a strong recovery in China after over a month of store closures. ©A.S. Watson

Related tags: as watson, China, COVID-19

Health and beauty retailer A.S. Watson has observed a strong recovery in China after over a month of store closures due to the novel coronavirus (COVID-19) outbreak.

Last year, the Hong Kong-based company and subsidiary of C.K. Hutchinson, increased its Watsons store numbers in China by 9%, bringing up the total number of outlets to 3,947 in 483 cities.

When the COVID-19 outbreak started in January, the company saw its business quickly affected as cities came to a standstill.

At its peak, some 2,500 stores, which make up 64% of its total force, remained closed for over a month. Store traffic dropped about 90% which led to sales plummeting by 80%.

In the first weeks of March, however, the firm observed a reassuring improvement in its business.

“In March we saw strong recovery. Up to yesterday, only 4% of our stores were closed. The remaining are open and operating… Sales numbers are quite encouraging under these circumstances,”​ said Dominic Lai, group managing director of A.S. Watson Group, said during C.K. Hutchinson’s 2019 annual result conference call on March 19.

Lai reported sales in March are now down by 25% and emphasised that its business in China was improving on a daily basis. Retail footfall has improved from being down 90% to 50%.

He attributed this strong recovery to Watsons’ digital initiatives it has invested in over the past few years.

For instance, Watsons’ e-commerce platform has seen an improvement of over 80%.

Additionally, the company built up digital initiatives that have paid off during this period.

The My Store program, for example, is a platform in partnership with WeChat that connects consumers with beauty advisors.

“With the My Store program, beauty advisors can connect with customers [via WeChat], make product recommendations and perform transactions. It’s a powerful tool that has shown its effectiveness,”​ said Lai.

The retailer also improved its delivery offerings with Click & Deliver, which proved to be useful during the lockdown in China, as it could deliver products to consumers within 60 minutes.

Canning Fok, group co-managing director, is hopeful that the company will continue to see growth in China moving forward.

“In the mainland, we were affected because we went over a month without operating. But during that time, we managed to keep the customers engage through online initiatives like the WeChat program. Hopefully, now we can gain back that month and a half.”

Europe business safe?

According to the company, the escalating COVID-19 situation has yet to affect its retail division in Europe.

In fact, it has experienced double-digit growth across its core European markets – the Netherlands, Poland, Germany and the UK.

Lai elaborated that for the first two weeks in March, the company saw growth of 28% in the Netherlands, 23% in Poland, 20% in Germany and 14% in the UK.

“These are big numbers that will help the bottomline in these difficult times, when the business in under pressure elsewhere,” ​he said.

Lai clarified that the company does not expect to see any of its stores shuttered in the event of mass closures in Europe.

Our main business in the UK, the Netherlands and Germany are classified as an essential business by the governments. We even got government confirmation from the Netherlands that even if they have mass closures, our stores will stay open. It’s the government that is asking us to stay open because we sell [over-the-counter] drugs and vitamins.”

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