“Retail is not dead, it just needs to be better,” says Malina Ngai, AS Watson

Baptiste Le Guay, Vincent Gallon

11 May 2021

“Retail is not dead, it just needs to be better,” says Malina Ngai, AS Watson

A.S. Watson is digitalising its operational model to adapt to the new way beauty customers are shopping today, especially in Asia. The Hong Kong headquartered retail group is setting up the O+O (Offline plus Online) concept as the new standard for its operations. A span of new technologies is being deployed so as customers can shop seamlessly from one channel to the other. Furthermore, the group plans to open 1,000 new physical stores this year.

“Forget physical versus online. It’s not either or; O+O is the new standard for retail,” explained Malina Ngai, Group COO of A.S. Watson Group & CEO of A.S. Watson (Asia & Europe) speaking at the inaugural Beauty Tech Live industry event.

According to Ngai, the O+O (Offline plus Online) concept simply describes how customers shop today, but it is very different from the traditional O2O (online to offline or offline to online) strategies. “It is more about creating an integrated experience to better serve customers’ needs, that enables them to shop across any channel, anytime, anywhere.”

And there are huge business consequences, as there is no cannibalisation in customers’ spending in physical stores. “In fact, an O+O customer spends three times what an instore-only customer shops with us. It’s about creating bigger share of wallet and higher customer lifetime value,” Ngai added.

An entirely new ecosystem

Combining physical and online stores is a great challenge for the A.S. Watson which operates over 16,000 physical stores and 100 e-commerce platforms in 27 markets between Asia and Europe, under brands such as Watsons, Kruidvat, Superdrugs, Drogas, Rossmann, ICI Paris XL, Marionnaud, The Perfume Shop.

In order for the O+O to be efficient, it relies on “a combination of our extensive physical store network as core touchpoints, our 140,000-strong customer service workforce, integrated with digital platforms, and most importantly, the customer connectivity with our base of 139 millions loyalty members we’ve built over the past few years,” said Ngai.

However, O+O is not just having physical and online stores connected. “It’s an ecosystem that is powered by technology, big data and artificial intelligence. Just as important, it’s an organisation cultural change when it comes to managing the business and prioritisation.”

In this context, all of the group’s physical stores are connected to digital platforms, which means the product offering is no longer limited by shelf space. In a few clicks, store teams can order products for deliveries or pick-up by customers. A.S. Watson also enables members of its loyalty programs to shop online not only on A.S. Watson’s mobile apps and websites, but also via WeChat or WhatsApp.

For example, in Watsons China, customers can seek personalised advice from in-store beauty advisors via Enterprise WeChat and enjoy one-to-one service. The advisor can suggest personalised promotion offers with the help of artificial intelligence engine, help order the products from the cloud service MyStore (WeChat platform tailored for Watsons) and customers can receive product delivery within one hour.

Technology-improved shopping experience

To offer a seamless retail experience and keep customers engaged, A.S. Watsons has doubled its development of digital assets and contents over the last 12 months, as well as its fulfilment capacities to cope with the surging demand through picking in stores. The aim was to be able to deliver ordered products within hours.

“Customers of all generations are now increasingly mobile savvy and digitally connected,” highlighted Malina Ngai. A.S. Watsons therefore chose to focus on developments using customers’ own mobile phone to align with their daily habits.

With WatsonsGO, for instance, customers to buy in store via payment on mobile app. First launched in Watsons China, the service is now available in Watsons Hong Kong and Singapore. With Go-In-Store, customers who browse online can speak to an instore beauty or health advisor on video to get consultation. On line tools, such as Skin Analyser, ColourMe, or Virtual Foundation Trial use virtual reality and artificial intelligence to provide recommendations or make virtual try-ons. In stores, a touch screen dubbed Endless Aisle, allows customers to shop and choose either to collect the products in store or have them delivered to their home.

Also, A.S. Watson has partnered up with delivery service Grab in order for customers in Southeast Asia to get their delivery in only less than two hours.

Converting more customers to O+O will be A.S. Watson core growth strategy in 2021 and beyond. However, physical stores will continue to play a significant role in the whole beauty shopping experience, and the group plans to open 1,000 new stores this year. “Retail is not dead; it just needs to be better for our customers,” concluded Malina Ngai.