Watson’s cooperation with the US group flash purchase

On November 7th, in the face of the impact of new retail and the high cost of physical stores, Watsons under the pressure of deep performance had to change and embrace the Internet for digital transformation. Recently, Watsons officially announced the opening of business cooperation with the US group flash purchase, and it is expected that 2,500 stores will be launched at the end of the year.

According to the “Electronic Business Daily”, Watsons has been accelerating the pace of digital transformation in the near future. In October, Watsons had a partnership with Hungry, and nearly 1,600 stores were on the platform of hungry, covering 230 cities across the country. In addition, Watsons is also on the Wechat side of the small program “Watson’s shop”, consumers can recommend and sell Watson products to friends on social media, but also share the store shopping experience, Watsons store can be said to be a new social E-Commerce platform . The data shows that more than 10,000 consumers have successfully registered.

In fact, although Watsons continues to expand, the performance has long been in the mud, and the frequent action on the line is just to save the performance. In 2016, Watsons experienced a negative growth in performance for the first time in China. The financial report for the year showed that Watson’s China revenue was 20.9 billion Hong Kong dollars, down 4% from 2015. Watson’s average single store output fell by about 10% from comparable retail sales in 2015. According to the 2017 interim financial report, as of June 30, 2017, Watsons China’s revenue was 10.615 billion Hong Kong dollars, of which Watson’s China’s first-half year-on-year store sales fell 6.2%.

It is worth noting that Watson’s performance has rebounded this year, but the so-called revenue growth rate is based on a low base. According to Changhe’s latest interim report, as of June 30, 2018, Watson’s China’s revenue, store number, tax depreciation and amortization profit all achieved a 10%-16% increase. However, in 2015-2016, Watson’s stores closed 446, and the number of new stores in 2018 is far less than this number. In the new retail environment, how to upgrade and transform has become a top priority.

In fact, Watsons has begun to change. In March last year, Watsons China Chief Executive Officer Luo Jingren resigned for personal reasons and was replaced by Chief Operating Officer Gao Hongda. Gao Hongda has started a series of measures to make strategic adjustments, including renovation and upgrading of old stores, adding makeup and Japanese and Korean cosmeceutical brands, pilot sharing of shopping guides and expanding online channels.

The online channel has always been a short-board of Watsons. Watsons did not break the territory in the early days, increased the number of stores to make a profit, and missed the best opportunity for E-Commerce development. After taking office, Gao Hongda has been active in E-Commerce. After taking the lead in becoming the “new retail” brand of Alibaba, he also opened a “timed” service with the rookie. Currently, there are more than 500 SKU goods supporting the store delivery service.

But with the development of the Internet, beauty and electronics companies have begun to rise and continue to grow and develop. According to public information, the online transaction scale of beauty products increased from 38.4 billion yuan in 2011 to 176.7 billion yuan in 2015. It is expected that the scale will be close to 10 times in 2011 by 2018, and the penetration rate of online channels will be At 43.6%, the development of beauty electronics has become saturated, and Watson’s power line is still struggling.

Today, when the retail business environment changes dramatically, simply expanding the online channels by embracing the Internet cannot solve the fundamental problems. Watsons should take the initiative to adapt to the current new retail transformation model and further build its core competitiveness, thus breaking through the current performance dilemma.