Watsons eyes more seamless experience for online shoppers

The drug store business might be a traditional one, but the industry is also looking to remake itself to stay relevant.

Beauty, health and wellness retailer Watsons, which is headquartered in Hong Kong, aims to transform itself by offering online and offline channels to consumers to keep their loyalty.

Its latest move in Singapore is to provide customers with a click-and-collect express option when they buy products online, a process which turns every physical store into a mini-warehouse. General Manager Irene Lau of Watsons feels that the multi-channel shopper is one who has higher value. Even though their online shop has been seeing 100 per cent year-on-year growth, more customers visit their 104 outlets.

Ms Lau said: "We are able to hold a wider range of products online and offer more variety. We also offer premium South Korean and Japanese brands online as well." People who like to buy items in bulk or larger household products prefer to shop online so that the goods can be delivered to their homes.

But just having the online store is not enough. Watsons Singapore wants to move towards making the whole experience more seamless for consumers who shop online and pick up their goods in-store. "With click-and-collect express, the physical stores do the picking of goods for consumers so that consumers do not have to wait 2 to 3 days for the products to be sent from the main warehouse."

Despite the economic downturn and falling retail turnover figures, the drug store industry continues to see many opportunities. Watsons has been enjoying consistent year-on-year revenue growth in the single digits as personal and healthcare items remain necessary. Their customer base is growing steadily, and they noticed that new members are coming from a younger age group.

Watsons has become savvier in stacking its shelves with products that appeal to a new demographic of consumers. The chain now sources brands by looking at their social media reach on platforms such as Instagram. It is also offering more lifestyle products such as sports nutrition and protein powders.

There is also a growing demand for natural, organic and sustainable products. Watsons has pledged not to sell personal care products containing microplastics starting next year; and their house brand tissue paper is also fair trade and sustainable.

(Adapted for academic purposes from The Straits Times, 23 September 2019)

1.(a)Under channel design decisions, discuss any three (3) relevant service outputs that Watsons offers to customers based on "analysing customer needs and wants". (9 marks)

2.(b)Explain the type of channel conflict that could occur between the Watsons' physical stores and its online store. Suggest one (1) way to manage this conflict. (6 marks)

3.(c)Outline one (1) trend each under socio-cultural and technological macro- environment forces that could have an impact on Watsons' business. (8 marks)

(d)Analyse and propose two (2) strategies on how Watsons can grow the value of its customer base. (7 marks)