How Watsons turned Hong Kong’s COVID-19 calamity into a victory

The global COVID-19 pandemic has impacted the businesses and operations of countless brands and companies. For Hong Kong, it has been the city’s most challenging time since the 2003 SARS epidemic.

Yet, rather than lick their wounds, some brands are being proactive by taking advantage of the situation at hand to strengthen their foothold in the market and strengthen relationships with their customers.

Simon Yuen talks with representatives from A.S. Watson Group about what the health and beauty retailer has achieved amid the crisis.

Emergency response

Months on from the original December 2019 outbreak in Wuhan, China, the COVID-19 novel coronavirus strain continues its spread worldwide. And although Hong Kong had initial success in keeping the levels of transmission low, the city’s proximity to the Mainland, and fears of secondary waves of infection, have resulted in public anxiety continuing to mount.

But while industries such as tourism, entertainment and F&B suffer, as a health outlet, the A.S Watson Group’s flagship brand Watsons has enjoyed the benefit of a unique positioning. As a vital necessity, the retailer has gone from strength to strength in responding to the public’s needs.

A study from YouGov shows that prior to 9 January – when the first death from COVID-19 was confirmed in China – Watsons’ brand health scores across various metrics remained relatively constant.

But as the number of COVID-19 deaths climbed through the rest of January, Hongkongers began drastically changing their routines, queuing overnight outside pharmacies to stockpile face masks. To respond to such an unexpectedly high demand and purchase rate, on 31 January, Watsons announced via its official Facebook page that each of its 230 branches would supply face masks, but that a per-customer quota system would be instituted. “Our strategies always start from customers. We also care for our people and their families, and we proactively address their top concerns, needs and their safety as a top priority. Business comes second,” says Malina Ngai, group COO of the A.S. Watson Group, and CEO of A.S. Watson (Asia and Europe).

This response boded well for Watsons, with a rise in its brand health scores. By February, several other big brands successfully sourced face masks and hygiene products during the city-wide shortage of these essential items.

With transparent information and appropriate marketing strategies, such as Watsons, these brands found it easy to gain endearment from customers.

From the start of 2020, until mid-February, Watsons’ YouGov Buzz score – which measures how many people have heard positive things about a brand over the previous fortnight – had jumped from 8.6 to 25.4, a significant increase of 16.8 points.

At the same time, its Current Customer score – rating how many people have bought from the brand in the past 30 days – had risen from 20.2 to 29 – a rise of 8.8 points. Last, its Recommend score – which looks at how many people would recommend a brand – had risen from 9.9 to 16.9, an increase of seven points.

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Watsons leveraged a global business network to continue sourcing products from around the world. Yet, it was still difficult to keep up and supply enough masks and sanitisers when demand from Hongkongers kept surging. At a time when Hong Kong faced its most serious face masks shortage, Watsons’ warehouse team was working until 2 am for weeks.

“Every second counts during a crisis. One of the biggest challenges we have encountered is time management. We had to deal with time differences and all decisions must be made in hours or even minutes. The long Chinese New Year holiday also made merchandising and logistics more difficult,” Ngai says.

Improved transmissions

Watsons was only able to offer 30,000 quotas for face masks, while there were about 1.49 million customers who were attempting to buy face masks at its peak. But while most of them failed to purchase any, these customers had few complaints about the operation of the system.

Yet, crafting a better face mask purchase method for customers was still an important challenge for brands to tackle. On 14 February, Watsons created an online reservation system for face masks sales,  enabling customers to buy face masks on a designated pick-up date rather than queueing up for hours in the cold weather overnight. Not only was this considerate of customers’ time and comfort, but reduced close contact and the resulting chance of infection.

“We already had plans to apply cloud technology to our eCommerce later this year, but the epidemic accelerated it. By using cloud technology, our web page can now handle a high volume of incoming traffic per minute,” Ngai says. “A queuing page is set up when the traffic is higher than  a certain level to give customers transparency.”

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Digital transformation investment by A.S. Watson Group has been ongoing since 2012, attempting to integrate online and offline to offer customers a more seamless shopping experience.

In 2019, the group’s back-office system was upgraded to support mobile offices and international communications, which allowed the group to design and complete the registration of a web page for online mask orders in only a week.

Watsons has also been investing in technology at work, allowing staff to work from home. It has allocated employees to two teams, asking them to come to the office alternately.

“Our mission is to protect our colleagues, especially front line staff, and to serve customers with what they urgently need. It raises the morale of our people to come together for a common purpose and enables all of us to build a stronger bonding between ourselves and the company,” Ngai elaborates.

“Our strategies always start from customers. We also care for our people and their families, and we proactively address their top concerns, needs and their safety as a top priority. Business comes second.”

Healing hands

The success Watsons had in reacting to the problem at hand, and finding better methods for sourcing and distributing face masks, helped build up a positive image among its customers. But in addition to selling face masks to the public, Watsons also worked with several social welfare organisations to give out 150,000 face masks to the elderly, working with the Hong Kong Young Women’s Christian Association; the Yang Memorial Methodist Social Service; St. James’ Settlement; and the Hong Kong Christian Service.

Face masks were distributed to 10 districts in Hong Kong, including Sham Shui Po, Kwun Tong, and Yau Tsim Mong. These districts were a priority as they house a large number of at-risk senior citizens.

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But Watsons’ efforts to better serve customers and give back to the community won’t stop there. Consumers are looking for more personalised experiences and now put greater weight on a brand’s advocacy and stances.

Ngai says that during the COVID-19 outbreak, the group’s first priority has been to communicate with colleagues in a timely, sincere, and regular manner.

“Human connection is critical amid a crisis. If possible, I suggest going to the office, visiting front line staff and workers in warehouses, and hosting town hall meetings. These activities provide an irreplaceable human touch, transparency, and care to the staff, avoiding information gaps and panic,” she says.

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Diagnosis data

One of the silver linings of the crisis is it has given the company a chance to step up its efforts to learn more about its customers. In March, the A.S Watson Group performed a global health survey, revealing that one billion shoppers bought health products last year across its network, while the sale of health products increased by 11% year-on-year.

Moreover, shoppers buying health products visited Watsons more than 10 times per year, with their spending being almost 80% higher than general shoppers. Based on the results, Watsons has set itself the goal of continuing to strengthen its health products and service offerings. Last year, Watsons formed a partnership with Prenetics to launch a DNA home test kit. The company also provides services such as an online doctor in the UK, and health service consultations in Hong Kong and Singapore.

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“Don’t waste a crisis,” Ngai explains. “I think the current epidemic will help us prepare our brands to emerge from crises even stronger than before. We expect the current COVID-19 crisis will change the way we run, accelerate mobile offices, online training, online shopping, supply chains, and other aspects.”

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