AS Watson Group, the world’s largest health and beauty retailer, said the coronavirus pandemic had accelerated the launch of its touchless payments system, even as it dented the Hong Kong company’s plans of opening new stores globally.
The company, which is owned by Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings, has spent HK$1 billion (US$129 million) between 2012 and this year on technology, as part of a digital transformation. It launched the Watsons GO touchless payment system – originally scheduled for release at the end of the year – in Hong Kong recently.
“Covid-19 has led to the growth of online and e-commerce platforms around the world, and this has accelerated our digital transformation,” Malina Ngai Man-lin, the company’s chief operating officer, said in an interview. “We decided to accelerate the launch of Watsons GO by half a year so our customers wouldn’t need to queue, and to make shopping here more convenient for them.”
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Watsons GO allows customers to scan the bar code of any product with the Watsons mobile app and then pay for it directly through Alipay HK, the digital payments application owned by Ant Financial, an affiliate of South China Morning Post parent Alibaba Group Holding. It will start accepting credit cards from next month.
The service was launched at a Watsons store in the Olympian City shopping centre in Kowloon last week. It will also be rolled out in Cityplaza in Taikoo and in Kowloon Tong later this month. Watsons GO will also be launched in Singapore at the end of the month.
Ngai, also the chief executive of the group’s Asia and Europe regions, said the company will review feedback from customers before introducing the system to other stores in Hong Kong.
The company was also considering further increasing its face mask production in Hong Kong, as the city battles a third wave of coronavirus infections. It currently produces about 300,000 masks a day, or about 10 million a month, at eight automated production lines in Tai Po, where it converted part of its water plant to meet the rising demand for protective gear.
And as the pandemic continues to spread around the world, Ngai said the company will slow down the opening of new stores. AS Watson, which operates more than 7,800 Watsons stores across Asia and Europe, had planned to open another 1,300 shops across its 12 retail brands around the globe this year. It has, however, decided to open only 900 of these, of which more than 500 will be Watsons stores in Asia, Ngai said.
In Hong Kong, where the retail sector has been hit hard by anti-government protests as well as the coronavirus, the company will adjust the locations of its stores.
“Hong Kong’s retail industry is going through a structural change. Without any tourists coming to Hong Kong, retail sales in the city have gone down by a third, and local consumption has also decreased because of the movement control. This is a big challenge to all retailers in the city,” said Ngai, who is also vice-chairwoman of the Hong Kong Retail Management Association.
“We will focus more on local residential locations [for our shops], and we hope that this will help to stimulate local consumption. Stores situated at traditional tourism locations have very high rents, so we will need to find ways to seek rental relief, as stores in those locations have lost around 90 per cent of sales.”
AS Watsons will relocate about 10 of its more than 600 stores in the city under the ParknShop, Watsons, Fortress and Watson’s Wine brands, Ngai said.
Local consumer sentiment is expected to deteriorate further with the third wave of coronavirus infections in the city, said Thomas Lam, executive director at Knight Frank. “However, local malls and shops in residential districts may fare better, as people might not dare to go out and decide to stay nearby instead.”
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