Watsons Turns as Caught up in Repeated Promotional Controversies
- Chaileedo Press
- Feb 7, 2022
- 3 min read
Watsons is not having a good time in China, not only is it being hit by Chinese beauty collection stores such as HARMAY and THE COLORIST, but also because negative news of Watsons live streamer insulting consumers madly is sweeping in.
Watsons has not had a good time in China in the past few years as it has not only been impacted by Chinese beauty stores such as HARMAY and THE COLORIST but has also been questioned for its live streaming and promotions one after another.
According to National Enterprise Credit Information Publicity System, the second branch of Beijing Watsons Personal Products Chain Store Co., Ltd. was warned and fined 50,000 yuan (about $0.79 million) by the Beijing Yanqing District Market Supervision Administration for allegedly using false prices to lure consumers on January 11.
In addition, negative news swept through Watsons' live streamer who insulted consumers madly.
The incident began when Watsons launched a facial mask discount in China on January 11, under which consumers could buy a box of masks for 1 cent (about 0.16 cents), but needed to pick them up in an offline store, according to the promotion rules. However, consumers who placed successful orders said that after receiving information about the merchant's stock availability and pickup, they were told they were out of stock when they picked them up and that the merchant had no way to handle them.
"The mask was on the shelf, but the clerk told me it was out of stock." Some consumers said on social media platforms.
On the complaint platform "Hei Mao Tou Su", there are more than 7,000 complaints about Watsons, of which there are more than 1,500 lawsuits initiated due to the inability to pick up the "1 cent promotional mask".
In the evening of January 14, Watsons China made an emergency apology. In the case of failure to pick up goods, Watsons said it will take the form of replenishment to continue to fulfill the above orders while saying that the scolding live streamer belongs to third-party cooperation agencies and will strengthen the training and supervision of third-party cooperation personnel.
Frequent offline promotions, online and third-party cooperation live streaming ...... from a series of Watsons marketing seem to show that it is trying hard to keep up with the times. With the rise of many Chinese beauty collection stores, Watsons' performance has also been greatly affected.
Watsons' earnings report showed that Watsons China revenue totaled $2.648 billion in 2020, down 19% year-over-year and the largest decline in five years. Although Watsons' results recovered in the first half of 2021, this was achieved based on a low base effect due to the impact of the pandemic outbreak but its results still are less than the first half of 2019.
The slump at Watsons is in part due to the impact of an increasing number of Chinese brand collection stores. Upstream in terms of price, there are Sephora and HARMAY to meet consumer demand for high-end beauty products. Even within its group, Watsons has competitors. In 2005, the Watsons Group acquired the beauty collection store MarionnaudParis, which focuses on high-end skincare and fragrance products, and opened its first store in mainland China in Shanghai at the end of 2020. As a result, Watsons has been subjected to internal brand competition and pressure has increased dramatically.
Downstream in terms of price, THE COLORIST and WOW COLOUR are available for consumers to select affordable beauty products and retail collection stores such as KKV allow consumers to buy lifestyle products.
It is undeniable that Watsons, despite its many categories, brands and early popularity, seems to be a big grocery store and now it is in an awkward situation of not being able to make ends meet.
According to the public financial report of Watsons' parent company CK Hutchison, Watsons opened almost one store a day in China from 2016 to 2019. After 2019, Watsons' store expansion in China slowed down but is still greater than the global store expansion rate. Watsons, which intends to keep laying out its sinking market, instead missed a good opportunity for e-commerce development at this time.
As one of the world's largest international health and beauty products retailers, Watsons has expanded rapidly since entering the Chinese mainland market in 1989 with more than 4,000 stores and was once the first choice for young girls to buy beauty and personal care and snacks. With the improvement of people's living standards and consumption upgrades, the cosmetics retail industry has also turned into a huge market. Watsons, can it still return to the top?
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