Page 10 - Sphere No.31 (Jul 2012)

8 Sphere 31
Retail
A shift in consumer behaviour away from
high-end luxury products over the last several
years has posed a challenge for Hutchison’s
retail units, particularly in Europe. In spite of these uncertain
economic conditions, however, Hutchison’s European colleagues
were able to adapt to the changing needs of their consumers and
rework their inventory management strategies, allowing the retail
division in Europe to maintain steady sales volumes and operating
margin growth. In addition, smart loyalty and reward programmes
have been notably effective in sustaining sales volumes.
In total, the A S Watson Group now has over 10,000 retail
stores worldwide, compared to only 75 stores when it became a
wholly owned subsidiary of Hutchison Whampoa in 1981. The
company grew slowly into Asia and Mainland China in the 1980s
and early 1990s and then into Europe in the late 1990s and early
2000s with the acquisitions of Savers, Superdrug, Rossmann,
Drogas, Kruidvat, Cosmo Shop, the Merchant Retail Group,
Spektr, Marionnaud and DC.
In the years following these acquisitions, management worked
diligently to improve operating efficiencies, reduce inventory
surplus, centralise purchasing and develop own-brand products.
These efforts helped turn these acquisitions – some of which were
loss-making ventures – into profitable businesses. Today, A S
Watson stores serve approximately 26 million people each week.
Going forward, Asia and China, in particular, will be key areas
for strong growth potential. Watsons China grew from 410 stores
in 2008 to over 1,000 stores in 2011. Currently, Watsons China is
opening one new store nearly every day, with each store in China
seeing an average sales growth of 7.8 per cent over 2011 figures.
As a whole, total revenue for the retail division grew 17 per cent
to HK$143.6 billion between 2010 and 2011.