Watson’s Personal Care Stores

Market Expansion

Identified Driver

About Watson’s

◈ Owned by A.S. Watson Group (ASW)◈ Work with more than 5,000 suppliers in the world◈ Provide 180,000 distinct items for sale◈ Operating in 25 markets worldwide ◈ The largest international health & beauty retailer in

Asia and Europe

Distribution Map

Where Are We Going?

Why Are We Going?Target Market:◈ Women from 18 to 45◈ Asian Australians now make up

some 12% of the nation's population◈ 20% of China-born international

students ◈ 19% of residents in Sydney are of

Asian descent◈ 18.2% of residents in Melbourne are

of Asian descent

Keys To Success

◈ The largest health care and beauty care store in Asia◈ Consultants for personal care in each retail store◈ Providing products from various brands around the

world◈ Company brand products◈ Strong band name◈ Also sell commodities, food and drinks

PESTLE Analysis

Political

❏ -Efficient and transparent legal system

❏ -Stable political environment

❏ -Corporate tax rate of 30%

❏ -Less corruption than countries such as Canada, UK, and US

PESTLE Analysis

Economic

❏ -GDP of $52,000CD

❏ -AUD currency is extremely stable

❏ -Is the world’s 13th largest economy

❏ -Entering 24th consecutive year of uninterrupted economic

growth

PESTLE Analysis

Social

❏ -Diversified ethnicities

❏ -13th ranked education system in the world

❏ -Minimum age is $16.87 an hour

❏ -Publicly funded health care and education

PESTLE Analysis

Technological

❏ -Government funded research and development

❏ -Proper maintenance of infrastructure

❏ -Cell and internet service available throughout the

country

PESTLE Analysis

Legal

❏ -3 branches of government

❏ -Contracts do not have to be on a formal document and

signed to be legally binding

❏ -If upto code, it is easy to import products into Australia

PESTLE Analysis

Environmental

❏ -Volatile weather conditions

❏ -Diverse wildlife

❏ -Strict laws enforcing the removal of natural resources

What Does It Mean?

❏ -We do not see issues in the future dealing with the Australian government

❏ -The country has the proper infrastructure and resources needed

❏ -With consecutively growing economy with diverse ethnicities we see Australia as a logical destination to move our company

Comparative Advantage

Comparative Advantage

● Almost 40% of the workforce holding a tertiary qualification or advanced diploma

● The first choice education destination within the Asian region

● Rich in natural resources ● Female population is increasing to 50.2% of the total ● High level of disposal income ● An opening trade market ● 10th in the country of ease of doing business

Market Structure

● Monopolistic Competition

● Limited barriers to entry

● Large competition from Australian drug store’s

Social Trends

● We increasingly rely on use of skin product ● Awareness of healthy skin and body care● Women’s inherent love for beauty● Environment: air pollution, low water quality● Daily life: bad habits, fast pace of life, stressful

Corporate Social Responsibility

Workplace: safe, healthy,supportive, discrimination-free environment

4 pillars

Marketplace: setting out the same ethical expectation with business partners, offering the products of best quality

Corporate Social Responsibility

Environment: energy-efficiency, reduce waste and greenhouse gas emission

Community: develop programs with organization’s that are relevant to local community needs ( beach cleanup, gardening for the community )

Porter’s 5 Forces

Australian Beauty & Health Industry

➢ Modest growth of 2% in 2013 ➢ Consumers seek products with multiple benefits ➢ Mass resurgence in drugstores ➢ Price promotions and discounting ➢ Australian households spent 8 billion on beauty and

10.5 billion on personal health care in 2012

Competitor

Priceline pharmacy- A health and beauty retailer of cosmetics, skincare,

haircare and healthcare products - Over 330 Priceline brand stores throughout

Australia. - Has over 4 million memberships, making it one of

the largest health and beauty retail loyalty programs in Australia.

Opportunities & Threats

- Potential customer base among Asian females (own their brand loyalty)

- Professional sellers speaking different languages- Unique products- Lower prices- Lack of popularity among locals

Bargaining power

- Suppliers have little bargaining power : a large batch of demand for stores all over the world (economies of scale)

- Customers have high bargaining power: large competition in Australian industry

Self-developed Products

◈ Products owned by Watsons and manufactured in Mainland China (low cost)

◈ Issue: transportation cost

◈ Solution: already have warehouses in Southern Asia: Malaysia, Singapore and Indonesia, much closer and cost much cheaper transportation fee

Strategy

Transnational Strategy

Entry Method

Greenfield● Late mover in Australia health and beauty industry

Scale of entry● Strategic commitment

Action Plan

- One store in each city- Find out customer preference- Build warehouses- Adding more stores over time- Using similar marketing strategy we did in other

countries - Market position: localization

Risks Involved

-Variability of Australian currency -Competition from large multinationals in industry-Low brand awareness from residents not of Asian heritage-Do not yet know consumer preferences

Thank You

Any Questions?