Superdrug owner plans £37m investment to accelerate ecommerce growth

Superdrug owner AS Watson is launching an innovation lab to improve its digital strategy and accelerate ecommerce growth as part of a $60m (£37m) investment.

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Dubbed eLab, the project will involve the creation of an 80-strong team of digital specialists based in four of the group’s main markets – the UK, Italy, Hong Kong and China. The team will operate at a group level, working with country-specific digital marketing and ecommerce teams and advising its brands, which include Superdrug and The Perfume Store in the UK.

Elab will also be responsible for the development and maintenance of the company’s technology infrastructure – including its website, mobile apps and digital loyalty programmes – across the 25 markets where AS Watson operates.

In the UK, that will initially include an upgrade to Superdrug’s ecommerce store to make it mobile-optimised. Further plans include a revamp to make the site more engaging, with more product information and games, as well as the ability to scan product bar codes with a mobile phone to find out more information.

In the first half of next year, Superdrug will also make its loyalty card available on mobile so that customers can accrue and redeem points and discounts using their smartphone and is considering launching a dedicated mobile app.

Speaking to Marketing Week, AS Watson’s chief operating officer Malina Ngai admits the company is currently run as a traditional bricks and mortar retailer. To ensure it stays ahead of rivals and continues to be relevant to customers, it wanted to create a special team who are passionate about digital and know about customers and how they behave, she adds.

The main aim is to accelerate ecommerce growth, with the company hoping to achieve a 50 per cent year-on-year increase in digital sales and to have 5 per cent of its total sales coming from ecommerce within the next 18 months. Ngai says the UK is one of its more advanced digital markets, with ecommerce sales here already close to 5 per cent, and the company hopes to repeat that success in some of its less developed digital markets.

The majority of the $60m investment will go into its technology platform, but a “key investment” will be in the lab team because, as Ngai puts it, “without the right people the tech won’t work”.

Ngai claims that, while AS Watson is still upgrading its tech, initial results have been “encouraging”. The company has found that customers that shop both online and offline spend twice as much as those who just shop in-store.

However, in a survey of 143,000 members of its loyalty programmes across 10 markets, some 71 per cent said they still prefer to shop in store, with 28 per cent saying they shop online and offline. That leaves just 1 per cent who only want to shop online.

That means, says Ngai, that providing a great online experience is as much about engaging people with the brand and offering them information about products as it is about selling to them.

“Our vision is ‘customer 360’ and to give them we that need to be able to provide the same best-in class experience online and offline to get customers to engage strongly with our brands,” she said.

The increased focus on digital is also mirrored in AS Watson’s marketing spend. Its total advertising and promotional spend has increased 5 per cent globally this year, but within that digital marketing spend is up 34 per cent. In London in particular, AS Watson is looking to build up a team in its innovation lab that can create new and engaging content and enhance digital marketing capability.

“Its not a much bigger marketing pie but the media mix we are using is shifting more and more online – to social media and search,” she adds.

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