Taipei Times: Watsons is well-known for its lowest-price guarantee over the past two years. What strategies do you employ to maximize this appeal to consumers?
Gordon Reid: We inspected the whole retail business in Taiwan two years ago and tried to redefine Watsons' position in the marketplace from other retailers. Actually, we didn't offer the best prices at that time. But we found that we had a great chance in this niche after learning that some other retailers charged higher. We then launched the lowest-price campaign in a bid to expand market share, and it has worked well during this period.
We've got 2,500 staff to keep an eye on the local competition and feed information back to our headquarters. Then another 25 full-time employees are in charge of assembling the notes and reports and updating sales prices in the system.
That's how we got the best prices in the market. At the same time, we offer good-value promotions.
If everywhere else in the market is undercutting us or doing promotional prices, then we'll match it. So customers can come in and have confidence that they will get the best prices and the best promotions. Of course, to do this we need to establish good relationships with our suppliers.
Most of them are willing to cooperate with us and offer low prices as we show them how we can sell their products better. Initially we got a handful of requests for refunds every week. As we became more organized, it's getting less and less now. As a result, we reported an average 30 percent increase in annual sales revenue after employing this strategy.
TT: Watsons introduced the "color-coding" system to the Taipei 101 store late last year, which is also being used by another drug and cosmetics chain. What's the consumer response to the new setting? Will you expand the system to other outlets as well?
Reid: Customers have responded well to the color-coding system in our Taipei 101 outlet, which is also our flagship store. The system highlights three major product categories -- health, beauty and fun -- with a color directory. Customers can easily find what they want by the color board on top of the shelves. We plan to use the system in any new stores we open this year, not every existing Watsons store.
However, we are in the process of giving every store a better look. This year we want to put in new lighting, new graphics and new sandwich boards in every single store.
We've already done 24 stores this year, and are going to revamp our top 25 stores to create a better shopping environment for consumers.
TT: What have been the changes in Taiwan's retail market over the past few years? Will, or has, the participation of new players such as hypermarkets and virtual stores brought changes on the market? Will you consider developing e-commerce in the near future?
Reid: I think hypermarkets and supermarkets are less developed in Taiwan than anywhere else in terms of the number of stores. People still trade individually in local areas and go to traditional markets just like in the UK 20 years ago.
To me, it's quite exciting and interesting. Their participation, however, somewhat made people here develop different modes of shopping behaviors. For example, more and more people do recreational and planned shopping in hypermarkets during weekends with their families, while doing convenience and available shopping in residential areas during weekdays.
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