Younger customers are venturing back to real-world stores, says AS Watson CEO Malina Ngai: ‘They want to be able to touch the product’

AS Watson, founded in 1841 and operating nearly 17,000 outlets across 31 markets, is emphasizing Southeast Asia as a key growth engine where young, digitally-savvy consumers still value in-store experiences; CEO Malina Ngai told the Fortune Innovation Forum the company uses localized marketing (eg, Malaysia’s “Kaw Kaw Deals”), a broad portfolio including J-/K-/C-beauty and halal-certified products, and customer insight to stay relevant. She stressed a people-first culture and employee empowerment alongside accelerated digitalisation—launching a company-wide generative AI protocol in September—as strategic levers to improve agility and operational execution as AS Watson readies for its 185th anniversary.

Analysis

AS Watson, founded in 1841, operates close to 17,000 outlets across 31 markets and is explicitly positioning Southeast Asia as a key "growth engine," with CEO Malina Ngai citing young, digitally-savvy consumers who nonetheless value in-store experiences and localized activations such as Malaysia's "Kaw Kaw Deals." The company's geographic breadth across mainland China, Malaysia, the UK, Turkey and Ukraine provides diversification but requires market-specific formats and campaigns to drive footfall and conversion rather than reliance on pure e-commerce share.

AS Watson's broad product assortment — J-beauty, K-beauty, rising C-beauty and halal-certified ranges for Muslim consumers in Malaysia and Indonesia — supports faster social-media-driven adoption and penetration across demographic segments, highlighting the importance of assortment and margin mix as preferences shift. Ngai's observation that Chinese brands leverage technology and social engagement underscores competitive dynamics in the region.

Management is prioritizing a "people-first" culture and has rolled out a company-wide generative AI protocol in September, indicating a focus on operational efficiency, personalized marketing and cross-functional adoption of technology. With the firm approaching its 185th anniversary in 2026, growth depends on execution of localized campaigns, AI rollout metrics and the ability to convert store preference into profitable sales growth.

Key Decisions for Investors

• For investors with exposure to regional health & beauty retail, consider selectively increasing exposure to operators demonstrating localized omnichannel execution like AS Watson while monitoring measurable campaign ROI and store footfall
• Monitor KPIs including same-store sales, in-store footfall versus online share, product-mix shifts toward C-beauty and halal ranges, and social-media-driven sell-through to validate sustainable revenue growth
• Track implementation outcomes for the company-wide generative AI protocol (timing, cost savings, marketing personalization results) and management commentary ahead of the 185th anniversary for evidence of margin improvement
• Maintain caution on margin pressure from aggressive promotions and fast-moving assortment changes; avoid expanding positions materially until there is clear evidence that localized campaigns and AI initiatives translate into stable margin expansion