Who is still browsing Watsons?

Ask AI · What signals of change can be seen in the beauty industry as it diverges from Watsons?

How long has it been since you last shopped at Watsons—because the store can only look as dim as the times you don’t go.

Recently, CK Hutchison Holdings disclosed its full-year 2025 performance. While the retail segment (with Watsons as the core) grew overall, its operations in China and Europe for health and beauty products have shown a fairly clear split. In China, total revenue fell 2% versus 2024, same-store sales dropped 1.8%, the number of stores decreased by 7%, while Europe kept growing.

With the same types of business—and both grounded in offline stores—why are the operating results so different?

Watsons’ divergence between China and Central Europe isn’t just about ups and downs in performance; it also reflects differences in consumer habits, shopping scenarios, and store functions that offline health and beauty retail faces in different markets.

Pressure in China

Watsons’ pressure in China can’t be summarized solely by changes in skincare or makeup demand. More importantly, the broader context is that Chinese consumers, when selecting products, comparing prices, placing orders, and reordering, are increasingly prioritizing completing purchase decisions online.

According to data from industry associations, in 2025 the total beauty cosmetics market transaction value across all channels in China was 721.77B yuan, up 2.83%. Of this, online channel transaction value was 382.47B yuan, up 4.45%, accounting for 65.36% of the market; offline channel transaction value was 10k yuan, down slightly by 0.08% year over year, accounting for 34.64%.

These figures do not mean that offline consumption has disappeared. Its importance in the transaction process remains, but its role has changed.

For Watsons, whose operating foundation is offline stores, the impact of this shift is relatively direct. Watsons stores used to take on the more complete job of filtering, comparing, letting customers try, and meeting their purchase needs after they came in. However, once online platforms have already done the groundwork—driving recommendations (“planting seeds”), price comparisons, reviews and selection, and promotional reach—Watsons stores’ advantages in certain parts of the customer journey are diluted.

Accenture’s 2026 China consumer insights note that 43% of Chinese consumers have become accustomed to browsing and buying online, which is higher than the global average of 32%. At the same time, 51% of Chinese consumers prefer a shopping experience that combines online and offline. This suggests that Chinese consumers have not left offline shopping behind, but they have moved more of their purchase decisions earlier to the online stage.

For Watsons in China, multiple indicators have weakened overall. The pressure does not come only from changes in foot traffic; it comes more from the shift in what role stores play across the entire transaction chain.

To adapt to market changes, Watsons has already set up “backstage stores” for online orders. This approach shows that the functions borne by stores in China are no longer only about serving in-store foot traffic. New responsibilities such as online fulfillment, real-time delivery, and sorting are being integrated into store operations.

In other words, stores still have value, but it is more dispersed as a source. The relationship among store count, same-store growth, and profit contribution is also no longer as stable as it used to be.

It is worth noting that Chinese women are not unwilling to buy cosmetics offline. It’s just that Watsons’ appeal to them is weakening. According to data from 化妆品报 (Cosmetics News), Sam’s Club sells at least 10k units per month of more than 40 beauty products. Just these bestsellers alone can generate nearly 100 million yuan in monthly sales revenue.

Growth in Europe

Compared with China, Watsons’ Europe segment still maintains growth, and it cannot be simply attributed to weaker local online competition.

The NielsenIQ report 《Beauty Industry Snapshot 2025》 shows that over the past 12 months, the online sales growth rate for beauty products was 9 times that of offline. In Europe, online beauty products sales also achieved 10% growth.

However, online growth in Europe has not rewritten the operating foundation of offline health and beauty stores. Stores still meet consumer needs in many scenarios.

Another NielsenIQ study also mentions that, under inflation pressure, European consumers buy discounted items and shift toward lower-priced brands, but they are not willing to compromise on quality in a明显 way. For health and beauty chain stores, this is of real practical significance.

When local consumers buy in-store, it’s not only to complete the payment—it’s also to complete comparison and filtering during the visit, and to receive products and select discounts immediately. As long as this type of demand still exists widely, offline stores will remain important places for driving sales and bringing growth.

Judging from data in CK Hutchison’s 2025 annual performance, multiple indicators for Watsons’ Europe segment are still moving upward. Total revenue in Western Europe rose by 10%, same-store sales increased by 3.9%, and the number of stores grew by 2%. In Eastern Europe, total revenue increased by 20%, same-store sales grew by 4.1%, and the number of stores rose by 7%.

This means that the divergence between Watsons in Central Europe and its operations in China is not just a simple difference in corporate performance between the two regions. It is more like the fact that stores in different markets assume different consumer-facing roles.

China’s stores are starting to show their division of labor in display, fulfillment, real-time delivery, and online coordination. Meanwhile, stores in Europe can still, to a large extent, concentrate selection, price comparisons, discounted purchases, and taking items away immediately in the in-store scenario. Because the completeness of a store’s role across the consumer journey differs, the resulting operating outcomes naturally differ as well.

Industry Resonance

Watsons’ pressure in China is not just a fluctuation in the operations of a single company. In fact, in recent years, China’s offline beauty and cosmetics retail industry has generally faced substantial operating pressure.

In its 2025 annual report, Shanghai Jahwa disclosed that Sephora (Shanghai)’s last year’s operating revenue was 5.5B yuan, with a net profit of -352 million yuan; Sephora (Beijing)’s operating revenue was 1.035 billion yuan, with a net profit of -147 million yuan. The operating pressure is clear.

Sephora is a global high-end beauty retailer chain originating from France and belonging to the LVMH Group, covering all categories of beauty including makeup, skincare, fragrance, hair care, body care, and beauty tools. With thousands of offline stores and flagship stores across more than 30 countries worldwide, Shanghai Jahwa is the joint-venture partner for Sephora Shanghai/Beijing.

Facing the same pressure, the Asia-leading one-stop beauty retail group Sa Sa International offers a more decisive response. According to related announcements, its online business in mainland China already contributes over 80% of revenue. Therefore, it decided to close the remaining stores in mainland China and withdraw from offline retail.

Watsons’ different performances between China and Europe cannot be fully explained simply by “online is strong and offline is weak.” More in line with today’s operating reality is that Watsons’ stores in China are undergoing a faster reassessment of their functions.

For Watsons, this divergence is not only about fluctuations in one year’s performance. It also reflects that the operating environment health and beauty retail faces in different markets has already become meaningfully different.