Page 31 - Sphere No.15 (Nov 2005)

S PHERE 29
SPLASHING C ASH
ASTERN EUROPEAN CONSUMERS, starved of quality goods
for so long, are relishing the change to shop at A.S. Watson-
run stores springing up in the region’s new republics.
The company is using the Latvian capital of Riga, on the Baltic
Sea, as a beachhead for developing business in the surrounding
states. Even though the states have been free of stifling Soviet rule
for more than a decade, it is only in recent years that people have
become affluent enough to splash out on once-extravagant items
such as branded cosmetics, sleek tights and packaged toiletries.
Latvia, Lithuania and Estonia have all blossomed under the new
openness. The younger generation are reaching adulthood with
good English-language skills, Internet and e-commerce fluency and
exposure to television and movies. They are demanding the kind
of consumer choice their counterparts in the West have long
taken for granted.
A.S. Watson has tapped into that market with its acquisition of the
Drogas chain in 2004, which has 63 stores in Latvia and 31 in neigh-
bouring Lithuania. The Group also has a
joint venture with the Rossmann group
which expanded its portfolio into Poland,
Hungary, Czech Republic and Germany.
Recently, two stores opened in Estonia
under the Watsons brand.
Supervising the rapid expansion is
Dennis Casey, Chief Executive Officer of
Health and Beauty for Eastern Europe.
Mr Casey is a long-serving employee who
worked on the A.S. Watson expansion in
Singapore, Malaysia and Taiwan during
the late 1980s and 1990s; he is seeing the
same spending patterns emerge in
Eastern Europe, as people exercise their
new-found consumer power.
Women in the region, known for
their fair-skinned beauty, are flocking to
the Drogas stores that are stocked
with a wide range of international-stan-
dard products. “People here spend a lot
of money on fashion and cosmetics,”
says Mr Casey, who is based in Riga. “I
think these are new frontiers. The work
ethic here is very, very strong. People
want to get out and get on.”
Mr Casey is impressed by the elegant architecture of Riga, the long,
clean beaches outside the city, its burgeoning nightlife and the ultra-
modern airport. Working in the region has also given him a chance to
visit Russia again, a country he first went to 32 years ago when secur-
ing a visa was extremely difficult.
Returning to Russia to scout out business possibilities has been
like going to another country. “Retail is coming on in leaps and
bounds,” said Mr Casey. “People have more money to spend on
fashion and the changes are phenomenal.”
The next stage of A.S. Watson’s growth in the region has just
been announced with the acquisition of the Russian health and
beauty retail chain Spektr Group in St Petersburg. Further expan-
sion is planned in the Commonwealth of Independent States such
as Georgia and Ukraine as well as the Nordic countries of Finland,
Denmark, Sweden and Norway. Add the populations together and
that is close to 300 million potential consumers.
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