Eu Yan Sang, traditional Chinese medicine retailer and wellness brand, recently reported a 75-percent plunge in net profit for its second quarter, extending its loss record for more than three consecutive quarters.
The company attributed the loss to lower foreign exchange gain coupled with higher distribution and selling expenses. In addition, lower spending by mainland tourists and a continuing challenging retail environment were blamed for lower Hong Kong sales.
In China, its outlook seems better, and an increase in sales in Singapore and Australia was also reported.
The company has stated that it is also looking to increase emphasis on wholesale and ecommerce channels to furthering growth opportunities. But what more does Eu Yan Sang need do to bolster its fortunes?
FACT FILE
- Over 300 retail outlets in six different markets
- Inked a deal in January 2016 to receive up to US$35 million from HCare Investments Holding to expand in China
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DIAGNOSIS 1
The brand has also placed most of its eggs in the China basket, tying its brand health with the economic health of China. There are few ad campaigns by the brand that are consistent and memorable. A legendary brand can’t continue to flourish purely based on its heritage. It needs a steady stream of brand messages to recruit new customers. From a branding perspective, it is important for the brand to identify key niche segments across all Chinese communities in Asia and develop targeted messaging—be it quality assurance, preventative health benefits or general well-being messages. It needs to engage with these communities by developing customised content. A one-size-fits-all approach won’t get the full spectrum of consumers. On the retail front, Eu Yan Sang can go beyond its traditional way of selling OTC drugs and consider creative partnerships with lifestyle brands such as restaurants and health clubs. By doing so, it can position itself as a wellness brand rather than a purely functional traditional Chinese medicine brand. |
DIAGNOSIS 2
However, the brand looks a little tired, unfocused and lacking in appeal to its developing audience: 1 Brand mark: A banal sans-serif typeface and symbol lacking in detailing don’t evoke character. The identity is neither modern nor traditional, just dated. 2 Packaging: An uncoordinated plethora of colour schemes, styles and typographics. 3 Social media: A hugely untapped area for the brand. The ecommerce website has no links to any social media channels. There is a Facebook page, but it has only one post. 4 Customer trust: The Bo Ying Compound incident has hurt the brand, highlighting discrepancies in their standards across different countries and an approach to contamination which displays a lack of concern for the customer’s well-being. But it does present Eu Yan Sang with an opportunity: to set more stringent standard for contamination and apply it unilaterally, showing they place customer safety first. |
As a 135-year-old brand, Eu Yan Sang has an ageing population on one hand and a younger generation concerned about well-being on the other, as its target audiences comprise two opposing sides of the spectrum. This makes its demographic segmentation a tough task.
The increased emphasis on ecommerce makes sense as a means to constrain the costs of physical premises and open up their brand to a wider audience. There’s a growing interest, especially in the West, in natural herbal treatments—a positive factor in their efforts to expand beyond traditional markets.
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