This article first appeared in The Edge Malaysia Weekly on June 7, 2021 - June 13, 2021

WHAT do hair colour, acne skin care and beauty facial masks have in common? They are some of the products that have seen a spike in consumption since the first Movement Control Order (MCO) in March last year, according to Guardian Health & Beauty Sdn Bhd (Guardian).

That, coupled with the surge in the sales of hand sanitisers, face masks and anti-bacterial products, enabled Guardian to maintain its 2019 sales performance last year, despite the overall slump in the economy, and the retail market specifically. GDP shrank 5.6% while Malaysia’s retail sales, according to Retail Group Malaysia, contracted 16.3%.

Guardian, which operates 465 stores — 365 health and beauty stores and 100 pharmacies — hopes to do even better this year, supported by the healthy growth in e-commerce sales and increase in new customers at its store-within-a-store outlets. Its latest move to lower and lock in prices of 1,500 essential items until year-end is also expected to help retain existing customers and attract new ones.

Guardian in Malaysia is owned by the Dairy Farm International Group (DFI), which also owns and operates grocery stores in Malaysia under the Giant, Cold Storage and Mercato names.

“It has been a year since Guardian Health & Beauty has had the opportunity to demonstrate the important role we play in society. This is linked to our portfolio and the range of products we sell and how important they became during the pandemic. We saw a big surge in basic essentials related to the Covid-19 pandemic, such as hand sanitisers, masks, vitamin C, anti-bacterial products and anything that is used for disinfecting,” Guardian’s CEO Soren Lauridsen tells The Edge in an interview.

Lauridsen also revealed interesting sales trends that include a surge in the sales of hair colouring products, thanks to the closure of hair salons. Wearing of masks often and for long periods led to an increase in acne and tired facial skin, which contributed to the jump in sales of acne creams and beauty facial masks. These trends were similar whether online or at its stores located within malls as well as at its high street stores.

Not surprisingly, sales of cosmetics declined overall as wearing a face mask covers half the face, and moreover, people mostly stayed at home. But, while Guardian saw a decline in the sales of lip products such as lipsticks, sales of eye make-up fared better as people accentuated their eyes, which they use to help in communication.

“We do think that we will do better than in 2020 as there are a lot of indications of that,” Lauridsen says, but cautions that this could change should the current MCO be extended for two or three months. “It will hit Guardian and everyone else in the retail sector too. For now, we believe we can do better … but it is a very volatile environment.”

Sales growth in 2020 was flat over 2019, says Lauridsen, who declines to share any specific figures. “It was not business as usual in 2020 and it impacted us ... but not much. We had really strong periods in the hard lockdown.”

According to the Companies Commission of Malaysia’s website, in the financial year ended Dec 31, 2019, Guardian posted RM1.337 billion in sales and a net profit of RM25.94 million. The retailer had RM1.79 billion in

liabilities, of which RM439.39 million were current. Accumulated losses totalled RM263.32 million.

Guardian is seeing a boost in sales from its high street malls, store-within-a-store concept and e-commerce platform.

“During the pandemic, the big winners are the high street stores … the mall stores, in general, are suffering. When there is a fairly big fall in mall traffic, such as during the first MCO or now, there is also a decline in food and beverage patronage. Others (retailers) too feel the decline in sales, and we are not spared. On the other hand, we have seen very strong growth in our high street stores, which is positive. And we have seen an even bigger increase in our online business,” Lauridsen says.

In fact, Guardian Malaysia reported triple-digit e-commerce growth last year. According to Lauridsen, Guardian — which started in Malaysia 54 years ago with its first pharmacy at The Weld Shopping Centre, Kuala Lumpur — launched its e-commerce platform many years ago and has enjoyed consistent growth. “We saw a dramatic surge during the first MCO,” he notes.

“Obviously, the online business is taking some business away from the brick and mortar, but we are not thinking [of switching from] offline to online. We are thinking [of growing both] offline and online. We have had a strategy for many years where we pursue growth in both channels. We have today 465 stores and they are still a substantial part of our business despite the very rapid growth of our online business.

“We also have many customers who go online to search for products but they would still like to come to the store and experience, smell and test,” he observes, quickly adding that this is now not allowed because of strict standard operating procedures.

DFI’s grocery business under GCH Retail (M) Sdn Bhd has been undergoing a multi-year transformation exercise, which includes the introduction of the store-within-a-store concept. A total of 34 Giant hypermarket outlets now also host a Guardian store.

According to Lauridsen, these stores are capturing additional customers and have proven to be a success. “Store-within-a-store looks promising. It was done as part of Giant’s transformation and it has managed to accelerate sales [for Guardian], generating sales that we would not have been able to get before because we are reaching out to a group of customers who may not necessarily visit our Guardian stores even if we had a stand-alone store in the same mall, either because of time or convenience. These days, people are limiting their shopping destinations; they find it a hassle to visit too many stores.”

He adds that Guardian will be very prudent and selective when it comes to store expansion. “We are cautiously evaluating our opportunities in store expansion and, in particular, monitoring [Guardian stores within] malls. Are these malls able to get back to the good old days, or will some of them come out of this with less customer count?” he asks. Factors such as consumers being able to spend only two hours at a mall can have an impact on sales.

On Guardian’s strategy going forward, Lauridsen says, “We want to be known as a mass market retailer.”

Also the CEO for Guardian South East Asia, Lauridsen says Guardian is carrying out a programme called “Low Price Locked To Stay Low”. “It is a regional effort to ensure prices of daily essentials such as bath and hair care, personal hygiene, vitamins and supplements remain affordable during this challenging time when customers are increasingly looking to stretch their dollar.”

The prices of some 1,500 items — including health, beauty and personal care essentials — have been lowered and locked in. “We are giving a guarantee to our customers that these prices will remain at these levels for the rest of the year,” he says.

The timing of the announcement of tighter MCO rules on May 28 may have worked in Guardian’s favour. The retailer saw sales doubling during the weekend of May 29 and 30, with a particularly robust response towards its own brand of hand wash and paper products as well as items such as Antabax, Dove, Panadol, Flavettes and Guardian Vitamin C. Customers also bought more face masks, hand sanitisers, disinfectant sprays and other vitamins.

“For 2021, we look forward to our customers responding positively to the strategies we have put in place … These are challenging times for all of us, but we will remain focused on our strategy of putting our customers at the heart of everything we do,” says Lauridsen.

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