Road to recovery: Sa Sa Q1 buoyed by return of tourists to HK, Macau

The beauty retailer announced that Hong Kong and Macau saw a 31.5% increase in the total number of transactions in the three months ending June 2023.

In Hong Kong alone, offline sales increased 58.3% year-on-year. Macau recorded 67.5% year-on-year growth. In total, offline sales increased by 60.7%.

The company attributed the increase to the increasing tourist traffic, particularly in Hong Kong.

According to the firm, tourists now account for 35.3% of its total sales in Hong Kong.

However, the firm noted that tourist traffic has so far been “concentrated” ​at certain tourist hotspots.

This includes core tourist areas such as Tsimshatsui, Mongkok, Causeway Bay, West Kowloon Station station and Lok Ma Chau station.

At core tourist locations, tourists account for more than half (58.2%) of sales.

In June, the company announced that it would be expanding its store network in tourist-dense locations. It also revealed that it had already signed three new leases in two tourist areas.

“We expect that the gradual return of Mainland Chinese tourists will have an ongoing positive impact on our performance in the Hong Kong SAR as it ranks consistently among the top holiday destinations for Mainland Chinese while beauty products also feature high on their travel shopping basket,” ​said chairman and CEO Dr Simon Kwok.

As of June, Sa Sa operated 81 brick-and-mortar outlets in Hong Kong and Macau.

Hong Kong and Macau account for the lion’s share of the group’s total turnover at 82.2%.

Overall, Sa Sa saw turnover increase by 30.9% year-on-year to HKD1,047.5m (USD133.9m) in Q1.

Potential uncertainty in tourism

At the same time, the group was conscious of the potential uncertainty in the travel market.

“Looking ahead, the retail sector in the group’s core markets is expected to continue to recover gradually as travelling and tourism resume in the region. However, the pace of such recovery, the impact of changing consumer tastes brought about by the pandemic, and the rise of competing tourist destinations will all impact the extent and pace of such recovery for each market in the region.”​

The group emphasised the need to strengthen its omnichannel capabilities. In Hong Kong and Macau, online-only accounted for 5.4% of total sales.

“We continue to adapt and leverage the group’s offline store network and unique team of professional beauty consultants to deliver online-merge-offline, addressing the needs of modern consumers who are looking for a seamless experience wherever they appear.”​

It will also push the development of its WeChat mini-programme to encourage sales from Chinese tourists.

“Mainland China tourists visiting Hong Kong and Macau SARs, the Group is actively promoting the WeChat mini-programme and mobile application and seeking to connect with these customers after they return to Mainland China to enable them to shop and purchase online.”​

In March, the cosmetics company announced that it was set to make a return to Singapore after almost four years.

Neighbouring Malaysia had been a “bright spot” ​for the group during the pandemic years as restrictions loosened considerably compared to China, Hong Kong and Macau.