Days after warning its profit will fall by as much as 50 per cent, beauty products retailer Sa Sa International has revealed a new strategy to restore profitability.
A change of focus towards local Hong Kong consumers – rather than tourists – will see it close some stores in tourist areas and open more in residential neighbourhoods, according to a report in the the Hong Kong Economic Journal.
While there are no plans to reduce the chain’s Hong Kong store count, it will review every existing store in tourist-dominated areas, where rents are higher yet custom is falling. In some cases, the company has benefited from a 20 per cent reduction in rents in high profile locations, but even that may not be enough to convince the chain to maintain some sites.
Sa Sa International chairman Simon Kwok Siu-ming said the company will weigh the costs and benefits of every store in a tourist area.
Kwok said that while mainland tourists are spending less, the strength of the Hong Kong dollar is also hurting the business, by reducing the average customer transaction size.
Meanwhile, Sa Sa still plans to open stores in China’s free-trade zones to capture mainlanders’ discretionary spending. One will open next month in Qianhai, Shenzhen.