Beauty-products retailer Sa Sa International saw sales plunge 67.9 per cent in the June quarter due to the collapse in mainland tourist arrivals in the city.
Sales in Hong Kong and Macau, its core market, fell by 74.3 per cent with same-store sales down 71.9 per cent. The company said the number of inbound mainlanders in the two territories was down by 98.4 per cent year on year due to the Covid-19 pandemic. Overall transaction volume was down by 57 per cent with local customers spending an average of 6.5 per cent less per purchase.
Chairman and CEO Simon Kwok said local customers now account for the bulk of the group’s revenue in the two cities, leading to the company adjusting its product mix to boost items which help protect against the pandemic and personal care lines.
“This enhances the loyalty of existing customers and broadens the customer base.”
To help counter the sales slump, SaSa has been focusing on e-commerce, especially social commerce which can use the expertise of consultants in stores.
“Thanks to the personal service element, social commerce presents a bigger potential in delivering better performance in house brand sales mix, gross margin and basket sizes as compared to traditional pure online sales,” said Kwok in a stock exchange filing.
“Piloted in October last year, the WeChat mini programme achieved satisfactory progress in targeting mainland customers who visited retail shops in the Hong Kong and Macau SARs.”
Due to a low base, and the effect of the 618 Shopping Festival, sales through WeChat mini programme more than doubled quarter on quarter in the three months to June, though not by enough to compensate for the loss of sales after SaSa closed its online store on the mainland.
SaSa also used social media to engage with Hong Kong customers in late May, and used live streaming both there and on the mainland.
Looking forward, the company says it will continue to implement cost savings, such as negotiating rent reductions, and controlling inventory, which it has already reduced from around US$129 million to $108 million from March to June.
“The group hopes that the Covid-19 pandemic will abate as soon as possible, and that the Hong Kong and Macau SARs governments will then ease the compulsory quarantine measures for inbound visitors. This would allow Mainland China tourist arrivals and sales to gradually recover in the Hong Kong and Macau SARs,” said Kwok.
He said the wage subsidy scheme in Hong Kong and Macau government’s move to give vouchers to people to encourage shopping had both helped the group.
Sales in Mainland China and Malaysia and online decreased by 27.8 per cent during the quarter.
“Although Mainland China and Malaysia were still affected by the Covid-19 pandemic during the period, the decline in sales in the two markets narrowed as the stores have gradually reopened from March and May respectively.”