Sa Sa loses its shine for mainland tourists

Gone are the days when mainlanders visiting Hong Kong crowded inside the Sa Sa International outlet. The famous local cosmetic retail shop kicked off the new year with bad news.

On Wednesday, Sa Sa said its retail sales during the Lunar New Year period fell 4.8% with a 2.8% decrease in transaction volume. That news shocked investors, who dumped Sa Sa shares triggering a 10% drop in early morning trading.

The number of mainland tourist arrivals, who had been Sa Sa’s biggest clientele since Hong Kong relaxed the individual visit scheme in 2003, increased 31.6% in the Chinese New Year period.

In a statement, the company said “the big rise in their visitation did not materialize in terms of sales as the mainland tourists were more reserved in shopping.” It also went into length about the Sino-US trade war and fluctuations from the stock and property markets.

To address the changes in customer behavior, Sa Sa said it would strengthen its promotional efforts to stimulate sales. Mainland visitors going to Hong Kong are more selective in buying what they want.

Hong Kong cosmetics are known to be abundant in variety, authentic and affordable. But consumer patterns have changed with mainland youngsters switching to online sites that offer more varieties and bargains. Authenticity is an issue, but cosmetics are small ticket items, unlike gold and jewelry, which mainlanders still buy in Hong Kong, especially since this is a good year for marriage.

That is also why Chow Tai Fook did not suffer the same issue as Sa Sa.

In its heyday, Sa Sa – famous for its imported brand fragrances sold at a deep discount – leased eight outlets in Causeway Bay, a popular tourist spot. The high rentals it paid made a splash in the newspapers, but it was more than compensated by its customers.

Two years ago, in one of their Mong Kok stores, customers could not even get in because many of their mainland customers were carrying their luggage inside the store.

That problem now appears to be solved. In fact, there is more competition in the market as Miniso, a Chinese-owned Japanese retailer with a logo similar to Uniqlo and products similar to Muji, is selling perfume and cosmetic products, along with their home appliances and mobile gadgets, at low prices.

Sa Sa would probably take a long time to think about how it can earn more tourist dollars in a city always crowded with mainlanders.