Hong Kong – Hong Kong-based beauty and personal care chain SaSa has announced in its latest financial results for the year 2020/2021 that it is expecting to close 15 to 20 stores throughout the year.
SaSa is only one of the many businesses that have shut down operations as a strategic move over pandemic-induced economic downturn. According to the company, the markets of the Hong Kong and Macau SARs dealt a severe blow to the group’s sales performance with the pandemic bringing tourism to a standstill.
Since the beginning of February 2020, the cumulative number of Mainland Chinese visitors in the Hong Kong SAR up to now has plunged to almost zero year on year, and due to social distancing initiatives imposed by the Hong Kong SAR government, local consumer sentiment has also been dampened.
SaSa’s brick-and-mortar stores are established in Hong Kong SAR, Macau SAR, and Malaysia.
Overall, the group’s retail sales in the markets of the Hong Kong and Macau SARs dropped by 58.1% year on year, while its same-store sales decreased by 54.4% during the financial year. Meanwhile, in Malaysia, turnover decreased by 34.9% in the financial year.
Due to the movement control orders in Malaysia, the group’s stores were temporarily closed for nearly 100 days in total. As of 31 March 2021, the total number of SaSa’s retail stores in Hong Kong and Macau SARs was reduced from the peak of 118 two years ago to 100. Among closed stores in Hong Kong SAR, 80% were located in tourist districts.
With this, the company has expressed plans to leverage its online sales and deliver an enhanced customer experience by combining online with offline.
Compared to offline sales, the beauty retail chain’s online business had been looking up, rising by 45.4% to HK$501.3m accounting for 16.5% of the total turnover from the group’s continuing operations, up from 6% in the previous financial year.
The company shared that the group’s long-term vision is to grow businesses beyond brick-and-mortar operations. By growing the share of sales from online platforms, it trusts that it can help reduce its reliance on physical stores.
“Through persistently adjusting and rationalizing the store network, the group could improve its overall cost structure and lower the breakeven point for the traditional retail business, thus reinforcing its competitiveness and profitability in the long term,” the group said.
The group will work to further realize the complementary effects of combining the advantages of online business and physical stores to improve both customer experience and the group’s profitability.
It plans to execute the integration of online and offline operations. The group said that it will be improving inventory and logistic arrangements to provide a seamless O2O customer experience. For SaSa, the O2O business offers a more favorable gross margin and basket size owing to the element of personal service when compared to pure online sales channels. All these mean a more attractive profit margin for the O2O business, an area that the group wishes to develop to its fullest potential.
Dr Simon Kwok, SBS, JP, the chairman and CEO of the Group, said that online business has become the new focus of the retail industry, and that they are dedicated to expediting development in the new retail landscape by investing more resources in their online business, unceasingly strengthening the brand and adjusting their product portfolio.
“The Group will also proactively propel businesses beyond our core markets in Hong Kong and Macau SARs and promote the online business, thus diversifying and expanding our revenue portfolio and customer base and creating value for our stakeholders in the long term.”
