Sa Sa pushes e-commerce strategy to shore up sales as mainland tourists dwindle and Sephora heats up rivalry
- Sa Sa engages Boutir to chase online sales as foot traffic dwindles, rival Sephora re-enters local beauty retailing market
- Sa Sa has lost 40 per cent of its market value in the past 12 months, versus a 4 per cent drop in the Hang Seng Index
The firm is setting up “personal online stores” for its beauty consultants to engage customers and strengthen brand loyalty after a distressing 12 months, when unprecedented social unrest and the ensuing pandemic triggered a record slump earnings.
The partnership allows Sa Sa to merge physical and online stores and “use social media to engage and sell more with customers in Hong Kong,” chairman and chief executive officer Simon Kwok said. “This partnership is also generating additional commission income for the frontline staff amid the Covid-19 outbreak.”
Sa Sa incurred a net loss of HK$515.9 million (US$66.6 million) for the year ended March 31, versus a HK$470.8 million profit a year earlier. Its shares have declined 40 per cent over the past 12 months, 10 times deeper than the benchmark Hang Seng Index.
Via Boutir, customers can first visit Sa Sa’s physical stores or access product information via Facebook Live, before placing their purchases with its beauty consultants’ online stores. At the same time, they can engage customers by recommending products, checking orders and arranging delivery.
More than 65,000 merchants are using Boutir to run their online stores, according to information on Apple‘s AppStore. The app allows retailers to connect social media accounts and interact with their customers directly through social media like WhatsApp, Line, WeChat, and Facebook Messenger.
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The personal online stores allow customers to build trust from their ongoing relationship with their beauty advisers, said Eric Ng, Boutir founder. This will translate into repeat or additional orders, he added.
Sa Sa’s recalibration of its retail strategy may be long overdue as the pandemic is changing Hong Kong’s retail landscape for the long run.
While entrenched in grocery lines, the move online is likely to expand into other categories including beauty products, said Veronica Wang, partner at OC&C, a consultancy. “This will be a trend even after the Covid-19 pandemic is over.”
In recent years, the online beauty market in mainland China has been growing at about 30 per cent, while offline channels grew between 10 and 13 per cent, she added.
For cosmetic brands, online channels have become an important growth driver for international retailers. L‘Oreal, which owns brands such as Maybelline New York, Yves Saint Laurent and Kiehl’s, among others, saw those sales growing from 1 per cent in 2013 to more than 30 per cent now, according to OC&C.
The re-entry of Paris-based rival Sephora, which is perceived to be more social-media savvy, is also another reason for Sa Sa to pursue a more focused e-commerce campaign, analysts said.
The move online is likely to become critical as foot traffic dwindles. Tourists from mainland China, the lifeblood of Hong Kong’s retail sales, shrank to 2.7 million in the first six months this year versus 27.6 million in the same period a year ago, according to the Hong Kong Tourism Board.
Their absence may force more retailers in the city to eventually close many of the costly physical stores, according to Pascal Martin, partner at OC&C. Yet, the personal touch in stores cannot be completely replaced.
“A beauty consultant provides services that cannot be rendered online, like advice on the adequacy of different products with consumers‘ skin type, the application of beauty products,” he said. “But the online and offline experiences are not competing with each other.”
