‘Sasa’ scales back mainland retail amid tourism shift

Sa Sa International Holdings (Sasa) has announced a strategic shift away from offline investments in mainland China, reflecting changing consumer preferences and ongoing challenges in the retail sector. The company’s latest report highlights a significant decline in its mainland operations, prompting a reevaluation of its market strategy.

In the six months ending September 30, 2024, Sasa’s turnover reached HKD1.92 billion, a 10.4% year-on-year decline. This decline was driven mainly by a sluggish macroeconomic environment and reduced consumption from Mainland Chinese tourists. Notably, offline sales in Hong Kong and Macau fell by 19.4%, totaling HKD1.31 billion, while the mainland experienced an alarming 36.7% drop due to the closure of 12 stores.

Macau’s resurgence in tourism has welcomed some 17 million visitors (from March to September 2024), with 11.9 million arriving from mainland China—a 13.8% increase from the previous year. However, a demographic shift among these tourists is evident, with younger travelers increasingly favoring experiential activities over traditional shopping. This change is attributed to rising hotel costs in Hong Kong and the convenience of same-day returns to the Greater Bay Area.

“The demographic of Mainland Chinese tourists has changed, now seeking experiential travel over shopping,” the report stated, emphasizing the need for retailers to adapt to these evolving preferences.

Despite the challenges, opportunities exist within the retail sector. In July 2024, visitor tax-free allowances rose from RMB5,000 to RMB12,000, potentially boosting tourist spending. Additionally, Mainland Chinese consumers are increasingly open to exploring niche and domestic beauty brands, which Sasa aims to leverage through a revamped store portfolio and a focus on local markets.

The company operates 82 stores across Hong Kong and Macau, located near tourist attractions. However, it has scaled back its footprint in mainland China, closing several outlets as part of a broader restructuring to enhance operational efficiency and improve financial performance.

As of September 30, 2024, Hong Kong and Macau sales accounted for 73.1% of the Group’s total sales, although turnover in these key markets decreased by 18.4% compared to the previous year. The decline moderated through the year, thanks in part to increased foot traffic from Mainland Chinese tourists, which improved sales performance from a 33.8% year-on-year decline in the first quarter to a 24.1% drop in the second quarter.

Looking ahead, Sasa is enhancing its online presence and integrating its membership program across channels, aiming to cultivate customer loyalty and boost repeat purchases. The group is optimistic that emerging government initiatives to attract large-scale business exhibitions will gradually revive regional retail consumption. Victoria Chan