Business

Sa Sa eyes expansion in Asia

by Lucinda Ho

Starting from a 40-square-foot cosmetic retail counter 28 years ago, Sa Sa has become a well known brand that even tourists will take to the stores when they visit Hong Kong.

The company, with an expanding network in Asia , is eyeing to increase its number of stores to 240 in the region in five years, said Macy Leung Wai-ka, corporate communications director of Sa Sa International Holdings Limited.

It now has 81 retail shops in Hong Kong , Macau , Malaysia , Singapore , Taiwan and mainland China.

The expansion is aimed at increasing sales and the overseas operations are now the fastest growing segment of the business, Miss Leung said.

The region's leading cosmetic retailing and beauty services group reported an increase of 14.5 per cent in turnover to $1.17 billion for the six months ended September 30, 2005 . But its net profit fell 4.7 per cent to $67.8 million.

Although the company has a dominant position in the local cosmetic retail market, competition is fierce. It has broadened its scope of business to beauty services so as to differentiate itself from rivals.

“We have to find the way to stand out and attract the customers,” said Anita Shen Sui-fun, marketing director of Sa Sa.

In 2002, the retailer opened a one-stop beauty centre called Sa Sa Beauty+ to provide facial, spa, massage, slimming and nail art services to customers. It now has two beauty shops in Hong Kong .

“Customers can go to the retail stores to buy cosmetic products, and if they want to get a treatment, they can go to Sa Sa Beauty+ for the service. Therefore we can say that it
is a one-stop service,” Miss Shen said.

The company also expanded its customer base by starting a beauty service centre for men in 2004 under Phillip Wain, a women's beauty and fitness club chain that it acquired full control in 2003.

Yet, retailing remains the major part of Sa Sa's business, Miss Shen said.

When the cosmetic business was yet to be flourishing more than two decades ago, Sa Sa introduced the concept of “one-stop-shop”, like shopping in supermarkets, with cosmetic products displayed in shelves and free product samples for customers to test.

At present, the company, which is listed on the Stock Exchange of Hong Kong, has more than 50 retail shops in Hong Kong alone.

Apart from selling private label products, Sa Sa is the sole agent and exclusive distributor of international cosmetic brands like Suisse Programme and Elizabeth Arden in Hong Kong .

It has received good reputation and won representative awards, including the Hong Kong Top Service Brand Award given by the Hong Kong Brand Development Council and the Chinese Manufacturers' Association of Hong Kong.

The relatively low prices of its cosmetic products have been attracting many girls and women to dip into their purses. “I bought my perfume at about $200 to $300, and it is $100 to $200 cheaper than in other stores,” said June Im Jung-youn, a 24-year-old exchange student from South Korea .

However, cheaper prices raised the doubts of some customers about the quality of the products.

Alison Ho Mei-han, a 19-year-old local university student, said: “I don't know if those are from the parallel markets, and I don't know in what way Sa Sa can get those at such low prices either.” She said she never bought cosmetics from a chain like Sa Sa and she would only buy those branded products in specialty shops.

The way that Sa Sa gets the branded products at cheaper prices is still confidential. “I can only tell you that it is because we buy in a large number of products, and we have a long-term relationship with vendors,” Miss Shen said.

To tap the potential big market in mainland China, Sa Sa tries to gain recognition from more mainland tourists in Hong Kong .

“We have some joint promotions and publish advertisements in mainland Chinese newspapers,” Miss Shen said.

Sa Sa also accepts customers to use China UnionPay credit cards for making payments so that they can shop conveniently. Besides the retailing service, Sa Sa also provides one-day package tours exclusively for mainland visitors to enjoy several treatments in Sa Sa Beauty+.

A 24-year-old tourist from Shenzhen, Joyce Zhao Huiying, said there was no Sa Sa retail store in her city and she learned about the cosmetic retailer from some magazine articles. During her visit in Hong Kong , she did shop in Sa Sa stores.

Sa Sa is aiming to expand its presence in the mainland from the two shops in Shanghai to more than 100 stores throughout the mainland in five years.

On reaching foreign customers, Sa Sa launched an online shopping system in 2000. Its Korean-language website was set up in the following year to help the retailing chain enter the Korean market.

“We launched that just because of the market demand,” Miss Shen said. “We found that there were some Koreans who bought things on our website, so we provide it.”

Leo Sin Yat-ming, a marketing professor at the Chinese University of Hong Kong , said it was good for the cosmetic group to develop overseas markets as there would be more opportunities and the Hong Kong market was limited.

People in South Korea love using cosmetic products and the country is one of the fastest growing markets for Asia , Professor Sin said.

But when expanding into overseas markets, Sa Sa has to be able to adapt to those markets and change its strategies accordingly as its Hong Kong experience may not work in other places, he said.