Assessing Marketing Environment Report – Sasa

Introduction

Sa Sa International Holdings Limited is a leading cosmetics retailing group in Asia. Listed on The Stock Exchange of Hong Kong Limited in 1997 (Stock Code: 178).

The company was founded by Ms. Eleanor Kwok and her husband Mr. Simon Kwok in 1978. Headquarter is in Chai Wan, Hong Kong. As of February 6, 2013, it operated approximately 260 stores and counters. The Group employs over 4,800 staff in Hong Kong, Macau, Mainland China, Singapore, Malaysia and Taiwan.

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The Group offers over 600 brands with 16,000 items of skincare, fragrance, make-up, hair care, body care products, health and beauty supplements and men’s skin care products under international brands including own-brands and exclusive products such as Elizabeth Arden and Suisse Programme.

It also offers round-the-clock online shopping services (www.sasa.com) along with product and corporate information. Sasa emphasize they offer “value of money” to the customer. By offering quality items in competitive price throughout the market, Sasa serves reasonable priced products for teenagers, young adults to luxuries brand for business woman, demanding user. Sasa online shop (www.sasa.com) serves customer whom enjoy the convenience of shopping online. They attract customers to try their products.

Analysis of the Key Macro-Environmental Forces

Political Forces

Government Regulations - Individual Visit Scheme implemented in 2003 Tourists boost Beauty and Personal Care retail industry. The tourist sector is a force because strong influxes of Mainland Chinese tourists continue to pour into Hong Kong, especially since the individual visit scheme was implemented in 2003. This group of visitors helps drive strong sales in beauty and personal care retail channels.

The increasing number of tourists from mainland China boosted the industry’s performance, especially in skin care, to a great extent. High quality assurance is the major selling point of Hong Kong’s beauty and personal care products. Tourists from mainland China trust the beauty and personal care products sold in stores in Hong Kong. 2)

Economic Factors - Strong Economic Performance

The robust economy managed to squeeze GDP growth of 5% in 2011, continuing the steady momentum of economic upturn. Hong Kong’s retailing industry (including cosmetic retailing) was one of the main contributors with double-digit growth in current value terms.

Inflation

Beauty and personal care recorded strong growth in value sales in 2011. Growth was faster than 2010 mainly because high inflation led to an increase in unit prices, while the recovery of the economy stimulated spending by local consumers and tourists. Currency : Exchange rate of RMB to HKD. Tourists from mainland China benefited from the exchange rate of RMB to HKD and buy more in Hong Kong.

Low Unemployment Rate

The steady economic growth provided healthy job opportunities and reduced the unemployment rate. As a result, a rise in income fuelled domestic consumption in the city. Sa Sa is benefited by the economic growth.  Social-cultural : Growing interest in socially responsible products Sa Sa do not focus on socially responsible products. However, other brand competitors such as “The Body Shop International Plc” is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products which is the trend.

Technological : Internet Retailing

Internet retailing is developing fast, recording double-digit growth rates. Online sales are expected to continue to grow. The high growth rates registered by internet retailing are due to the high penetration and rapid development of internet and e-commerce in domestic and foreign markets. Sa Sa’s online shopping services (www.sasa.com) is benefited by the high growth of internet retailing.

Legal : Labor Law

In addition to the minimum wage enacted in May 2011 and renewed in May 2013, Hong Kong was characterized by a low unemployment rate and high consumer
confidence. These factors caused people in Hong Kong who have a higher income spend more for personal satisfaction.

Sa Sa SWOT Analysis

Strengths

Prime Locations : Most of the Sa Sa stores are located in the shopping districts attracts the tourists from mainland China

Long-term partnership with suppliers : With 35 years of experience in cosmetics, Sa Sa’s well-established network and relationship with suppliers, often buying in large quantities given them strong bargaining power, so they can offer competitive prices to customers.

Own global sourcing and purchasing team : With their own global sourcing and purchasing team, the group manages to have exclusive brands and private labels, it increases the brand selections and add more exclusivity for the group.

"One Stop Cosmetic Specialty Store" Concept : Sa Sa prospers on its successful and proven “one-stop cosmetics specialty store” concept, offering customers with a wide range of quality products.

Good Employee Training : Sa Sa considers employee training as crucial to the continued success of their operations and business expansion. Training is focused on product knowledge and service skills and in turn providing the best customer service possible.

Weaknesses

Growing interest in socially responsible products but Sa Sa do not focus on these products. Other brand competitor such as “The Body Shop International
Plc” is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products which is the trend and became popular.

Opportunities

• Government Regulations - Individual Visit Scheme implemented in 2003 Since the individual visit scheme was implemented in 2003, this group of visitors helps drive strong sales in beauty and personal care retail channels.
• Tourists from mainland China trust the beauty and personal care products sold in stores in Hong Kong.
• Government Policy favors Tourism Industry. Hong Kong government policy favors tourism industry and thus attracts more visitors by establishing more scenic spots such as Hong Kong Disneyalnd and Ngong Ping 360 Cable Car.
• Opportunities in Mainland China. China market is an undeniable potential market whilst Hong Kong market is still attractive under Government’s favorable tourism policy.
• Technology : E-commerce :It’s e-commerce arm, www.sasa.com provides online shopping service to customers as well as a strong marketing tool for the Group.
• Local Events : Sa Sa participate in local Beauty Exhibition which give them more opportunities in business.
• Demand for men’s skin care products: Demand for men’s skin care products is expanded rapidly and contribute significantly to the good performance of the industry.

Threats

• High rental : High rental and operating cost in major market Hong Kong is a big challenge to Sa Sa.
• Brand Switching is another challenge for Sa Sa.
• Competitors : Competition from other cosmetic retailers, e.g. Bonjour Holdings Limited, Angel etc. Bonjour is the key competitor owns 41 retail stores in Hong Kong, Macau and Guangzhou. Bonjour offers over 20,000 beauty and healthcare products, covering a broad range of items.

Conclusion

Sa Sa manage to gain positive growth annually and stand at a leading position in the beauty retailing industry. They maintain excellent relationship with suppliers. Own global sourcing and purchasing team is the reason for the persistent gaining of superior performance over time.

Sa Sa’s internal and external factors are visualized. They give insights on directions to tackle the existing problems and potential ones, like market expansion to China. Set up operation system to improve efficiencies. They prepare to strengthen e-commerce platform. They have also set up CRM system to increase brand loyalty. With implementing these problem solvers, Sa Sa can step into next level growth and become a stronger leader in beauty retailing industry.

References

1. Sa Sa Official Website (2013) :
   http://web1.sasa.com/corporate/eng/whoweare/coinfo/retail.jsp
2. Bloomberg Businessweek (2013) :
   http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?tick
3. Euromoniter.com (2013)
   http;//www.euromonitor.com/beauty-and-personal-care-in-hongkong-china

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