According to market researchers, Hong Kong is no longer the tourist spending hotspot it once was for Chinese consumers, and this is playing out particularly strongly in its impact on beauty sales.
Euromonitor International’s most recent report on the country outlined the steep growth seen in Hong Kong’s beauty and personal care market over the last year, and pinned this on the fall in tourism and related spending.
“The image of Hong Kong as a shopping paradise has diminished in recent years, with many mainland Chinese seeing Hong Kong as a place of political instability,” its analysts explained.
Addressing the drop
Some brands are taking steps to tackle the drop in sales, according to the Asia Nikkei, which notes that Hong Kong’s largest cosmetics retailer, Sa Sa International Holdings, has released an updated business strategy.
The move from the company comes on the back of disappointing end of year results in March, which detailed that the company’s profits had dropped 54% year on year down to USD 49.3 million. Its sales fell too, dropping by 13% year on year to USD 1.01 billion.
In response, the company is now focusing on small retail spaces, creating a boutique-style approach to its offering in order to target “trendy young shoppers”, according to the Asia Nikkei. Sa Sa is also said to be focusing on its social media channels as a way to boost brand awareness among the younger consumer groups in its sights.
The domestic market
With tourism set to remain low, the beauty industry in Hong Kong will no doubt be turning its attention more widely to courting domestic consumers.
Sa Sa is leading the way, and targeting younger consumers seems a savvy move: Euromonitor notes that Hong Kong consumers are increasingly buying into innovation, especially from the masstige tier.
This is a trend that is being driven by millennials and Generation Z on a global scale, and catering to their demands is likely to see brands lead the growth offered by this rising consumer group.