Positive growth despite weak economy
Defying conventional wisdom, cosmetics and toiletries posted positive sales growth in a time when Hong Kong is still suffering from the doldrums of the economic recession. Consumers, especially women, kept up discretionary spending as they look to these products for the feel-good factor. Overall, cosmetics and toiletries sales registered growth of 2% over 2002 to amount to HK$5,815 million in 2003.
Although retailing in general suffered in 2003 as a result of the economic downturn, high unemployment rates and the SARS (Severe Acute Respiratory Syndrome) outbreak, cosmetics and toiletries in Hong Kong fared reasonably well ? Albeit via alternative shopping channels. According to trade sources, following the SARS outbreak, consumers avoided public interaction through less dining out and shopping especially from March to June 2003. It is interesting to note however that cosmetics and toiletries. Particularly colour cosmetics, may be the last thing that women will give up. They resorted to buying via the Internet through websites such as http://www.sasa.com. As an indication of its sudden surge in popularity, cosmetic retailer Sa Sa International saw its online sales climb 25% over the same period in 2002. In 2003, direct sales (including Internet sales) accounted for close to 6% of total retail sales. This is almost two percentage points more than in 1998.
Winners and losers
Hong Kong was hit by SARS from March to June 2003. During this time, its citizens became more wary of catching the virus, hence increased hygiene-consciousness and donning a mask became a norm almost overnight.
This has had several impacts on the cosmetics and toiletries industry. For some products, such as liquid soap, body wash/shower gel and hand creams, sales expanded greater than in 2002 as consumers began to pay more attention to proper skin-cleansing and care. Others like lipsticks, on the other hand, saw sales dip as this became redundant among women who wore masks. Others products like fragrances and colour cosmetics in general were not affected by SARS at all. This is so since these products are treated as being considered necessities and a way of keeping spirits up.
Procter & Gamble HK Ltd emerge as top player
Procter & Gamble HK Ltd emerged as the top player in 2003, accounting for the biggest share of cosmetics and toiletries value sales in Hong Kong. With skincare brands such as SK-II and Olay and toiletries products such as Vidal Sassoon and Pantene selling well in Hong Kong, Procter & Gamble managed to retain the top spot with 12% share of total value sales. In addition, the companys new product development and price promotion played a crucial role as the weak economic conditions in Hong Kong made consumers more price-conscious. Thus new products were well needed to maintain interest and price promotions to encourage consumers to buy.