Uncertain global economic conditions may have led consumers to tighten their purse strings, but digital media could reverse that trend and give retailers a much needed boost, said the chief financial officer of a Hong Kong-based cosmetics chain.
Guy Look, CFO of Sa Sa, spoke with CNBC’s “Squawk Box” following the release of the latest CNBC Global CFO Council Survey, in which 25 percent of respondents cited consumer demand as the biggest external risk factor they face. It was the highest among the options given.
Despite that concern, respondents seemed upbeat about the consumer discretionary segment, with 12.5 percent picking it as one of the sectors that would experience the most growth over the next six months.
Look said digital media is doing a good job in instilling confidence in consumers, which he said makes him positive about the company’s outlook.
“Obviously there are government policy factor, economic factor influencing the consumers but I thinkâ¦the smartphones and digital media are enabling consumers to feel very confident about what they buy and they have such a lot of exposure to the market that this keeps them going,” he said.
“Personally, from what I see in terms of how sales are manifested, I see that consumers are aware of what they want to buy and it’s much more difficult to influence them one way or the other. In that respect, given that the consumers are quite encouraged by all the excitement online, I’m generally quite positive on the outlook.”
Look said 70 percent of Sa Sa’s sales comes from mainland Chinese visitors to Hong Kong. The drop in the number of those tourists was a reason behind the 23 consecutive months of decline in the special administrative region’s retail sales.
Both China and fluctuations in the U.S. dollar ranked among the biggest external risk factors facing businesses, according to the CFOs surveyed.
When asked if the recent strength in the U.S. dollar is a key risk for Sa Sa, Look said cosmetic sales have been more resilient.
“If we look at the overall retail sales performance in Hong Kong provided by the Hong Kong government, from 2016 to date, we have not seen one month of positive growth. Whereas for cosmetic sales during this period, we have seen seven months of positive sales, not consecutively, it’s on and off but in more recent times, the positive growth has been more persistent,” he said.
“I think cosmetic is certainly a more stable business and also it does reflect that Hong Kong, in this respect, is more competitive in the global market.”