Fast-moving consumer goods segment in Hong Kong is tough: costs of rent and labour rise quickly, price competition is fierce, and online challegeners are strong.
759 Store, a fast growing groceries retail chain of over 200 stores sprung up since 2010, was hit hard by shrinking retail market reasuling falling sales, narrowing margins and plunging profits this year, reflected on its latest financial report of its parent companyCEC International Holdings (0759.hk).
Offering directly imported Japanese snack food at low price, 759 store was once considered as miracle in the retail market. However, the retailer has decreased the weighting of its snack category because of strong Japanese yen and continues to imports more food groceries and frozen foods from Mainland China, Europe and America. This shif of products range hurts its company positioning to customers and broadening type of goods means head-to-head compeition with existing players.
For the year ended April, 759 Store operations reported an 11.8 per cent drop in revenue and a loss of HK$29.5 million, following a loss of HK$15.8 million in the previous financial year. Meanwhile, shop rents were still its largest expense item for retail, rising 3.3 per cent in 12 months.
Fortunately, Lam Wai-chun, founder of 759 Store, has learned his mistake and said he would cut the number of his outlets and add more Japanese snacks.