THE WHAT? Hong Kong retailers are implementing cost-control and sourcing strategies to offset rising logistics and fuel costs linked to the Middle East conflict
THE DETAILS Major players including DFI Retail Group (Wellcome, Mannings, 7-Eleven, Ikea) are leveraging scale, expanding sourcing networks and increasing direct procurement to manage cost pressures. Wellcome has diversified sourcing to over 50 countries, while Ikea has secured fixed-price contracts and optimised logistics. Retailers are also tightening supplier negotiations and reducing operational costs. Despite these efforts, Sa Sa has warned that shipping and airfreight costs have risen by 10–15%, with potential further pressure on beauty products derived from petroleum. Freight surcharges have surged significantly, with carriers increasing fees amid ongoing geopolitical instability affecting key shipping routes such as the Strait of Hormuz.
THE WHY? The strategies aim to protect margins and avoid passing increased costs onto consumers, while maintaining supply chain stability in a volatile geopolitical and inflationary environment.
Source: South China Morning Post
