The past year has been a challenging one for the global luxury goods market. With macroeconomic uncertainty and continuously rising prices among brands, consumers have been cutting back on luxury retail spending.
According to a recent report by Bain & Company, 2024 global sales of personal luxury goods are set to fall by 2%, with China, a key market, experiencing a decline of 20-22%. This has been reflected in the slight earnings declines for 2024 reported by Richemont Luxury, LVMH, and Moncler Group, while Kering has shown more significant declines.
However, there have been a few outliers in this trend, with Hermes and Prada Group (which also owns Miu Miu) reporting double-digit earnings growth.
Despite these challenges, Singapore remains an important market for luxury brands, with Euromonitor reporting an 11% growth in luxury goods sales in 2023, reaching $9.1 billion.
In recent years, luxury brands like Dior, Chanel, and Louis Vuitton have embraced robust digital strategies, including e-commerce and digital marketing, to engage customers (Photo: Albert Chua/EdgeProp Singapore)
Singapore has continued to be an important market for luxury brands, with Cartier, Moncler, and Marc Jacobs opening new stores in Changi Airport this year, and Marni, Graff, and Golden Goose opening new stores in Marina Bay Sands.
Luxury brands have long been known for their timeless elegance and heritage, but in recent years, they have also begun to embrace digital strategies as a means of engaging customers. This has become especially crucial in a world of rapidly evolving consumer behaviors and preferences. In addition to digital strategies, luxury brands have also recognized the importance of creating offline shopping experiences to build stronger connections with their clients.
In recent years, luxury brands have been adopting the strategy of creating unique experiences for their top-tier clients, and flagship stores have become bigger and bolder. For example, Louis Vuitton (LV) opened its new 690 sq m (7,427 sq ft) “apartment concept” space at Ngee Ann City, dedicated to its “VICs” (very important clients) in 2023 (Photo: Louis Vuitton).
Burberry is another example of this, having reopened its extensively renovated stores at Marina Bay Sands and Paragon in 2024 alone. Its immersive store experience showcases the brand’s rich British legacy while blending tradition with innovation. In November, Burberry also opened a new store on Orchard Road at Wisma Atria, with a prominent double-height façade.
Flagship stores are becoming increasingly important for luxury brands, with Yves Saint Laurent (YSL) opening a new Saint Laurent duplex store in Paragon shopping mall in 2023, followed by a YSL beauty boutique in Raffles City last month.
Last month, catering to its VIP clientele, Yves Saint Laurent opened a YSL beauty boutique in Raffles City (Photo: YSL)
Other luxury brands have also been investing in bigger and bolder flagship stores. In 2023, Richard Mille opened its world’s largest standalone store, spanning 7,500 sq ft in Singapore’s affluent St Martin’s Drive. The store features a “speakeasy” concept with a sports bar and a dining room.
Despite the challenges faced by the luxury goods market in 2024, it is expected to grow in 2025 and beyond, driven by various factors such as the steady growth of high-net-worth individuals (HNWIs), buying interest from Millennials and Gen Z, the resurgence of Chinese tourists, and the continued growth of duty-free retail, particularly in Japan.
Looking towards the future of luxury brands, several trends have been observed, including personalization and customization to build deeper connections and brand loyalty with customers. Brands are also leveraging AI and digital experiences to better understand customer wants and complement offline experiences.
Some luxury brands have been at the forefront of adopting innovative AI techniques, such as Dior’s AI platform, Astra, which extracts data from multiple channels to stay attuned to customer preferences. Additionally, Balenciaga’s Paris Fashion Week show for its Winter 2024 collection went viral as the designers transformed the runway and surroundings into an immersive digital canvas, incorporating AI-driven digital distortions. Brunello Cucinelli also created a separate website powered entirely by generative AI.
Despite the difficult year for the luxury goods market, growth is on the horizon for 2025 and beyond as brands continue to expand their store count, open larger flagship stores, and create elevated experiences for their top clients. With Millennials and Gen Z comprising the majority of their customer base, luxury brands will continue to embrace advanced digital technologies and platforms while building strong omnichannel strategies that include immersive and interactive physical stores.
Sulian Tan-Wijaya is the Executive Director (Retail & Lifestyle) at Savills (Photo: Sulian Tan-Wijaya)