2024 has proven to be a challenging year for the global luxury goods market. Consumers have been cutting back on luxury retail spending due to macroeconomic uncertainty and continued price elevation among brands.

According to a recent report by Bain & Company, 2024 global sales of personal luxury goods are set to fall 2% this year, with key market China estimated to have declined by 20–22%. Richemont Luxury, LVMH and Moncler Group reported a slight earnings decline for 2024, while Kering reported more significant earnings declines.

Outliers Hermes and Prada Group (which also own star performer Miu Miu) bucked this trend with double-digit earnings growth.

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Despite these challenges, Singapore remains an important market for luxury brands. Euromonitor reported that sales of luxury goods grew 11% in 2023 to hit $9.1 billion.

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Cartier, Moncler and Marc Jacobs opened new stores in Changi Airport this year, while Marni, Graff and Golden Goose opened new stores in Marina Bay Sands.

Luxury brands are often known for their timeless elegance and heritage. In recent years, luxury brands like Dior, Chanel and Louis Vuitton have adopted robust digital strategies, including e-commerce and digital marketing, to engage customers.

Embracing digital marketing platforms is crucial for luxury brands in a world of rapidly evolving consumer behaviours, expectations and preferences. Digital experiences aside, luxury brands have long recognised the importance of creating offline (physical) shopping experiences to build closer connections with their customers.

In recent years, luxury brands have also been embracing the strategy of creating unique experiences for their top-tier clients. Flagship stores are getting bigger and bolder.

Burberry is a case in point. This year alone, the British luxury brand re-opened its extensively renovated stores at Marina Bay Sands and Paragon. The immersive store experience showcases Burberry’s rich British legacy and artfully blends tradition with innovation. In November, Burberry opened its new Orchard Road street-facing store at Wisma Atria, boasting a prominent double-height façade.

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Flagship stores are getting bigger and bolder. A year ago, Yves Saint Laurent (YSL) opened a new Saint Laurent duplex store in Paragon shopping mall fronting Orchard Road. Last month, it opened a YSL beauty boutique in Raffles City.

Louis Vuitton (LV) opened its new 690 sq m (7,427 sq ft) “apartment concept” space at Ngee Ann City dedicated to its “VICs” for very important clients in 2023. The brand undertook an extensive renovation at ION Orchard to provide an elevated retail experience which features LV collectables on display.

In October 2023, Richard Mille opened its world’s largest standalone 7,500 sq ft store in Singapore’s affluent St Martin’s Drive, featuring a “speakeasy” concept incorporating a sports bar and dining room.

Spending on luxury goods is expected to grow in 2025 and beyond, driven by several factors:

• Steady growth of high-net-worth individuals (HNWIs) worldwide, especially in emerging markets like China and SE Asia;
• Buying interest from Millennials and Gen Z, which together will form at least 75% of the global luxury market;
• The resurgence of tourists from China;
• Continued growth of travel (duty-free) retail, especially in Japan.

Some future trends for luxury brands we have observed include:

• Personalisation and customisation to build deeper connections and brand loyalty with customers;
• Leveraging AI and digital experiences to better understand customer wants and to complement offline experiences.

A few luxury brands are leading the way with the use of innovative AI. Dior’s AI platform, Astra, extracts data from multiple channels like Google reviews, live shopping sessions and customer surveys to stay attuned to customer preferences.

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Balenciaga’s Paris Fashion Week show for its Winter 2024 collection went viral as the designers transformed the runway, ceilings, and walls into an immersive digital canvas. The space featured expansive screens displaying nature-inspired landscapes and imagery, creatively manipulated with AI-driven digital distortions.

Brunello Cucinelli created a separate website from its e-commerce site, powered entirely by generative AI.

While 2024 has been one of the worst years on record for the luxury goods market overall, growth is in sight for 2025 and beyond as luxury brands continue to increase their store count, build larger flagship stores and create elevated experiences for their VVIP customers.

With Millennials and Gen Z forming their largest customer group, luxury brands will continue to embrace sophisticated digital technology and platforms while building strong omnichannel strategies, which include immersive and interactive physical stores.

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