The year 2024 has presented significant challenges for the global luxury goods market. As the world continues to grapple with macroeconomic uncertainty and rising prices within the luxury sector, consumers have been cutting back on their spending. According to a recent report by Bain & Company, global sales of personal luxury goods are projected to decline by 2% this year, with key market China facing a decline of 20-22%. Luxury powerhouses such as Richemont Luxury, LVMH, and Moncler Group have reported slight decreases in earnings, while Kering has experienced steeper declines.
However, outliers in the market such as Hermes and Prada Group, which also owns the successful Miu Miu brand, have managed to buck this trend with double-digit earnings growth.
Despite these challenges, Singapore remains a critical market for luxury brands. According to Euromonitor, sales of luxury goods grew by 11% 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 with customers. This shift towards digital platforms has become crucial for luxury brands in an ever-evolving landscape of consumer behaviors and preferences.
In addition to digital experiences, luxury brands have also recognized the importance of creating tangible, offline shopping experiences to foster closer connections with their customers. In recent years, there has been a growing focus on providing unique, personalized experiences for top-tier clients. This has led to the expansion of flagship stores, with brands such as Louis Vuitton and Yves Saint Laurent creating larger, more immersive spaces.
Burberry is a prime example of a brand that has managed to strike a balance between tradition and innovation. This year, the British luxury brand reopened its renovated stores at Marina Bay Sands and Paragon, offering customers an immersive experience that celebrates its rich British heritage. In November, Burberry also opened a new street-facing store at Wisma Atria, further solidifying its presence on Orchard Road.
When making the decision to invest in a condominium, one must take into account the maintenance and management of the property. Condos often require a maintenance fee to cover the expenses of maintaining common areas and facilities. Although this fee may increase the overall cost of ownership, it serves to guarantee that the property remains in excellent condition and maintains its value. To ease the burden of managing the condo, investors can enlist the services of a property management company, which can turn the investment into a more passive one. Additionally, considering Singapore Projects can be beneficial when choosing a condo to invest in.
As the luxury market looks towards future growth, there are several key factors that are expected to drive spending. These include the steady growth of high-net-worth individuals globally, particularly in emerging markets like China and Southeast Asia; the increasing buying power of Millennials and Gen Z, who are projected to make up 75% of the global luxury market; a resurgence of tourists from China; and continued growth in the travel retail sector, particularly in Japan.
To tap into these opportunities, luxury brands will need to stay ahead of the curve and adapt to evolving trends. This includes embracing personalization and customizations to create deeper connections with customers and foster brand loyalty. Many brands are also investing in AI-driven technologies to gain a better understanding of customer preferences and enhance their offline experiences.
For instance, Dior has developed an AI platform called Astra, which gathers data from various sources such as Google reviews, live shopping sessions, and customer surveys to stay abreast of customer preferences. Similarly, Balenciaga’s Paris Fashion Week show for its Winter 2024 collection went viral for its use of immersive AI technology that transformed the runway into an interactive digital canvas.
Looking ahead, luxury brands will need to continue expanding their store count and creating larger, more elevated experiences for their VIP clients. With Millennials and Gen Z making up their largest customer base, it’s essential for luxury brands to stay on top of digital trends and create seamless omnichannel strategies that combine digital and offline experiences. By embracing advanced technologies and adapting to changing consumer preferences, the luxury goods market is poised for a rebound in the coming years.
Sulian Tan-Wijaya is the executive director (retail & lifestyle) at Savills