The year 2024 has presented challenges for the global luxury goods market. With macroeconomic uncertainty and rising prices among brands, consumers have been cutting back on luxury retail spending. According to Bain & Company’s recent report, global sales of personal luxury goods are expected to decline by 2% this year, with a particularly sharp decline in China estimated at 20-22%. Luxury giants such as Richemont Luxury, LVMH, and Moncler Group have reported a decrease in earnings, while Kering has experienced more significant declines. However, there have been a few outliers, such as Hermes and Prada Group (which also owns Miu Miu), which have seen double-digit growth in earnings.
Despite these challenges, Singapore remains an important market for luxury brands. In 2023, Euromonitor reported a growth of 11% in luxury goods sales, reaching $9.1 billion. Brands like Dior, Chanel, and Louis Vuitton are adapting to the changing landscape and engaging customers through robust digital strategies, including e-commerce and digital marketing. This is crucial in a world where consumer behaviors, expectations, and preferences are rapidly evolving.
While embracing digital platforms is necessary, luxury brands also recognize the importance of creating physical shopping experiences to connect with their customers. In recent years, they have been focusing on creating unique and immersive experiences for their top-tier clients. This has led to the opening of bigger and bolder flagship stores.
Louis Vuitton, for example, opened a 690 sq m “apartment concept” space at Ngee Ann City dedicated to their “VICs” (very important clients) in 2023. Burberry has also recently reopened renovated stores at Marina Bay Sands and Paragon, showcasing their rich British legacy while blending tradition with innovation. In addition, they opened a new store at Wisma Atria, featuring a prominent double-height facade. Yves Saint Laurent and Richard Mille are also among the brands that have opened new stores with unique and immersive concepts.
Despite the challenging year, spending on luxury goods is expected to grow in 2025 and beyond. This can be attributed to the steady growth of high-net-worth individuals in emerging markets, the buying interest from Millennials and Gen Z, the resurgence of tourists from China, and the continued growth of duty-free retail. To further connect with customers and build brand loyalty, luxury brands will continue to personalize and customize their offerings and utilize AI and modern technology to better understand customer preferences.
Some brands are already leading the way with the use of innovative AI. Dior’s AI platform, Astra, collects data from various channels to stay attuned to customer preferences. Balenciaga’s Paris Fashion Week show for its Winter 2024 collection also went viral for its immersive digital canvas, utilizing AI-driven digital distortions. Brunello Cucinelli has created a separate website powered entirely by generative AI.
While 2024 has been a challenging year for the luxury goods market, growth is on the horizon for 2025 and beyond. As luxury brands continue to expand their reach and create elevated experiences for their top customers, they will also focus on embracing digital technology and building strong omnichannel strategies to engage with the younger generations.
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