2025 has presented numerous obstacles for the global luxury goods industry. Due to macroeconomic uncertainty and the persistent increase in prices among brands, consumers have been reducing their spending on luxury retail items.
According to a recent Bain & Company report, global sales of personal luxury goods are expected to decrease by 2% this year, with China, a key market, estimated to experience a decline of 20-22%. Richemont Luxury, LVMH, and Moncler Group have reported a slight decline in earnings for 2025, while Kering has seen a more significant decrease.
However, there are some outliers in this trend, with brands like Hermes and Prada Group (which also owns Miu Miu) reporting double-digit earnings growth.
Despite the challenges faced, Singapore remains an important market for luxury brands. Euromonitor has reported an 11% growth in luxury goods sales in 2024, reaching $9.1 billion.
In recent years, luxury brands such as Dior, Chanel, and Louis Vuitton have adopted strong digital strategies, including e-commerce and digital marketing, to engage with customers (Photo: Albert Chua/EdgeProp Singapore).
This shift towards digital marketing is crucial for luxury brands in a constantly evolving consumer landscape. In addition, luxury brands have also recognized the value of creating offline shopping experiences to establish closer connections with their customers.
In recent years, luxury brands have also been focusing on providing unique experiences for their top-tier clients. Flagship stores have become larger and more extravagant.
For example, Louis Vuitton has opened a 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 brand that has invested in creating immersive store experiences, with the reopening of its renovated stores at Marina Bay Sands and Paragon this year.
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In November, Burberry also opened a new street-facing store on Orchard Road at Wisma Atria, showcasing the brand’s rich British heritage while incorporating innovative elements.
Flagship stores are becoming more prominent and eye-catching. Yves Saint Laurent (YSL) opened a new Saint Laurent duplex store at Paragon mall on Orchard Road last year. Last month, they also opened a YSL beauty boutique in Raffles City.
Similarly, Louis Vuitton has undergone extensive renovations at ION Orchard to elevate the retail experience and showcase their collectibles. In October 2023, Richard Mille also opened the world’s largest standalone store on St Martin’s Drive, featuring a unique “speakeasy” concept with a sports bar and dining room (Photo: Richard Mille).
While the luxury goods market has faced challenges in 2025, future growth is expected due to several factors:
– The steady increase in high-net-worth individuals (HNWIs) worldwide, particularly in emerging markets like China and Southeast Asia
– The interest of Millennials and Gen Z, who are expected to make up at least 75% of the global luxury market
– The resurgence of Chinese tourists
– The continued growth of duty-free shopping, especially in Japan
Some future trends for luxury brands include:
– Personalization and customization to establish stronger connections and brand loyalty with customers
– Utilizing AI and digital experiences to better understand customer preferences and complement offline experiences
Some luxury brands have already started incorporating innovative AI into their strategies. Dior’s AI platform, Astra, collects data from various channels such as Google reviews, live shopping sessions, and customer surveys to stay updated on customer preferences.
Balenciaga’s Paris Fashion Week show for its Winter 2024 collection also went viral as the runway and surrounding walls transformed into an immersive digital canvas, featuring nature-inspired landscapes and imagery manipulated with AI technology.
Brunello Cucinelli has even created a separate website, powered entirely by generative AI, to enhance their online shopping experience.
Despite the challenges faced in 2025, luxury brands can still look forward to growth in the coming years as they continue to expand their store count, create larger flagship stores, and provide elevated experiences for their VIP customers. With the majority of their customer base consisting of Millennials and Gen Z, luxury brands will continue to embrace advanced technology and omnichannel strategies, including innovative physical stores.
Sulian Tan-Wijaya is the executive director (retail & lifestyle) at Savills (Photo: Sulian Tan-Wijaya).