All that glitters: Is luxury losing its shine, or finding a new one in Asia?

By James Wilson, Partner, Technology Consulting, Advisory and Head of Consumer & Retail, KPMG in Singapore

Luxury is no longer just a story defined by renowned maisons. Asia is rewriting the rules – not only as the biggest buyer but increasingly as the creator of up-and-coming brands.

Globally, the sales of luxury goods declined in 2024 – the first drop since the Covid-19 pandemic – and continued to dip in 2025, according to KPMG and Potloc’s Luxury in the Midst of Change report.

The picture was rosier in Asia and Singapore, where brands are especially well-placed for success if they can seize opportunities from the sector’s transformation.

Luxury sales in Singapore are forecast to climb to nearly S$14 billion in 2025, up 7 percent from 2024, aided by a growing middle class and more ultra-high-net-worth individuals (UHNWIs).

The country and the region have seen an increase in homegrown brands, who are making a mark through their focus on experiential luxury and targeted approach to storytelling.

Take, for example, a South-east Asian luxury silk brand which opened restaurants alongside its boutiques and featured its textiles in a popular drama series, leading to stronger brand awareness.

These strategies reflect how luxury brands must carefully recalibrate their efforts to win the hearts of consumers.

Traditional maisons face a tricky balancing act of maintaining their exclusivity, whilst ensuring their products are accessible.

Although 40 percent of maisons’ revenues come from ultra-rich clients, such customers make up just 2 per cent of luxury customers globally. Given the dichotomy, brands cannot afford to ignore the aspirational middle class that craves status yet also appreciates value.

They will also need to innovate relentlessly to ensure their products meet shifting consumer preferences, especially in the fast-growing Asian market.

Shoppers’ desires are now also being shaped by rapid technological adoption and a growing awareness of the need for sustainable consumption, which brands must pay close attention to.

Consumers are increasingly looking for brands that speak directly to their personal needs, desires and interests.

Brands that can effectively leverage artificial intelligence (AI) will gain a competitive advantage in satisfying consumers’ hunger for hyper-personalised experiences and moving beyond generic campaigns to appeal uniquely to each shopper.

A well-planned AI strategy will be especially effective in Asia, where high digital literacy means that brands can leverage multiple channels to reach previously untapped market segments.

When deployed well, agentic AI can empower brands to respond to customers more efficiently while tailoring their storytelling and tone to each audience. This will allow brands to make laser-focused recommendations to shoppers who are increasingly mobile-first, whilst creating digital journeys where each touchpoint feels bespoke.

Technological adoption can complement the use of physical experiences to further strengthen brand loyalty.

Such “phygital” experiences forge deeper connections, with brands already reinventing themselves as curators of unforgettable moments, according to KPMG and Potloc’s report.

Immersive retail concepts, exclusive boutiques and wellness retreats are changing customer perceptions of brands – from mere providers of luxury handbags or jewellery to purveyors of sought-after experiences.

Consumers are also increasingly opting for brands which resonate deeply with their personal beliefs and values.  

Although luxury has always been about status, it is no longer enough for brands to ensure they have a high perceived value. They must also cater to customers who want to consume luxury responsibly, especially younger generations who are increasingly prioritising sustainability.

Brands will stand out if they can leverage AI to streamline their operations and be more energy efficient, whilst communicating their sustainable transition clearly to consumers. These efforts will enable them to create additional brand equity and unlock further growth.

Even as brands expand their customer base, they must take steps to mitigate dilution.

There are risks when brands stretch themselves too far or fast by opening new stores or introducing products at breakneck speed.

Although appeal is important, the heart of luxury is, after all, not accessibility but perceived value that stems from exclusivity.

As a result, some brands have shut stores and prioritised higher-impact formats that drive loyalty, including digital-first, exclusive offerings.

For example, a luxury European fragrance house created customised content such as personalised stories and product recommendations for each customer when it launched its latest perfume.

A related challenge for brands is how to counter luxury dilution whilst appealing to both UHNWIs and aspirational customers.

Two-tier product lines can enable brands to offer a highly exclusive range to UHNWI clients, whilst providing a more accessible array of items such as cosmetics and small leather goods to more price-conscious customers.

Ultimately, brands must remember that luxury goes beyond products that are alluring.

The sector is headed towards a new era marked by AI-driven hyper-personalisation and the need to cater to various market segments without losing focus on what matters most.

Luxury’s future may glitter brightest where tradition meets innovation, and Asia is well-placed to lead the way.