Luxury brands set up shop here to pursue the super rich

SINGAPORE — Buoyed by the rising number of ultra-high-net-worth individuals (UHNWI) in Singapore and a steady demand for luxury goods from locals and Chinese tourists, high-end brands are setting up shop here as mass-market retailers struggle to stay afloat.

British fashion label Alexander McQueen, which launched its first store at Marina Bay Sands in January, will open its second outlet at Scotts Square next month. Famous British men’s tailor Gieves & Hawkes has opened its first standalone store outside the UK at Paragon. Delvaux, a premium leather-goods chain from Brussels, has set up shop at Scotts Square, while Spanish shoemaker Carmina and Finnish fashion retailer Marimekko have opened at Capitol Piazza.

“Singapore is a modern metropolis and very attractive to us, as it is considered one of the region’s top shopping destinations for tourists. As an aviation gateway, it also serves as an access point to many Asian countries ... Marimekko is positioned as a lifestyle brand representing modern luxury that consumers are more interested in, whereas mass-market brands are moving to the Web,” said Ms Paivi Lonka, Marimekko’s chief sales officer.

Meanwhile, some of those already here are increasing their presence. Italian fashion label Moschino and Japanese jeweller Mikimoto have new stores at Marina Bay Sands and Ion Orchard, respectively.

“Despite the extremely competitive situation in Singapore, with a few big retailers downsizing, we still feel the potential of the local market, which attracts an affluent crowd because of its vibrant, cosmopolitan environment,” said Mr Tomotsugu Ito, managing director of Mikimoto Singapore.

Property consultancy Knight Frank’s 2015 Wealth report showed that Singapore is slated to experience a 54 per cent growth in the number of UHNWIs, whom it defines as those with a net-worth of more than US$30 million (S$40 million), to 4,979 by 2024 from 3,227 last year.

Ms Heidi Yong, head of retail at Knight Frank, said: “Local luxury-goods demand continues to be supported by positive economic growth, low unemployment and healthy tourism spending. Despite a decline in tourism arrival numbers, total tourism spending has remained steady.” She noted that Chinese tourist per capita expenditure in Singapore went up by 29 per cent last year, boosted by the strengthening yuan against the local dollar. Tourists from China, Indonesia and Australia topped the list of visitors to Singapore last year.

Mr Desmond Sim, head of research in South-east Asia at property firm CBRE, said: “Factors like high market liquidity and favourable exchange rates are working in favour of luxury retailers here.”

Challenges faced by these luxury retailers include high rentals and tight manpower regulations.

“Rising costs in Singapore are inevitable. Mikimoto, as a luxury retailer, has to increase sales targets and formulate better marketing collaborations with malls to complement the high rental increment,” Mr Ito said. “We have positive revenue expectations for the Singapore market, which is backed by strong economic policies and political stability.”

Luxury retailers are also enticing prospective employees by offering international training opportunities in their bid to beat the manpower crunch. “Design and fashion students are naturally interested in our brand,” Ms Lonka said.