In brief:
For decades, the luxury sector has enjoyed double-digit growth, partly due to wealth expansion in new markets. However, in the face of increased uncertainty from geopolitical shifts and changing consumer behavior, the sector has been seeing a significant slowdown in recent years.
An EY-Parthenon analysis found that while there was stronger purchasing activity for personal luxury goods following a post-pandemic “revenge spending” period, the sector started to see a decline in consumer spending across Southeast Asia after that.
Notably, the more subdued spending by consumers from China — historically the engine of regional growth — is the key contributor to this slowdown. A case in point is the substantial decline in the share of Chinese tourists’ spending on luxury brands in Singapore. The EY-Parthenon analysis also noted that Chinese tourists had been accounting for about 70%–80% of luxury good sales to tourists in Singapore before the COVID-19 pandemic, but that has dropped to about 45%–50% today. The absence of such high-value demand has been felt across key malls and product categories.
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Read moreThe fundamental reason for the decline in regional demand is the fact that tourists and other consumers now prioritize experiences over shopping. Affluent tourists are increasingly drawn toward cultural, nature-led, dining, wellness and entertainment experiences.
In comparison, local consumers have risen in importance. The affluent segments — ranging from established wealth and corporate leaders to next-gen spenders — prioritize craftsmanship, brand heritage, product quality, service excellence, resale value and personalization. These nuanced drivers demand more curated assortments, richer storytelling and elevated service rituals.
Additionally, the EY-Parthenon analysis found that approximately 70% of consumers globally intend to reduce or maintain their luxury spend due to a perceived lack of value, quality concerns and creative fatigue. This highlights a new turn in consumer priorities: They are not rejecting luxury but demanding more meaning for their money.
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Read moreThe EY-Parthenon analysis found that Southeast Asia accounted for approximately 3% of the global luxury goods market in 2025. The region’s luxury goods market exceeded US$11 billion in that year and is expected to continue its growth momentum in the next five years.
Notably, Singapore is the premier shopping paradise in the region, with its diverse retail landscape ranging from high-end shopping locations to cultural finds in local ethnic districts. Luxury shopping is fueled by its high-income residents, affluent tourists and corporate elites. However, high rental costs can affect the yields of luxury brands.
Thailand is emerging as a promising hub for the next phase of growth for luxury brands, supported by rising tourist inflows, favorable foreign exchange rates and a youth-driven fashion culture. Vietnam displays a dual-market dynamic — with Ho Chi Minh City attracting fashion-forward young consumers and Hanoi seeing stronger demand for formal wear among white-collar households.
By exhibiting varying levels of maturity, Southeast Asian luxury good markets are expected to see a robust growth pipeline for the next five to 10 years. Hence, luxury brands in the region need to create value through meaning, relevance and experience. Desire now emerges at the intersection of cultural resonance, technology-enabled engagement and operational agility.
“Shoppertainment” like social and live commerce compress the customer’s discovery-to-purchase journey, turning inspiration into instant action and deepening loyalty through storytelling and community. Such rising expectations for immediacy also mean that brands able to meet quick-commerce convenience through smarter pricing, stocking and delivery models can carve out new revenue pools and deepen trust.
Artificial intelligence (AI) amplifies this shift by transforming how consumers discover and interact with luxury. Autonomous agents and hyper-personalized digital storefronts elevate curation, while predictive, regionally attuned supply chains improve availability and support assortments tailored to the rhythms of each market. Technology strengthens both operational performance and the sense of being intuitively understood — a key driver of perceived value.
Yet desire cannot be engineered through technology alone. Consumers increasingly scrutinize what “value” truly means, making creativity, craftsmanship and culturally rooted storytelling essential. Experiences must carry as much weight as products — from intimate previews to connoisseurship programs and destination collaborations — to reinforce emotional connection and cater to consumers’ pivot toward experience-first luxury.
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Read moreThe new equation of desire blends elevated products, distinctive experiences, selective access and intelligent technology. To master this mix that will shape the next chapter of luxury in Southeast Asia, brands need to ask themselves the following questions.
A key priority is strengthening consumer loyalty by elevating the overall brand experience. Increasingly, brands are moving beyond products to offer distinctive and immersive experiences that deepen emotional connection and reinforce loyalty — from cultural activations to private viewings and invitation-only events. This is particularly relevant for younger shoppers who place greater value on experiential luxury than product ownership alone. Anchoring innovation around shopping occasions and “missions” (e.g., everyday top-ups, planned stock-ups, impulse treats or urgent purchases) can resonate more effectively across cultures and income levels.
Brands are also being forced to rethink pricing and portfolio strategies in response to consumers becoming more value conscious. Repeated price increases are no longer a guaranteed growth lever, and brands should be careful not to overstretch affordability. Instead, rebalancing product portfolios by offering more accessible entry points and expanding into adjacent categories like beauty and eyewear can allow brands to increase and diversify spend while maintaining relevance without diluting core brand equity.
Luxury brands need to rethink the mall and footprint strategy by prioritizing locations where experiential ecosystems align with target customer missions. This involves using data to drive tougher rental negotiations and embracing hybrid rent models that balance fixed and performance-based components. Brands should consider leveraging traffic analytics, store economics and group-level bargaining to counter landlord pressures and be willing to exit sites that no longer make financial sense.
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Read moreSoutheast Asian markets are diverse, with varying cultures, consumer behaviors and income levels. Hence, deliberate localization will be important. For example, retailers can standardize core operational systems and capabilities across markets, while localizing layers like product assortment, pack sizes, pricing and brand messaging to fit cultural references, preferences and occasions. This balances global efficiency with local relevance. Importantly, it avoids the pitfalls of overlocalization that fragments scale or underlocalization that can reduce relevance.
Leading brands are turning to AI as a powerful competitive differentiator supporting the consumer journey across both physical and digital touchpoints. Autonomous shopping agents can transform discovery and purchase behavior, while on-site personalization engines tailor content, recommendations and services with unprecedented precision. Behind the scenes, predictive and digitally enabled supply chains help brands stay agile amid volatility for faster innovation cycles and higher in stock rates. At the same time, AI-driven brand protection and authentication tools strengthen trust by safeguarding product integrity in a market where counterfeits erode equity.
Brands need to empower middle and frontline managers, such as store managers, sales leaders and teams that are closest to customers, to make decisions and better serve consumers. Beyond strategy, successful retail leaders focus relentlessly on execution. This involves actively removing complexity, such as reducing stock-keeping units, stopping low-impact initiatives and simplifying processes, so that they can expand management bandwidth and frontline capacity.
Forward-looking luxury brands in Southeast Asia should seize the opportunity to rethink their value proposition as consumers increasingly demand experiences and immediacy beyond product quality. By strategically and operationally repositioning themselves to deliver the right mix of distinctive experiences supported by intelligent technology, they can build a sustainable competitive advantage that would shape the industry’s future despite the increased uncertainty.
With consumers shifting expectations toward prioritizing experiences over shopping, Southeast Asia’s luxury sector would need to create value through meaning, relevance and experience. Changing the discovery-to-purchase journey through smarter pricing, stocking and delivery models and leveraging technology to drive perceived value are crucial.
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