Luxury brands fail to draw foreign shoppers despite aggressive marketing tricks

Discounts aren’t working well.

Tourism is the lifeblood of luxury retail in Singapore, and many upscale brands are struggling as foreign shoppers vanish.

A report by HSBC highlighted that Singapore’s luxury landscape has become stale in recent years, despite many infrastructure upgrades in the hope that tourism flows would strongly support sales.

“Local consumption still accounts for the majority of the city’s spending on premium brands. Indeed, while much infrastructure has been built on the hope that tourism flows would strongly support sales, the reality recently has been quite different leading to the risk of luxury retail being in overcapacity,” said the report.

With close to 80% of luxury sales being done in the tourism-driven Orchard Road area, luxury brands have been hard hit by Singapore’s tourism slowdown.

“Indonesians, who have long invested in the city for property, continue also to come for medical purposes as the Singaporean facilities are still seen as top notch in the region but this again means that shopping for luxury remains a side-show. The few Australian shoppers may have recently been hit by purchasing power (a weak AUD) waning. So all in, foreign purchases are likely stable and do not represent more than 35-40% of luxury sales despite the attempt by brands to make them spend more. Coach, for example, is offering 10% off in downtown Singapore shops to tourists who show their passports,” said the report.