By Tessa Wong
WITH consumers hesitant to spend, and visitor arrivals dwindling, it is no surprise that retail sales have been on a downward slide in recent months.
But a stroll down Orchard Road reveals one segment of the industry that still shines: luxury retail.
Despite the recession, luxury developers and retailers here have not put the brakes on their glittery expansions.
The next high-end development on its way is Knightsbridge, an 83,000sqft, four-storey retail podium connected to Park Hotel Orchard and scheduled to open in May next year.
Unveiled last month, Knightsbridge will house its eight to 10 luxe tenants in double-storey flagship units.
The developer, Park Hotel Group, has secured 50per cent tenancy and says it is confident of opening with a full house next year.
It joins two other upcoming or newly completed projects on the strip, in proximity to the existing temples of luxury, Palais Renaissance, Paragon and Ngee Ann City.
Just opposite Knightsbridge is the 190,000sqft Mandarin Gallery, expected to host the likes of Emporio Armani and Mont Blanc when it opens in October.
Up the road, crowds continue to throng the Louis Vuitton and Cartier outlets at the month-old Ion Orchard.
Luxe industry players are confident the industry will remain buoyant here, pointing to a continuing demand for such goods in the Asian region.
They also cater to a segment which has been less buffeted by a turn of fortunes.
'The luxury market is less volatile than the mass market in a downturn. Those who immediately feel the pinch are the mid-income groups, but high-income earners don't really drop their spending,' said Mr Allen Law, group director of Park Hotel Group.
A spokesman for Club 21, which is opening five stores in Ion Orchard and three in Mandarin Gallery, noted that there is still room for Singapore's growth as a financial and fashion capital.
They may have reason to be confident. Market research by UM Consulting has found that the performance of the luxury goods sector has steadily increased every quarter since last year.
It estimates spending in that sector to be $369.3million for the first quarter of this year, compared to $289.1million in the same period last year.
There is a steady hunger for bags and bling among Asians, who make up the bulk of visitors to Singapore.
'Developing countries like Indonesia and India are seeing their appetites being sustained, even increasing,' observes UM Consulting analyst Ramesh Brahmadathan.
Asia has been a focus for luxury brands' expansions.
Worldwide, they have taken a beating: the world's biggest luxury house LVMH, which owns top brands like Louis Vuitton, Givenchy and Tag Heuer, saw a 12per cent drop in its first-half operating earnings.
In stark contrast to luxe's ascent, there have been signs that the mid-tier market here may be flagging.
It was estimated to be worth $1.65billion in the first quarter of this year, dropping from $2.14billion in the quarter before that.
Mr Law predicted: 'The luxury sector will still grow, and it will grow faster than the rest of the market.'
This article was first published in The Straits Times.