Published May 30, 2007

Good times for high-end retailers as Singaporeans splurge in Q1

Fine dining, luxury goods sales soar as economy booms


(SINGAPORE) Just how confident people are about the Singapore economy has been spelled out in a report on lavish spending by charge card holders. Jewellery, haute couture, luxury watches or exquisite French cuisine - Singaporeans are living it up this year, bringing much cheer to high-end retailers, says the report by American Express (AmEx).

The report - Lifestyle Index and Spending Trends (List) - shows that sales of luxury timepieces, jewellery and designer fashion, as well as takings at fine dining establishments, were up to 70 per cent higher in Q1 than in the corresponding first three months of 2006.

The report tracks spending by AmEx cardholders in four key segments based on data from about 100 retail and dining establishments.

Sales of luxury watches grew the fastest, climbing an impressive 70 per cent. This was followed by sales of high-end jewellery, which rose 56 per cent. Revenue from high-end fashion items and fine dining also grew at healthy rates of 25 per cent and 24 per cent respectively.

'The report confirms that we are clearly in the middle of a spending boom in the lifestyle sector,' said Atul Mathur, AmEx's senior VP for Asean and South Asia. 'What is driving this are macro-economic and marketing factors - a vibrant economy and growing consumer sentiment as well as value creation through innovative marketing and promotional programmes undertaken by lifestyle brands.'

Luxury retailers attribute the increased spending to rising affluence, higher liquidity due to stockmarket gains and good bonus payouts. In addition, the desire to own unique conversation pieces could have led to greater demand for luxury watches and high-end jewellery.

'Sales of our luxury watches have gone up by 30 per cent over the past year in Singapore,' said Sam Benjamin, FJ Benjamin's group director for timepieces. The retailer distributes luxury watch brands Girard-Perregaux, JeanRichard and Bell & Ross here.

Upscale eateries report the same trend as more diners eat out, in more upmarket places. 'Diners are increasingly looking for enriching dining experiences encompassing excellent service, quality cuisine and wine, and stylish ambience, and they are prepared to spend on such experiences,' said Andrew Tjioe, chief executive of the Tung Lok Group.

Desmond Lim, group chairman of Les Amis, said: 'We are increasingly seeing more 'blue chip' bottles being opened over dinner.'

In addition to buying more big-ticket items, shoppers are also forking out more for each item, the List report showed. On average, consumers spent $3,829 per transaction while picking up luxury watches, 37 per cent more than last year. And for high-end jewellery, they spent $2,300 for each transaction, also up by 37 per cent.

And while consumer spending on each visit to a favourite designer boutique stayed constant at $715, restaurateurs can take heart as the bill per visit by these big spenders rose 13 per cent to $440.

All this has translated into better takings for the luxury retailers listed on the Singapore Exchange. At Sincere Watch, say, revenue of $95.4 million for the first quarter ended March 31 was 4 per cent higher than in Q1 2006.

This spending is, by and large, not being made just by visitors to the country. The List report shows over two-thirds of the spending on luxury watches, high-end jewellery and high fashion was by Singapore residents, up from 55 per cent just two years ago.

By contrast, the share of visitor spending at fine dining restaurants is growing compared to spending by locals. Overseas visitors accounted for some 60 per cent of spending on fine dining, up from 53 per cent two years ago.

Spending on luxury items is likely to continue growing, especially with the new entertainment options coming on stream over the next few years, the report said. In particular, the upcoming integrated resorts and Singapore's hosting of the Formula One Grand Prix event from 2008 are expected to boost the arrival of affluent tourists, which will in turn translate into further growth in retail spending, it said.