Identity spending redefines Singapore’s fragmented retail market

Consumers are increasingly spending on who they are rather than what they need.

The domestic market is no longer a single monolith, with consumers increasingly spending on "identity" categories like wellness and skincare whilst cutting costs on daily essentials.

“It's fragmenting. Brands that can realise and identify this trend and design channel-specific segment strategies, leveraging artificial intelligence (AI) to the digitally savvy consumers, would be the ones that would be winning,” Jason Ong, director at YCP, told Singapore Business Review.

The economy grew 4.6% in the first quarter of the year, slowing from 5.7% in the previous quarter. Whilst the Ministry of Trade and Industry expects Singapore to grow between 2.0% to 4.0% this year, some experts have warned of a possible slowdown if the Middle East tensions persist into the second half of 2026.

Specifically for the retail sector, Morningstar Equity Research has said that it continued to show stability in early 2026, with overall retail sales remaining firm. This was backed by domestic consumer demand and the gradual return of regional tourists.

Ong said the consumer market is experiencing premiumisation and value bifurcation. This means that consumers are trading up on identity sectors like skincare, health and wellness, furnishing, and trading down on essentials.

The expert also noted that Singapore is not just a regional hub, but also a great innovation test bed and a premium consumer market. This presents an opportunity for brands to define and test their strategies before scaling them into other countries.

“AI and data are also becoming a differentiator… Retailers and brands are investing in demand forecasting, personalised promotion and supply chain optimisation. Data advantage is no longer just a value driver, but a critical brand strength,” Ong said.

The Singapore government has been rolling out efforts to push for AI adoption across various sectors. This includes a focus on building industry clusters powered by AI, linking companies across sectors to develop technologies that could compete globally.

Experts have said that this focus signals a shift in economic strategy, with the government betting on artificial intelligence (AI) and industry collaboration to drive growth whilst tightening foreign workforce rules.

Ong said firms need to resolve their data challenges so that they can adopt the right AI strategies. Companies need to get their internal house in order as AI is here to stay, the expert said.

“Consumers are adopting it, brands and retailers are adopting it, and at the core of this is data. Data is a key differentiator. It is the currency of the future. Firms need to resolve their data challenges so that they can adopt the right AI strategies going forward,” Ong said.