In the next few years, Singapore households will continue to see their spending balloon, to be inflated by the increasing share of non-essential expenses.
According to BMI Research, Singapore's total household spending is projected to grow by an average of 6.5 percent annually between 2018 and 2022. This is a significant improvement from the country's average growth of 2.9 percent over 2013 to 2017.
"We project total household spending to reach S$216.4bn (US$174.5bn) in 2022, up from S$166.6bn (U$124.4bn) in 2018," BMI Research noted, adding that non-essentials will account for roughly 58 percent of the total spending.
BMI Research explained that the outperformance of non-essential spending categories over essential ones is a characteristic of a developed market. In the case of Singapore, non-essential spending is poised to grow even more due to the rising levels of disposable income
In fact, the majority of Singapore households already fall in the upper-income segment, or those households with disposable incomes of US$75,000 and above, and will account for 66 percent of total households in 2022, up from 53 percent in 2018.
Additionally, average household disposable income is estimated to rise from US$100,392 in 2018 to US$122,300 in 2022.
"We believe that as disposable income levels continue to rise, households will spend more on leisure and other experiences, illustrated by the strong growth in recreation and culture spending," BMI Research stated.
The research firm forecast recreation and culture spending to expand by an average of 8.2 percent annually over 2018 to 2022, hitting S$30.8 billion in 2022.
"This is in line with our global view on consumer trends shifting towards spending on 'shareworthy' experiences and other leisure activities, particularly among the millennial age group," BMI Research said.
With this, BMI Research noted that there stores which are increasingly focused on consumer
experiences in the alcoholic drinks category.
For instance, the Duty Free Shop opened a 167 metres store at Singapore Changi Airport Terminal 4 which provides retail experiences like cocktail making tutorials. Meanwhile, Diageo-owned Johnnie Walker launched 'Johnnie Walker Home', an invitation-only suite that allows guests to learn, taste and purchase a variety of high-end spirits.