Luxury fashion houses are discovering that in today’s world, the best way to connect with young consumers isn’t through another handbag or pair of sunglasses—it’s through a cup of coffee.

At Ralph Lauren’s boutique in Singapore, a corduroy letterman jacket might set you back about SG$900 ($693). But just a few steps away, a creamy vanilla latte from the brand’s in-store café costs a far more approachable SG$9. That contrast captures a larger shift unfolding across Asia, where major fashion labels like Ralph Lauren, Coach, Louis Vuitton, Dior, and Prada are transforming their boutiques into lifestyle destinations.

These luxury giants are catering to a new generation of consumers—especially Gen Z—who value experiences and self-expression as much as physical goods. “Gen Z, across the globe, really focus on self-expression,” said Todd Kahn, CEO of Coach, during an interview on Squawk Box Asia. “Our cafés are an extension of that self-expression, a space that fosters community.”

The strategy is working. Young shoppers aren’t just buying coffee; they’re also sharing their experiences online, turning every visit into free marketing. Photos of Coach’s “chilli crab” soft-serve ice cream—served with a branded fried bun, or mantou—have quickly made the rounds on social media, helping the brand reach a much wider audience without traditional advertising.

Luxury meets lifestyle

In the past, sunglasses and keychains were considered the first step into luxury fashion. Today, a slice of cake or a branded cappuccino can serve the same purpose—offering an affordable yet aspirational taste of a designer brand.

Coach’s culinary ventures began in Asia, where the company tested a variety of dining concepts. Following their success, the brand will open a Coach-branded steakhouse inside Singapore’s Jewel Changi Airport this October.

But the real star of Coach’s expansion has been its coffee shops. “Our data shows that cafés are probably the best format for us,” Kahn explained. Not only do these locations operate profitably on their own, but they also help drive sales in adjacent retail stores. Customers tend to linger longer while their companions relax with coffee, which increases shopping time and spending.

According to Kahn, Coach stores that feature cafés see sales improvements ranging from 15% to 35% compared to standard locations. With over 980 stores worldwide, the company is now planning to open more than 100 branded coffee shops globally within the next four years—a major step in what’s being called “experiential retail.”

The price paradox

While the luxury industry has seen profits nearly triple from 2019 to 2024, the growth hasn’t come from booming demand. McKinsey & Company’s State of Luxury report revealed that roughly 80% of that rise was driven by price hikes rather than more sales.

But the momentum may be slowing. Bain & Company reported that luxury sales dipped 2% in 2024—the first real-term slowdown the sector has seen in 15 years, excluding the pandemic years.

“Traditional European luxury has gone up tenfold over the past two decades,” Kahn noted. “I don’t feel good about telling someone they should save four months of their salary just to buy a handbag.” He emphasized that most of Coach’s products sell between $300 and $500, making them accessible to younger consumers while maintaining a premium brand image.

Still, Coach’s vision extends beyond affordability. By merging fashion with lifestyle and community experiences, the company—and many of its luxury peers—are redefining what it means to “own” luxury. For Gen Z shoppers, sipping a latte under a brand logo can be as meaningful as carrying one on a purse.

In this new era of retail, the luxury industry isn’t just selling products—it’s serving identity, one cup at a time.