Magazine article New African

'Now Is the Time for Global African Luxury Brands'

Magazine article New African

'Now Is the Time for Global African Luxury Brands'

Article excerpt

Africa is becoming more prosperous and Africans are becoming wealthier. Between 2001 and 2010 growth in GDP on the continent averaged 5.2% annually. Between 2009 and 2010 Africa experienced the highest growth of HNWI (high net worth individuals) globally (11.1% vs. average: 8.3%) and in the next decade it is predicted that the number of African billionaires will grow by 117% to 75 people--the second-fastest growth after Asia (119%).

In South Africa there are almost 45,000 HNWI with a total wealth of $740 billion and, while the rich population is increasing, there is also a steady increase of an (aspirational) African middle class and discretionary income among the population. According to McKinsey & Co., the single largest business opportunity in Africa will be its rising consumer market, with consumer-facing industries expected to grow by $400 million by 2020. In fact, private consumption is higher than in India or Russia and rose by $568 billion in the past 10 years.

At the same time, in the rest of the world, the number of very rich people is increasing--in February 2010 Forbes identified about 1,000 billionaires and noted that the CLEWI index (cost of living extremely well) has been going up and will continue to go up much more than the regular price index.

These market dynamics have contributed to a fast-growth, global luxury industry which was estimated at $277 billion in 2012 by Bain & Company. For the past 3 years, this industry has grown by double-digits; driven mainly by luxury consumption in emerging markets. Numerous studies have also confirmed that luxury market growth and GDP growth are strongly correlated.

So then, the question is: if Africans are becoming wealthier and consuming more luxury goods, is there not a sizeable market opportunity for African luxury brands?

There is already an impressive list of luxury brands present on the continent, both in direct and indirect retail. Iconic brands of the LVMH, Kering (ex-PPR), Richemont and Estee Lauder groups all have some direct presence in Africa and more and more international luxury brands and conglomerates are expanding and looking to expand their footprints in to Africa. Recently, Jo Malone opened 4 retail locations in South Africa, as did Burberry's and Pink. Brands like Alexander McQueen, Balenciaga, Chloe, Oscar de la Renta and Roland Mouret, to name a few, have just found a South African home in newly launched luxury boutique department store, Luminance. But, while international luxury brands have risen to the occasion, Africa has been slow on the uptake, up until now.

So is there going to be a new scramble for Africa in the luxury sector too? With a fast-growing middle class, Africans want to consume better quality goods.

According to Nielsen, 28% of Africa's population (about 280 million people) are wealthy (control 47% of the income), urban and well-educated with high discretionary spending, who are more open to buying expensive and exclusive value-added products. This attractive consumer segment is driving the expansion of large high-end retail locations in Africa, such as Morocco Mall, as well as smaller concept stores such as Temple Muse, 2A, Asprey, Catherine Gayla and upcoming Alan.

It is a myth that Africans are more attracted to Western brands than African ones. We have our own kinds of luxury: lavish Man gold jewellery, rich Kente cloth, the intricate embroideries of Senegalese boubous and delicate laces of Benin (to name a few).

Our unique preferences, tastes and cultural environment serve as the inspiration needed for more brands to develop a uniquely African value proposition.

This has been confirmed by the boom of successful African fashion houses such as Maki Oh, Lanre da Silva, David Tlale, Christie Brown, etc., and premium concept stores such as Merchants on Long and the Tribe Hotel pop-up shop.

But, like famous milliner Philip Treacy in the UK, when are we going to see a luxury brand of African head-wraps? …

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