A new world or­der as Africa blings it on…

Grow­ing wealth has at­ten­tion of lux­ury brands

Weekend Argus (Saturday Edition) - - MEDIA& MARKETING - SPE­CIAL COR­RE­SPON­DENT

UN­TIL a few decades ago, Africa was more in the news for Band Aid, a char­ity su­per­group founded by Bob Geldof to raise money to fight poverty and famine in Ethiopia; then the con­ti­nent was bandied about in the main­stream press as a utopian mar­ket for lux­ury goods.

This bas­ket case-to-show­case sce­nario, rooted firmly in the seis­mic shifts seen in many African economies, was a com­mon nar­ra­tive at the Africa Re­tail Congress ear­lier this month.

The con­ti­nent is the world’s sec­ond fastest-grow­ing econ­omy af­ter the Asia- Pacific. And de­spite be­ing dogged by un­em­ploy­ment and grow­ing in­equal­ity, it has been hailed as an at­trac­tive and dy­namic con­trib­u­tor to the global econ­omy and one of the last fron­tiers of world growth.

Once the tide of the 2008 fi­nan­cial cri­sis had re­ceded, it brought the vast po­ten­tial of the emerg­ing mar­ket lux­ury goods sec­tor to the fore.

En­ter Africa’s bling dy­nasty and sud­denly op­u­lence had a new ad­dress. Fu­elled by the re­sources and com­modi­ties boom, Africa’s new money was the manna the sec­tor was only too will­ing to tap.

De­spite anaemic growth, the ap­petite among high-end con­sumers for lux­ury goods – de­signer cloth­ing, ac­ces­sories, hand­bags, fine jew­ellery, watches, and cos­met­ics and fra­grances – re­mains sta­ble, ac­cord­ing to Deloitte’s anal­y­sis of the Global Pow­ers of Lux­ury Goods 2015 report. The study pro­vided an out­look on the global econ­omy, in­clud­ing South Africa and sub-Sa­ha­ran Africa.

Jolandi Grace, Africa fash­ion and lux­ury brand leader at Deloitte, com­mented that the strength of the sub- Sa­ha­ran Africa mar­ket could be at­trib­uted to three key trends, among oth­ers: the growth in the South African mid­dle class; the grow­ing num­bers of women con­sumers who had be­come more ac­tively in­volved in the econ­omy of sub-Sa­ha­ran Africa, with well­pay­ing jobs; and large num­bers of for­eign vis­i­tors to South Africa, pri­mar­ily from sub-Sa­ha­ran Africa.

Else­where on the con­ti­nent, the rise of the con­sumer’s wealth pro­file and spend­ing pat­terns has drawn the at­ten­tion of lux­ury brands, from Hugo Boss to Her­mès and McLaren to Maserati, all seek­ing to leave a la­bel on Africa’s bling dy­nasty.

It is es­ti­mated that Africa’s lux­ury re­tail sales could reach $ 5.2 bil­lion ( R73bn) by 2019. Ac­cord­ing to Euromon­i­tor this is the sec­ond-fastest growth rate glob­ally af­ter the Mid­dle East

Re­search by New World Wealth has con­cluded that Africa is the fastest-grow­ing high-net­worth in­di­vid­ual (HNWI) mar­ket in the world, with about 160 000 such in­di­vid­u­als at the end of last year, boast­ing com­bined wealth hold­ings of $660bn.

African HNWI num­bers have in­creased by 145 per­cent since the turn of the mil­len­nium, com­pared with the world­wide growth of 73 per­cent.

Worth not­ing is that these num­bers are ex­pected to rise by 45 per­cent over the next 10 years, reach­ing about 234 000 by 2024.

As the num­ber of dol­lar mil­lion­aires in Africa grows, global com­pa­nies in the lux­ury and fash­ion in­dus­try are show­ing an in­creased ap­petite for rand and naira and en­ter­ing new con­sumer mar­kets on the con­ti­nent. Brands rang­ing from Krispy Kreme to Koenigsegg have made a bee­line for some of the con­ti­nent’s fastest-grow­ing mar­kets.

At a time of rapidly ris­ing in­comes, fu­elled by old and new economies, the wide ar­ray of avail­able lux­ury prod­ucts and shift­ing at­ti­tudes to­wards the dis­play of wealth, more African con­sumers than ever feel com­fort­able buy­ing and flash­ing lux­ury brands. Sand­ton City, which of­fers such lux­ury brands as Louis Vuit­ton, Burberry and Gucci, is a good in­di­ca­tor of the spend­ing power of Africans.

Pur­vey­ors of lux­ury goods also in­clude the likes of Chivas Re­gal, which re­cently brought its lim­ited edi­tion, The Icon, to South Africa. Chivas bot­tles are be­ing dis­played at a few high-end shop­ping cen­tres in the Sand­ton area and at Hyde Park Cor­ner.

Although Africa has a long way to go to catch up with Asia and Latin America’s mid­dle class, the com­bi­na­tion of rapidly grow­ing economies and youth­ful pop­u­la­tions bodes well for the lux­ury in­dus­try.

While Africa’s lux­ury mar­ket, val­ued at $4bn, is a far cry from the $280bn global value, lux­ury brands with a foothold on the con­ti­nent know it is Christ­mas when the Africans come shop­ping.

WE’VE AR­RIVED: Op­u­lence has a new ad­dress – it’s Africa.

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