A new world order as Africa blings it on…
Growing wealth has attention of luxury brands
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.