Montblanc signs in to shiny new Sandton digs
Luxury brand prepares for long game in wooing Africa’s rich
SITTING in the newly renovated Montblanc store in his pinstriped suit, navy blue tie and crisp white shirt, Eric Vergnes, the luxury brand’s group president for Middle East, India and Africa, takes off his classic statement timepiece to show the minute details of Montblanc’s 2015 Heritage Spirit collection.
“The timepiece I’m wearing has a perpetual calendar with semiskeleton effect and a moon face,” said Vergnes, who was speaking at the opening of Montblanc’s flagship store in Sandton City this week.
“The competition is not making this type of piece. It’s worth at least 19 000 Swiss franc [about R268 000].”
It’s a hefty price to pay for a watch and buyers are not queuing up as demand for luxury goods slows on a continent where the market for top-end brands is still in its infancy, making up only 2% of the global luxury goods market in 2016.
But Montblanc, with four stores in South Africa, believes in the country’s long-term prospects.
“We strongly believe in the potential of this market . . . we are not suffering as much as the rest of the market when it comes specifically to the watches, [but] we are not growing in watches worldwide. We are going down as many players in the industry are,” said Vergnes, who admitted that the slowdown of the South African economy was worrying.
“There is of course apprehension because it’s never the best decision to interact and to try and develop the brand in a business which is shrinking, and maintaining its value is very complicated,” he said.
The 119m² store sits alongside that of Montblanc sister company Cartier, both of which are part of Switzerlandbased Richemont.
The store is the epitome of luxury, designed by interiors architect Noé DuchaufourLawrance.
Although Vergnes remained mum on the costs of the refurbishment, he said the decline of the rand had caused Montblanc to raise its prices twice this year to meet its profit expectations.
“We try to maintain our prices as long as reasonably possible, but then we also need to ensure that there are not many price discrepancies worldwide, hence we had to raise our Vergnes.
The world of luxury retail has been feeling the pressure globally.
Last month, Richemont said that it expected first-half profit would decline 45%, after demand slowed from Chinese consumers, the group’s biggest market.
Asia makes up about 44.9% of Richemont’s total revenue while the Middle East and Africa make up 8.8%, according to Bloomberg data.
Deborah Aitken, a senior industry analyst at London-based Bloomberg Intelligence, said spending on luxury goods in Africa may increase in line with the expansion of wealth, thus boosting retail infrastructure. “Luxury goods prices here,” said companies may accelerate their presence in Africa to capture untapped demand, given slowergrowth Asian economies,” said WRIST ACTION: Montblanc’s timepieces are turning heads Aitken, adding that “relatively lower price points of small luxury leather goods and accessories’ brands appeal to middle-income consumers across Africa”. Moët Hennessy Louis Vuitton and Richemont account for a combined 60% of the 50 global luxury single-brand stores in Africa, with Egypt having the region’s thirdstrongest presence of monobrand luxury stores, according to a report by Aitken. Global research firm Knight Frank estimates that the number of African millionaires will rise 54% to more than 254 000 by 2025, giving it one of the highest regional growth rates of this segment.
But with only half of global luxury companies having directlyoperated stores in Africa, expansion to raise brand awareness is essential.
Limited retail infrastructure and remote locations make it difficult to expand in some African countries, however.
“The shopping experience and the construction of the brand has to happen in South Africa until we are able to fully develop into other African countries,” said Vergnes.
“For us, it’s important to flagship not just from a business experience, it’s to flagship in terms of brand construction.”
What remains clear is that “Africa is our new frontier and it’s where tomorrow we will be generating our growth”.
Richemont’s share price declined 1.52% to R83.38 by the close on Friday on the JSE.