Urbanisation and an emerging middle class are driving demand for luxury products in Sub-Saharan Africa, also presenting opportunities for local entrepreneurs.
Sub-Saharan Africa has been identified as a promising market for luxury goods as urbanization, economic development and increased affluence among the expanding middle class drive growth across the sector, according to consulting firm Deloitte. Currently, Africa’s luxury retail sales are rising at 5.6% per year — a growth rate second only to the Middle East — and may reach US$5.2 billion by 2019, according to Euromonitor.
Growing luxury car market
The luxury car market, for example, is experiencing steady growth in Sub Saharan African. Jaguar nowadays has stores in Angola, Ghana, Kenya, Nigeria, South Africa, Tanzania, Zambia and Zimbabwe; Porsche opened dealerships in Lagos, Luanda and Nairobi; and Bentley opened a showroom in the Kenyan capital last year, selling brand new cars ranging from US$270,000-400,000. “For me it’s comfort first. The car can look good, but I’d like to be comfortable in the car since you’re going to be spending a lot of time in it,” says Muchohi Gikonyo, owner of several luxury cars and Founder of a Luxury Car Rental Company in Nairobi.
Luxury cosmetics brands and fashion labels are also making inroads into Sub-Saharan Africa. Cosmetics brand MAC, for example, has opened stores in Ghana, Côte d’Ivoire, Kenya, Namibia, Nigeria, South Africa, Zambia and Zimbabwe. And although a lipstick at the outlet in Nairobi costs around US$27, there has been a constant stream of clients coming in to test and buy products. “Some would even buy five lipsticks of different shades for variety,” says Joyce Gikunda, the store’s proprietor.
Hugo Boss now has shops in Senegal, Côte d’Ivoire, Nigeria, Angola and South Africa, and Italian luxury menswear house Ermenegildo Zegna has opened stores in Lagos and Johannesburg. “For us, today, Africa is more important than the US,” says the company’s CEO Gildo Zegna. In five to ten years, Africa can become the new frontier for luxury.”
The launch of ‘Afroluxe’ brands
Also local entrepreneurs are taking advantage of the rising luxury market in Sub-Saharan Africa. For example, Olivia Byanyima and Shanley Knox, started their own luxury Ugandan homeware brand, Olivia Knox, which celebrates the rare Ankole cow horn; Aone Ditirwa has launched one of Botswana’s first ever luxury shoe lines called R’alocha; and Nigerian businesswoman, Reni Folawiyo, has founded the luxury concept store Alára (in Lagos), which offers a mix of fashion, art and design in a similar style to famous concept stores like Paris’ Colette, London’s Dover Street Market and Milan’s 10 Corso Como. “I felt that the country needed something iconic that would change the city, change the way Nigerians saw themselves, and also change the way the world sees them,” says Folawiyo.
Setting prices for a new product, especially one of high quality, can be a big challenge though. Few statistics on income and purchasing power are available and market research is also difficult to conduct and fairly unreliable; it’s impossible to know what people will pay for a product if it has never been offered before. This was also the case for Kenyan Naheed Ahmed, who is the founder of Absolute Chocolate, a company that manufactures and sells fresh, made-from-scratch chocolates without any preservatives. “Setting our pricing was a challenge as we had to make sure we have a price set that is comfortable for a bigger market but also deal with a sensitive product that requires skills, lots of time and precision to produce”, Ahmed explains.
More sophisticated palate
However, the chocolatier feels confident about the future. “I believe that the market for luxury food items is absolutely growing”, Ahmed states. “As food is essential, Kenyans are moving towards a more sophisticated palate and are really appreciating luxury products that are getting available to them locally.”
Jeroen van Loon