The trend towards luxury is percolating down into Africa’s expanding middle class, says Daphne Kasriel-Alexander, consumer editor at market research company Euromonitor International.
“While ‘serious’ money is still concentrated in the hands of the few, many buyers of luxury brands in Africa are aspirational consumers who will splurge on a product even when they may not be able to afford it,” she says. It is exactly this culture of consumption in developing markets that is creating opportunities for luxury goods sellers.
Swiss giant Richemont, best known for its Cartier and Montblanc brands, has been the beneficiary of Asia’s rapacious appetite for high-end goods — a buoyant demand that shows no sign of abating, despite concern over China’s growth.
Although there is far more of a legacy in Europe to buy luxury goods, global companies are trying to break into new markets to inculcate the culture of buying higher-end goods.
The number of people in Africa with fortunes large enough to qualify them as “high net worth individuals” was the fastest growing in the world during the 2009-10 period, according to a study conducted by Merrill Lynch and Capgemini.
Caron Koonin, owner of The Wish Collection, a high-end bespoke retail store in Sandton City, says business is booming.
“There is a lot of aspiration value in our products. They (middle class consumers) come in and start slowly. I believe in looking after those clients because even if they buy a bottle of perfume or chocolates they will eventually come back and buy the Frette linen, or the Baccarat crystal or the Crocodile shoes,” she says.
With a staff of eight, including a security guard, the cheapest thing in The Wish Collection store is a comb from GB Kent & Sons for R80, and the most expensive, a bed throw from Italian company Frette for R40000. Despite the global slowdown, Ms Koonin says the business hasn’t been much affected. The company also does corporate and hospitality gifting.
“During the recession, when Europe was hitting the wall, we were selling linen like no tomorrow,” says Ms Koonin.
The clientele hails from as far away as Tanzania, to Brakpan, and includes diplomats and members of the Emirati royal family.
The Wish Collection is not the only company targeting the affluent. International players have their eye on SA. Spanish bridal company Pronovias opened its first store in SA last month. Gowns range from R10000 to R200000, with collections by famed Lebanese designer to the stars Elie Saab.
British luxury brand Burberry opened its second store in SA in December, in Hyde Park Shopping Centre, north of Johannesburg.
According to Reuben Beelders, portfolio manager at Gryphon Asset Management, there is a huge difference between hard luxury items — watches and jewellery — and soft luxury items, such as clothes.
“The trends don’t always flow completely in sync. Hard luxury tends to be more defensive,” Mr Beelders said.
Source: Business Day