“Africa rising” has never been better articulated than by the growth of the luxury goods market, which is increasingly attracting big brand companies hoping to capture the imagination and purse strings of the continent’s growing middle class.
The latest hopeful is luxury bathroom accessories seller Hansgrohe Africa, which plans to “aggressively” expand to the rest of Africa to tap into the fast-growing consumer market.
Hansgrohe Africa managing director Anthony Mederer said that while there were large income disparities on the continent and within countries, there was a growing appetite for luxury goods in Africa.
“If you find the right people in the country, it’s not that scary,” said Mederer, emphasising the need to find local partners that knew the market.
Mederer said South Africa’s market had become extremely competitive and companies were moving into other parts of Africa where the markets were less saturated.
The company increased overall sales by 15 percent in the past year. Mederer said 85 percent of sales were in South Africa with the rest being from operations outside the country. He said the target ratio was for 50 percent of sales in South Africa and 50 percent from the rest of the continent.
Vunani Securities economist Ilke Van Zyl said the upward trend in luxury goods and services was slow but it was a lucrative investment for businesses. She said sales of discretionary items such as jewellery consistently bucked the ailing trend of other categories such as furniture and hardware.
Statistics SA includes jewellery among “other retailers”, a category that contributed the second highest increase in retail sales in June in South Africa.
Van Zyl said consumers also sometimes bought the “experience” of shopping at a particular retailer.
“It’s not just a place to buy food or clothes, the shop will look appealing and provide you with an experience. You want to feel good about yourself and the place offers you that opportunity while you shop,” Van Zyl said.
Last month, a report by the African Development Bank predicted the South African economy would grow less than 3 percent this year, making it one of the slowest-growing countries on the continent, as structural problems and a volatile rand restrained growth.
Countries such as Libya, Sierra Leonne, Chad, Ivory Coast, the Democratic Republic of Congo and Ghana were all expected to grow at more than 7 percent this year.
The National Association for Automobile Manufacturers of SA said last month that 1 569 new Porsches had been purchased in South Africa this year, translating to a sales increase of 72.2 percent on the previous year. This is against the backdrop of general slow growth in car sales of 7.5 percent.
The most popular model was the Porsche Cayenne, with sales of 819 vehicles retailing from R744 000 to almost R2 million.
JSE-listed luxury goods maker Richemont has almost doubled its share price in the past year despite a general slowdown in consumer spending in the period.
Richemont produces luxury goods from brands including Cartier, Piaget and Montblanc.
Richemont plans to spend $25 billion (R257bn) to expand into India, where it plans to source polished diamonds to satisfy the country’s regulations on local sourcing.
Local businesswoman Khanyi Dhlomo recently launched luxury clothing boutique Luminance in Hyde Park Corner shopping centre. The store was thrust into controversy after it got R34m in financing from the National Empowerment Fund. Luminance sells high-end brands such as Dior, Marc Jacobs and Manolo Blahnik.
According to a New World Wealth survey, Ghana’s capital city will have the fastest growing number of dollar millionaires on the continent. The survey shows Johannesburg has the highest concentration of dollar millionaires in Africa with 23 400 as of last year.
Last month Virgin Active launched an exclusive gym in Hyde Park where training programmes are modified to suit the limited time schedules of high flying executives. - Business Report