Africa’s consumers are becoming a force to be reckoned with – the number of people in Africa with fortunes large enough to qualify them as high net worth individuals is growing fast according to Merrill Lynch.
Burberry (Spring ’11 campaign above) have just opened a store in South Africa
In a recent statement, Frank Braeken, executive vice president of Unilever in Africa said, that for a long time multinationals have thought of Africa as a “monolithic” market, failing to address its diversity.
“The African consumer has been underestimated, underserved and underserviced,” said Braeken. “What I mean is we have looked at it a little bit generically, like ‘the Africans,’ a little bit patronizing generically. Now we start to take the African consumer seriously.”
He has every reason to. The continent’s one billion consumers are increasingly growing their net worth with Africa’s collective GDP per capita (PPP) having grown 26 percent in the past 10 years.
Africa’s ”Trendy Aspirants” and “Progressive Affluents” (from Nielsen’s “The Diverse People of Africa” survey) are a formidable group that are driving the trend towards luxury which is percolating down into Africa’s expanding middle class.
“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,” says Daphne Kasriel-Alexander, consumer editor at market research company Euromonitor International. It is exactly this culture of consumption in developing markets that is creating opportunities for luxury goods sellers.
Africans are spending more on luxury goods including fashion such as Yefikir’s stunning designs
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.
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 South Africa 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 South Africa 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.
Note: Nielsen’s “The Diverse People of Africa”
A recent survey by Nielsen has identified seven types of consumers that companies targeting African markets need to be aware of.
“Rather than just a continent, Africa must be viewed as 54 separate and distinct countries with a wide array of political, economic, geographical, cultural and social features,” said Nielsen.
According to the research firm, there is no “single African consumer.” Instead, Nielsen says its seven types of consumers can be grouped in three tiers based on monthly income and average spending.
7 types of African consumers:
Trendy Aspirants: 21%
Progressive Affluents: 7%
Balanced Seniors: 17%
Struggling Traditionals: 10%
Evolving Juniors: 24%
Wannabe Bachelors: 11%
Female Conservatives: 10%(Source: The Diverse People of Africa, Nielsen)
In the first tier belong the “Trendy Aspirants” and “Progressive Affluents” (wealthy, urban, well-educated Africans with high income and consumer packaged goods spending (CPG)).
The second group is comprised of “Balanced Seniors” and “Struggling Traditionals” (middle aged, mid-income Africans with average CPG category spend), while the third one includes “Evolving Juniors,” “Wannabe Bachelors” and “Female Conservatives” (this is the continent’s biggest tier, consisting of consumers who spend much less than average on CPG categories).
Business Day - http://www.businessday.co.za ZEENAT MOORAD, 2012/07/11 08:08:23 AM