Africa’s love of luxury brands to be satisfied

The consumption of luxury goods in Africa is expected to grow considerably as expensive brands make their way into the continent. “The potential of growth on to the African continent is immense, coming off a lower base. The saturation that is taking place in the United States, in Europe and China is starting to slow down and I think the next target for any luxury brand is to go into the African continent,” Richard Schafer from the South African Luxury Goods Association told CNBC Africa.

“That’s where the South African Luxury Association [comes from]: the idea behind it is to build a platform where South African brands can communicate with each other and grow into the continent.” The expected sales of luxury brands for 2014 are anticipated at roughly two billion US dollars, up from 1.5 billion dollars in 2011. With five of the 10 emerging markets in the world coming from the African continent, with an additional GDP growth of around 10 per cent, luxury goods consumption growth in the next 25 years is expected to be immense.

“The two billion sales which Schafer mentioned is still very minuscule compared to global sales, which is in the region of 100 billion dollars, but the potential is there. Luxury brands should take time. Luxury is about the long term, there shouldn’t be anything rushed,” said Umberto Angeloni, president and CEO of Italian menswear manufacturer Caruso.

Angeloni added that in the past, markets that began experiencing European luxury for the first time, such as Japan and China, took a long time to understand quality, value and style. Japan took more than 20 years to reach a stage where the Japanese consumer became more literate about fashion, quality and style.

China, on the other hand, underwent the same consumer revolution in only five years. Africa, according to Angeloni, could also take a shorter learning curve in understanding the value of luxury goods. However Schafer identifies challenges in operating in African countries and their retail market, but given time, the continent’s retail space will grow.

“It is communications, the abject poverty that still exists, the lack of education, lack of trading schools to create this luxury that are a challenge in the continent. With a little bit of help, there’s a lot of interest in assisting companies like ourselves and others to build jobs, artisans, to carry on creating luxury and creating jobs in the continent,” said Schafer.

Copyright CNBC Africa 2014