JOHANNESBURG Nov 22 Africa has more
millionaires than Russia, but for many wealthy Africans shopping
for designer handbags or luxury watches still means travelling
to New York or Europe.
Even as luxury goods companies have ventured into
unconventional markets such as Mongolia, A frica has been seen as
a source of inspiration for their designs rather than of
"Luxury goods companies have been extremely slow to invest
in Africa compared to the mighty rush into China and the rest of
the Far East," said Suzy Menkes, renowned fashion editor of the
International Herald Tribune. "The investments are mostly in the
north and south of the continent. The rest is mostly one large,
blank consumer space."
Africa's rapid growth, booming cities and an aspirational
middle class, however, are prompting luxury brands to look at
entering untapped markets across the continent, a l though the
complexity of doing business and the difficulty of finding
suitable sites for luxury stores means progress could be slow.
Louis Vuitton, the world's biggest luxury group, has stores
in Johannesburg and Cape Town, but Francesco Trapani, chief
executive of the jewellery and watches division at LVMH
, sa i d Africa was "still a very, very small market for
Development of the luxury market there is unlikely to take
off with the speed seen in the Middle East even though the total
investable wealth of high net worth individuals in Africa
totaled $1.1 trillion by 2011, according to Cap Gemini's 2012
World Wealth Report. That compares with $1.7 trillion for
high-net worth consumers in the Middle East.
"In general, the luxury industry (is) quite ignorant about
the real dynamics of doing business in Africa," said Uche
Okonkwo, executive director of the consultancy Luxe Corp, which
works with brands such as Chanel, which is privately owned, and
Dior, part of the LVMH group.
"People just don't understand Africa. It's just too complex.
They think it's a country."
One company that is making inroads is Italian menswear brand
Ermenegildo Zegna. It plans to open a store in Lagos, Nigeria's
commercial capital, adding to its outlets in Egypt and Morocco,
although a spokeswoman said it has yet to set a date for the
"Somebody has to start," said Franca Sozzani, editor of
Vogue Italia, which dedicated its May 2012 men's issue t o
Africa. "Zegna started in China 20 years ago and everybody
thought they were crazy."
The 102-year-old fashion house, whose made-to-measure suits
have been worn by actors such as Tom Cruise and Robert de Niro,
opened its first store in China in 1991 and has been an early
entrant to other emerging markets.
After Nigeria, Zegna plans to open a boutique in Luanda,
Angola in 2013 and is looking at Kenya and other markets.
Italian fashion house Gucci, owned by French group PPR
, is also looking at entering Nigeria as well as
Angola, a spokesman told Reuters, markets that are cash rich
German fashion house Hugo Boss and jewellers
Cartier, owned by Swiss group Richemont, are already
active on the continent.
Africa has more than 120,000 dollar millionaires, compared
to around 95,000 in Russia, according to the consultancy Bain &
Company, and the number of African millionaires rose 3.9 percent
last year, faster growth than any region except Latin America.
The pool of wealthy consumers should continue to increase as
oil and gas discoveries in countries like Ghana, Tanzania and
Mozambique fuel economic growth.
Claudia D'Arpizio, head of Bain's luxury goods and fashion
practice, said the construction of more malls could spur the
entry of multiple brands.
"There is big potential already in Africa," she said. "For
sure, this will be a big engine for growth for luxury goods
players in the future."
A conference organised by Menkes in Rome last week
highlighting Africa's potential as a luxury goods market drew
some of the biggest names in the industry, including LVMH, PPR
and Hermes and designers Vivienne Westwood, Jean-Paul
Gaultier and Manolo Blahnik.
Sozzani of Vogue Italia said Zegna's foray into the
continent could encourage its peers to follow, although many
brands are doubtful about the maturity of the market,
particularly those at the very high end.
Guillaume de Seynes, managing director of French luxury
group Hermes International and a sixth generation member of the
Hermes family, told the Rome conference that Africa might be "a
new frontier" for the seventh generation, suggesting the brand
is in no hurry to establish a presence there. He said the group
had also had difficulties finding suitable local partners.
"We have not yet found any opportunities to make business in
Africa or to open a store in Africa. We've looked at Egypt,
Morocco, South Africa," he said. "These markets are maybe not
yet mature enough to welcome a Hermes store."