Africa’s emerging middle class and burgeoning ranks of millionaires are attracting companies eager to tap the continent’s growing appetite for luxury goods, according to a report in IndependentOnline.
Hansgrohe Africa, the South Africa-based seller of German luxury bathroom fixtures and accessories, plans to expand to the rest of Africa, the report said. South Africa has become extremely competitive and companies are moving into other parts of Africa where markets are less saturated, said Hansgrohe Africa managing director Anthony Mederer.
While there are large income disparities on the continent and within countries, there’s a growing appetite for luxury goods in Africa, Mederer said. It helps, he added, to find local partners who know the market.
Hansgrohe’s sales increased 15 percent in the past year – 85 percent of sales were in South Africa. The company’s target ratio is 50 percent of sales in South Africa and 50 percent from the rest of the continent.
Sales of discretionary items such as jewelry consistently buck the trend of other ailing South African categories such as furniture and hardware, said Ilke Van Zyl, an economist with Vunani Securities.
Consumers in the luxury market sometimes buy the experience of shopping at a particular retailer, Van Zyl said.
“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,” she said.
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New Porsche sales in South Africa grew by 72.2 percent this year over the same period last year, according to the National Association for Automobile Manufacturers of South Africa. This is against the backdrop of what’s considered generally slow growth in car sales of 7.5 percent, the report said. The most popular model was the Porsche Cayenne, with sales of 819 vehicles retailing from $74,4000 to almost $200,000.
Luxury-goods maker Richemont almost doubled its share price on the Johannesburg Stock Exchange in the past year despite a general slowdown in consumer spending. Richemont produces luxury goods from brands including Cartier, Piaget and Montblanc.
Local businesswoman Khanyi Dhlomo recently launched luxury clothing boutique Luminance in Sandton’s Hyde Park Corner shopping center. The store was a lightning rod for controversy after it scored $3.4 million in financing from the National Empowerment Fund. Luminance sells high-end brands such as Dior, Marc Jacobs and Manolo Blahnik.
A New World Wealth survey shows that Johannesburg has the highest concentration of millionaires in Africa with 23,400 as of 2012. Ghana’s capital city of Accra is expected to have the fastest growing number of millionaires on the continent in the future.
The economies of countries such as Libya, Sierra Leone, Chad, Ivory Coast, the Democratic Republic of Congo and Ghana are all expected to grow at more than 7 percent this year, the report said.