The 2015 African Retail Development Index by AT Kearney says that ‘the retail opportunity is greater than ever before’ but Africa’s luxury retail environment remains mostly under-penetrated.
The immense potential and opportunities are greater than ever before but success requires a deep understanding of local market dynamics. To succeed in Africa, luxury brands need to adopt a well-informed strategy that focuses on cross-border marketing activities, forging alliances and strategic partnerships. MyStyleWindow provides a low-risk market penetration tool, designed to break down geographical barriers, and give brands the right knowledge, expertise and insight for longer-term strategic planning and investment.
The New Face of Africa
Rising 5.6% a year, Africa’s luxury retail sales may reach $5.2 billion by 2019. This is the second-fastest growth rate globally, Euromonitor estimates, trailing only the Middle East. About 40% of Bloomberg Intelligence luxury peers have directly-operated stores in Africa. These may swell amid solid GDP growth and greater infrastructure investments. As African wealth rises, luxury goods makers may target openings beyond Morocco and South Africa, which account for 86% of Africa’s directly-operated luxury stores.
– BLOOMBERG INTELLIGENCE, May 11, 2015
The conversation about Africa is shifting from one of ‘deficits and gaps’ to one of opportunities, prospects, ventures and creativity. The fast-growing youth population, the urbanisation expected to drive over 50% of Africans to cities by 2050 and Africa’s formalising economy are all well known. These trends and other developments have driven a half century or more of growth in Africa and will continue to do so.
With the growth of Africa’s middle class, we’re seeing development of new expectations. Educated, urban professionals are young, brand-aware and sophisticated in terms of their consumption. In the midst of the conversation around the economic slowdown in Asia, Africa holds enormous potential, as it’s millionaires grow at an incredible rate. Yet the luxury retail environment is still mostly untapped.
Huge Opportunities | Unique Challenges
The potential of Africa has been widely acknowledged but it is important to note that Africa has a unique set of challenges. The business environment is unique and return models that fit other markets don’t always work in Africa. Even the most experienced, sophisticated companies are often forced to recalibrate. The overriding issue however is that organisations and investors around the globe, now realise there are vast rewards for those bold enough to engage in closing the gaps. Lessons from Dubai and Singapore prove that in a rapidly-expanding new market, first-mover advantage cannot be ignored or overlooked.