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Tue - 15 Sep 2020

This Way Forward: The Future of Africa’s Luxury Market

The continent is about to become a promising playground for fashion and lifestyle influencers

What if the international luxury industry, which has grown tired of the usual ‘Big Four’ fashion cities (Paris, Milan, London, and New York), can find in African countries not only precious creative allies but their future luxury markets? 

Social and industrial innovations and the increase in a youthful, digital-savvy population, has made the African continent a significant opportunity for the fashion and luxury sectors. For global and Africa-based companies looking to access new growth markets, Africa offers exciting opportunities to build large, profitable businesses. According to Euromonitor, Sub-Saharan Africa has emerged in the last decade as the second-fastest-growing region globally, after Asia-Pacific, and has maintained this position in 2020. 

Growing urbanization, the continent’s changing demographic profile, with a sharp rise in young population that embraces technological advances, an expanding middle class, and an ever-increasing appetite with purchasing power for luxury goods are substantial triggers for sustainable growth of the luxury market in Africa. But Africa’s business environment remains poorly understood and known to many brand executives in the West only by its reputation for complexity, conflict, and corruption. However, the rise of social media and digital influencers on the African continent reflects a fundamental shift in luxury goods consumption. It opens de facto new doors for luxury brands to market their products on the continent without the financial risk implied by the opening of physical, brick-and-mortar stores. 

‘’The latest trends show that Africans are increasingly keen to embrace local or international brands provided that they can adapt their business models, their messages and methods of expression to African cultures, but also target consumers who have a genuine appetite for consumption and an unwavering curiosity about brands,’’ explained Martine Ghnassia, Co-Founder of InCapsule by Ifop & Communication Director of Ifop Group, a consulting firm dedicated to marketing trends and innovation.

According to a recent study published by African Business Central, the rapid increase in internet usage over the past decade on the African continent reflects the vast potential of African online retail. The advent of smart mobile phones and access to the internet, as the African telecommunications sector leaped forward in leaps and bounds, allows easy access. In contrast, the availability of mobile payment options significantly reduces operating and opportunity costs. In this increasingly digital- and tech-savvy context, Africa has an immediate window to international trends, so there is increased familiarity with brands, driving demand and aspiration for luxury products and lifestyles, according to McKinsey.

Social media also plays a significant role in brand marketing in most African countries. There is an increasing presence of local African fashion and lifestyle content creators on Instagram and their influence on younger consumers grows. On the African continent and beyond, new generations will be the primary engine of growth for the luxury market in the coming years. According to Bain & Company’s latest studies, generations Y and Z will represent approximately 55% of the 2025 market. They will contribute 130% of market growth between now and then, offsetting the decline in sales among older generations. ’’These developments represent a real opportunity for companies that want to grow their market in this region,’’ concluded Martine Ghnassia. ‘’While affordability remains an issue for many consumers in Africa, these emerging aspirational attitudes are a sign of the growth of consumerism, particularly among the younger, urban and more affluent population.’’ Needless to say, the African continent offers a promising future for luxury retail – and a brand-new playground for fashion influencers.