Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Fendi on Sale at African Malls Where Bling Still King: Retail

Fendi on Sale at African Malls Where Bling Still King
Employees work behind the counter of a cafe bar in the VIP zone, where the luxury brands are located, near an LVMH Moet Hennessy Louis Vuitton SA store inside the Morocco Mall in Casablanc. Photographer: Zacarias Garcia/Bloomberg

After decades of using African ostrich leather, diamonds, gold and platinum to craft handbags, watches and the like, luxury manufacturers want to send some of those goods back -- and the locals are eager to buy.

With oil exports from Angola and Nigeria minting new millionaires, and the middle class growing in South Africa and Morocco, Burberry Group Plc, Prada SpA, and other luxury companies are opening stores in African cities to cater to demand for displaying newfound wealth.

“The mix of customers is changing,” Michele Norsa, chief executive officer of Italian shoemaker Salvatore Ferragamo SpA, said in a Bloomberg Television interview. “You see nationalities of people you had never figured buying -- from Angola, Nigeria or Latin American countries.”

Burberry opened its first boutique in Johannesburg at the end of last year, adding to the store it has had in Cape Town since 2008. Louis Vuitton, Fendi, Gucci, Prada, Miu Miu and others have outlets in Casablanca’s first luxury mall, which opened in December. Swiss watchmaker Breitling distributes its timepieces via wholesalers in Ghana, Algeria and 10 other African countries.

“There is a new focus on Africa,” Italian suitmaker Ermenegildo Zegna Group said in April, announcing plans to open its first stores in Morocco and Nigeria.

Even as brands rush in, most wealthy Africans still buy their $750 Ferragamo suede sandals or $4,100 patent-leather Vuitton handbags on jaunts to Europe or the Middle East. The shops remain important in building brand awareness even if they don’t rack up much in sales.

Accrued Esteem

The esteem gained from buying an expensive watch in Paris or Dubai “doesn’t accrue to you unless there’s a knowledge in the local environment of what that brand means,” said Jolyon Ford, a senior analyst at consultant Oxford Analytica.

Sixty percent of Africa’s U.S. dollar millionaires, or 71,000 people, are in South Africa, the region’s largest economy, according to consultant Bain & Co. That’s more millionaires than in Saudi Arabia or the United Arab Emirates, the consultant estimates.

Sales of luxury goods in Africa, the Middle East and Australia may rise as much as 8 percent a year between 2011 and 2014, according to Bain, faster than any other region other than Asia.

Yet even purveyors of diamond-encrusted fountain pens and $3,500 leather jackets realize they need to attract a customer base that goes beyond the super-rich if they are to succeed in the region.

New Middle Class

“The real opportunity is more the emergence of the new middle class,” said Claudia D’Arpizio, a partner at Bain who leads the consultant’s luxury-goods practice.

By 2020, 420,000 South African households will have disposable income that tops $100,000, Bain estimates. The retail value of luxury goods sold in the country, where the World Bank says almost a quarter of people live below the poverty line, is set to swell by 20 percent to $816 million annually by 2015, Euromonitor International estimates. For at least five years, companies are likely to limit expansion to a few stores to test the market and gauge local tastes, D’Arpizio said.

As the African market evolves, Burberry “absolutely” will look to expand in the region, CEO Angela Ahrendts said in May. “The teams are constantly reviewing as markets are up and coming and as partners become available.”

King Bling

In Morocco, “it’s very much a case of showing that label, whereas in developed markets, it’s, if anything, the opposite,” said Fflur Roberts, global head of luxury-goods research at Euromonitor. In much of Africa, “bling is still king.” Consumer spending is set to surge more than 54 percent between 2011 and 2020 in the country, according to Euromonitor.

Infrastructure remains the biggest obstacle for the industry, according to Oxford Analytica’s Ford. Nigeria is set to post the second-strongest gain in total champagne volume, trailing France, between 2011 and 2016, Euromonitor estimates. Yet with four times as many people as Johannesburg, Lagos has just a handful of shopping malls while the South African city has scores.

Companies will also have to weigh the risk to their reputations of expanding in some parts of the continent. Fueled by oil exports to China, Angola is “the crucible” of conspicuous consumption in Africa, according to Ford. Yet, the wealth is in the hands of a few, and a quarter of the country’s gross revenue is unaccounted for, Ford estimates.

Angola, he said, “is like a laboratory” for acute income disparity. “So far, it hasn’t led to any social unrest or certainly any targeting of stores but it’s definitely” a possibility.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.