The luxury sector began to experience a slowdown in growth last year after having a growth rate of more than 10 percent during 2010, 2011, and 2012. While analysts forecast that the sector will settle at around 5 percent, Bain & Company predicts double-digit luxury sales growth in Africa for the upcoming years. With China’s growth declining from 20% from two years ago to around 3% this year, Africa is positioned to have one of the fastest-growing economies, according to Bain partner Claudia D’Arpizio.
Hugo Boss, Estée Lauder, and Ermenegildo Zegna have already established outlets in cities in Nigeria, and other are planning to follow suit. On a more hyperbolic note, another partner at Bain compares the restaurant on Victoria Island in Lagos to a Louis Vuitton outlet from the sight of all the customers’ handbags. This year, Porsche’s operations in Lagos met their annual target within the first three months. In spite of Africa’s positive growth, foreign companies remain hesitant to operate in Africa. The founder and managing director of the Polo Luxury Group, John Obayuwana, reveals the complications involved, including government regulations, political corruption, and the absence of retail infrastructure.
In addition, Africa’s newfound state of being the emerging market for luxury products is not a reflection of an increase in wealth for the general people. Sales remain concentrated in primarily South Africa and Morocco. Due to the large economic disparities between classes, consumers typically view these products as a tactic to distinguish one’s success and status over others. Nevertheless, the increase in luxury sales is an optimistic indicator of Africa’s overall economy.