Creating and managing luxury brands in Africa

According to Bain & Company, the luxury industry would be worth $279.5 billion this year and Euromonitor further added that Africa’s luxury market is worth $4 billion this year.

As billionaires and millionaires in Africa increase, driving luxury consumption for the luxury products and services such as private jets, champagne, timepieces and other items creates opportunities for luxury offerings.

To achieve luxury requires high investment for capital, set-up costs, production of items, as well as salaries, rent and other operational costs.

From Nigeria and South Africa, luxury businesses shared their experiences in the luxury industry.

Coscharis in Nigeria retails various luxury brands inclusive of Rolls-Royce and Jaguars.

With a client base that includes entrepreneurs, the ultra-high networth individuals and royal families. Some of these individuals purchase the luxury cars as collectors’ items. The business has been faring successfully with a few hitches caused by external and internal market factors.

“We are faced with several challenges in the market in selling our cars in the country,” explained a representative of the company. “The Nigerian currency has been devalued by over 45 percent in three months which has led to an increase in prices. Cash flow is very tight. We also have the election period and the violence by Boko Haram which has led to a very tough business environment in the country.”

In addition, is the challenge of grey market products, which is very common globally with apparel, and leather goods.

“There are car dealers who retail Jaguars, BMWs and other cars but they are not official retailers, which hampers official franchises,” he further added. “Therefore, if the car breaks down, you will not get service as those are not franchises. We ensured that we provided services even to the individuals who purchased cars from other dealers.”

Three women who have founded luxury businesses in Africa gave insights on their experiences in the luxury industry.

Hanneli Rupert a trained painter founded Okapi in 2008 in Cape Town, South Africa with the aim of sustainable development by using natural resources from her country South Africa to create luxury products. Okapi is the name of an African antelope.

Her products included women’s bags, wallets and purses made from various exotic skins such as crocodile. She also uses the skin from the Blesbok which is a type of antelope with strong skin suitable for bags and springbok horns used to make charms and cuffs. The range of luxury items include the Ayesha bag made from Scarlet Red Blesbok and gold hardware retails at $1238.24, Yemaja made from Ostrich skin with Gold Hardware is $3018.21 and the wallet made from crocodile skin and gold hardware is $1408.50.

“Making a crocodile skin bag can take 3 to 6 months, from beginning to the end of the product. I work with the best crocodile farm and tannery in South Africa and skins are hand selected,” explained Rupert. “Because each our crocodile pieces are hand made one of a kind they each have to be priced individually.”

Producing beautiful luxury products has come with successes and challenges.

“The biggest challenges I face is government greed and inefficiency. As my brand is inextricably linked to Africa and South Africa in particular I will never move my sourcing and manufacturing elsewhere,” she stated, “But it would be beneficial if the African countries dropped their trade barriers to create a larger local marketplace across the continent for sourcing materials and selling finished products.”

Okapi products are also retailed online but very few African luxury brands use online to retail their products.

“Most African luxury brands are focused on ready to wear which is still psychologically more of a hurdle for people to purchase on line. Our success with online is that we can communicate to a very wide audience befitting for a global brand instantly. The biggest shortcoming is that prospective clients still want to feel and see the product before purchasing it,” she explained.

Net-a-Porter site is one of the retail points used by Okapi to increase sales from an international market.

“The exposure this platform provides has definitely brought a bigger spotlight to Okapi. They have an incredibly reach because they are based online and we have managed to tap a wider customer base and our business is growing,” said Rupert.”

“A luxury bag should be a timeless piece of exceptional quality which grows better with age.”

Anina Malherbe is the CEO of VIVID Luxury, a luxury communications firm based in Cape Town and Johannesburg in South Africa that started in 2007. She has worked with several luxury brands such as Gucci, Patek Philippe, Bentley, Veuve Clicquot, Burberry, to name a few.

“I started my business while sharing small offices with a friend but I was determined and I persisted,” she explained.” My first client was luxury shoes and accessories label, Jimmy Choo. Once I had that first client, it gave me a foundation on which to build.”

“I have a great love for luxury products and I wanted to work on other brands in this category,” said Malherbe. “I realized that to do that I would have to branch out on my own. I had no finance and no clients, but I didn’t care.”

The first year was tough. Malherbe thought she had a great background from working at Shimansky a jewelry company and all the experience she needed.

“Nothing can prepare you for starting your own business. I had to deal with finance, administration and staff all on my own. It was no longer about just doing the things I enjoyed. I found myself working long hours just to take care of all the behind the scenes stuff so that I could focus on the service I provided for clients during the day.”

When the recession came in 2008, her business was hard hit as she had started the company at that time. This taught her to operate within a tight structure and to manage her finances in a lean manner. At the same time, luxury brands were going into the country thus enabling her to acquire business.

Malherbe decided from the outset that she would take on luxury brands only, and not sign up any business that might dilute that offering.

Providing services in the luxury industry requires a lot of attention to detail, high quality services and a skills set that understand luxury and can work in this industry whose consumers are usually high net-worth individuals and can be highly demanding.

“Finding skill for luxury is very tough in the continent. Very few people are trained in luxury or have worked in luxury therefore, we have an industry growing and very little talent to service it,” stated Malherbe. “In addition, one needs to understand the luxury brand, its target market very well to be able to develop a roll out plan for it. This requires one to understanding that brands intrinsic elements. You need to be creative, well-travelled and exposed to global trends.”

“It is exciting to be a leader in this industry as Africa is now becoming recognized for its luxury consumers. Now, it is time to ensure that luxury brands build their exposure and image and become part of the African lifestyle whilst ensuring that they protect their exclusivity,” concluded Malherbe.

Maryanne Maina