Global Briefing | Could Africa be the Next Frontier for Fashion Retail?

Westgate Mall, Nairobi | Photo: kamalkaur.net

NAIROBI, Kenya — In recent weeks, the media hype around Africa has been remarkable, with several articles in major publications proclaiming the continent “the next Asia.” In fashion, Franca Sozzani even dedicated the entire May issue of L’Uomo Vogue to “rebranding Africa,” while this year’s IHT Luxury conference will discuss “the potential of Africa, both as a producer and ultimately consumer of luxury goods.” But to what extent is there a real business opportunity for international fashion retailers on the African continent?

While Africa often serves as inspiration for fashion collections, it’s China, India and Brazil that currently present the greatest growth opportunities as emerging consumer markets. But with large international fashion retailers like Mango, Zara, Levi’s and Gap already active in Africa, and ASOS offering free deliveries to the continent, perhaps it’s time to ask the question: could Africa be fashion’s next frontier?

Growth Drivers

According to a recent Economist Intelligence Unit (EIU) report entitled “Africa: Open for Business,” real GDP growth for Sub-Saharan countries Angola, Kenya, Nigeria and South Africa was forecasted at nearly 4 percent for 2012, with average growth expected to hit 5 percent a year from 2013 to 2016. While these numbers are behind similar estimates for China and India, they are remarkable compared to anemic growth projections in Europe and on par with Brazil and Russia.

Indeed, seven of the world’s 10 fastest-growing economies are currently in Africa, with 70 percent of the continent’s population living in countries which have enjoyed average economic growth rates in excess of 4 percent over the past decade. This steady progress has given rise to a growing middle class. In fact, approximately 310 million people on the continent are now deemed middle class (defined as those spending between $2 and $20 a day at 2005 prices) according to a 2011 report by the African Development Bank, driving demand for products like mobile phones, televisions and fashion.

To be clear, while poverty in Africa is declining, only a small slice of the continent’s population can afford consumer goods, with most purchases coming from the very low end of the price spectrum. But consumption is steadily rising. According to the EIU report, by 2030, Africa’s top 18 countries could have a combined spending power of $1.3 trillion.

Youth culture is also a critical driver of opportunity for fashion retailers in Africa, the youngest of the world’s continents, where the number of 15 to 25 year olds is still growing at an astounding rate. “Western fashion is very popular with this younger generation,” said Joanna Maiden, managing director of SOKO Kenya, an ethical clothing production workshop who manufacturers for clients including ASOS Africa and New York-based label SUNO. “The middle class is moving away from more traditional clothing and going for more contemporary styles.”

“African consumers are no longer satisfied with a third or even second rate offering of products,” added a spokesperson for sportswear giant Adidas. “Their brand awareness is strongly driven by international media exposure through TV, but also through accelerated advancements in internet penetration and accessibility.”

“One of the things that [has] amazed us is that [Africa] is a very brand-conscious market; particularly in our West African markets, in Ghana and Nigeria,” said Mark Turner, Africa director at Mass Discounters (a Walmart subsidiary) at a conference held in Cape Town earlier this year. “It is a market that travels extensively and has access to [the] internet. It is amazing how sophisticated that customer is.”

South Africa First

But it’s clear that not all African countries have developed equally and, thus far, international fashion retailers have largely focused their efforts on South Africa, by far Sub-Saharan Africa’s most developed economy.

Levi’s, long considered a leader in new market expansion, introduced their jeans to South Africa following democratic elections back in 1994 and have since built a trusted status brand that has been highly successful amongst the country’s growing middle class. “Emerging markets tend to be defined by a booming middle class of brand conscious and aspirational consumers who show their status through an outward expression of their wealth through the brands that they consume,” commented Lauren Kulhmey, Levi’s brand manager in South Africa.

Other fashion and apparel retailers, though intially slow to follow, have accelarated their South Africa activities in the last year. Zara opened it’s first store in Johannesburg in 2011, followed by a second store in Durban’s Gateway Shopping Mall in March 2012. Meanwhile, Gap has opened two stores in South Africa, both in the past year. “The country represents the largest retail market in Africa and one of the most stable economies on the continent,” commented a spokesperson for Gap. “This combined with a high rate of tourism and a rapidly growing demand for international retail brands makes South Africa an ideal environment in which to bring our store experience.”

Beyond South Africa

Beyond South Africa, countries with the highest potential include Nigeria, Ghana and Kenya. Nigeria, Africa’s largest oil producer which recently scrapped its textile import ban, driving renewed interest from international fashion and apparel retailers, is currently home to brands including Levi’s, Mango, Nike and Swatch, which have set up stores in the Palms Shopping Mall in Lagos.

“Just because bad stuff is happening in places like Zimbabwe, it doesn’t mean there aren’t good things happening in places like Ghana,” said Richard Dowden, director of the Royal African Society. Indeed, in Ghana, the discovery of a sizeable oilfield in 2010 has stimulated substantial GDP growth and increased incoming migration flows. International brands such as Mango, Nike, Puma and Swatch operate stores in Ghana’s capital Accra, with the Accra Mall becoming a significant destination for fashion.

Kenya, a regional business and tourist hub with East Africa’s largest economy, is also a potential destination for international retailers. Oil was discovered in March 2012 in the country’s northwestern Turkana region and footwear brands including Adidas, Converse and Nike are already selling from Nairobi’s Westgate Premiere Shopping Mall.

Exploiting the Opportunity

Retailers who act early and target the emerging middle class in fast-growing countries stand to benefit from long-term gains. But that’s not to say that doing business in Africa comes without challenges and companies contemplating expansion on the continent would do well to consider the following recommendations:

Springboard Cities Consider first opening stores in cities such as Johannesburg, Cape Town, Lagos and Accra where there is a strong emerging middle class, strong infrastructure and political and currency stability. South Africa is the recognised gateway for international brands and retailers who are looking to gauge the potential of future Africa openings.

Other Stores Before Yours For brands who prefer to avoid the capital investment and risk associated with opening their own stores, distributing with established local stores, as Gap initially did with Stuttafords in South Africa, is a good first move that enables companies to gauge consumer response to their brands and products and gather real market data to support any future ambitions.

Franchising Opportunities Retailers looking to make a big splash into Africa may want to study Mango’s strategy. The brand currently has shops in 9 Sub-Saharan countries — Angola, Benin, Cameroon, Côte d’Ivoire, Ghana, Mauritius, Nigeria, Senegal and South Africa — a rapid expansion that was made possible through its franchise model.

One Size Doesn’t Fit All Understand your target consumers. Africa is a continent of 56 countries, each with distinct cultures, histories and brand preferences. East Africans tend to find Asian brands more appealing than those in the West. “They drive a Toyota, holiday in Dubai, buy Japanese and Korean gadgetry,” reported market intelligence agency WARC. “West Africans on the other hand have an outlook more closely aligned to the US. They aspire to drive big cars and are more likely to be ostentatious.”

Build Local Partnerships Many successful businesses in Africa are driven by tremendous entrepreneurial spirit and international retailers stand to benefit immensely from local partnerships, not least in the form of culturally accepted introductions into the market.

Embrace African Pride Africans are generally very proud of their heritage and though many are drawn to Western styles, they respond to an African twist. Retailers should consider tailoring colours, prints, accessories and styling to suit the African audience.

Sponsorship Opportunities
Local fashion weeks, designers and support organizations are fostering increased interest in fashion among young Africans and those involved in these efforts know the market and the local consumer far better than someone coming in from the outside. International fashion businesses entering the market may benefit from seeking collaborations with these local industry beacons who welcome funding and can offer local knowledge and contacts in return.

Go Online and Go Mobile
Creating an Africa-facing instance of your website is another low-risk method of gauging consumer demand for products. ASOS already provides free shipping to Africa in six to 12 days and could become the trendy e-tailer of choice on the continent. Due to lack of physical infrastructure, Africa is also the world’s most advanced market in terms of mobile financial services, making mobile commerce a highly relevant strategy, especially in Kenya, Nigeria and South Africa, where mobile payments are increasingly becoming the norm.

Jaana Jätyri is the founder of trend forecasting agency Trendstop.com

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18 comments

  1. As a fashion enthusiast currently living in East Africa, I am eagerly awaiting these advances. Very important points in the article: the need to have a local partner and having an “African twist” in your goods. Running a business in Africa is not easy yet not impossible, a lot of patience and knowledge of the local bureaucracy is needed. Though money may not be equally distributed among the population, the emerging middle class (specially teenagers and young adults) are eager to spend. But to be successful, you must incorporate African touches to your goods. Considering how much Western designers look to Africa for inspiration, this should not be a problem.

    expat in africa from Tanzania, United Republic of
  2. Great article and something we feature on constantly. We truly believe that Africa has a strong potential to be a leader in the fashion and textiles industry. Where all the other industry locations are over capacity Africa poses fresh ground and fresh opportunity.

    If interested in reading my self published book on African and ethical fashion which features 48 designers who produce or source in Africa such as SUNO NY, SOKO Kenya, Choolips, Jewel by Lisa and Lanre Da Silva Ajaye then do check out http://www.fashionafrica.co.uk and http://www.lulu.com/spotlight/jacquita

    thanks

  3. Exploiting the Opportunity

    Just that word alone makes me shiver when used in combination with the continent Africa. And of course when the person talking about it has a european outlook. There are so many things I could say but I choose not too. I hope people learn from History.

    laaa from Leiden, South Holland, Netherlands
  4. I agree with you laaa. It’s a European outlook and it seeks to make profits for the Europeans out of the pockets of these young new emerging middle class Africans. It is about creating another consumer continent. What does consumerism achieve except a disproportionate balance between the poor and the very rich?

  5. Great article and info. I would love to see this flourish for the country.. Not so much for the ‘exploiting’ in the benefit of the fashion retailers, but what it might do to help the African economy. And I hope that not only the retail world expands, but the manufacturing as well.
    And yes, I’m sure respecting the culture is going to have a lot to do with what sells and what doesn’t.
    -A. Rozier
    http://www.arozierdesignstudio.wordpress.com
    http://www.facebook.com/arozier

    twitter_ARozierDesigns from Leesburg, FL, United States
  6. The model you propose is the diametric opposite of what most enlightened thinkers are advocating for in Africa. This article is truly disappointing, but the good news is that others who have commented here have contributed realistic solutions, rather than jumping on some corporate bandwagon from hell.
    I refuse to contribute to the feeble ‘service economy’ model that has become the only option for so many North Americans. Your proposal falls into that very trap, big surprise.

    Elevating the growth of micro-economies within the domestic domain of Africa, incentivising Africans to manage their own economic potential – i.e. domestic textile production, apparel manufacture and trade. Under these conditions, the ‘youth’ that you claim as a target market, will have the opportunity to complete their education, enterprise their own businesses based on specialized skills, and make the socio/economic decisions that they so rightly deserve.

    African textiles and African production is where the really exciting growth is happening: self-determination, control of their own economies, a deep understandingof their markets.

    Africa doesn’t need you – you need Africa.

    Vineca Gray from Toronto, ON, Canada
  7. This article is insightful to the point I suspect the author (like myself) grew up in Africa. Whenever I visit Kenya now, amongst the ever mushrooming malls are local designer shops that stock local designer clothes along with top shelf Western labels like guess, H&M … I look forward to seeing what comes next.

    Enoch from Norcross, GA, United States
  8. If companies do expand into Africa…employment opportunities will surely follow.

    Why not take it one step further?… producing some of the goods locally…giving the people of Africa a direct connection to what is being designed/produced and then sold in the stores.

    Vvego

  9. “Exploiting the Opportunity

    Just that word alone makes me shiver when used in combination with the continent Africa.” -laaa
    Exact same feeling.
    Such a shame this article represents the shortsighted perspective powerful fashion businesses have. I really hope we can hear more from people who wish to see Africa prosper by encouraging the population’s potential as CREATORS, creatives… not only producers and consumers.
    Thank you Vineca Gray for your insights.

    S. Aguirre from Eugene, OR, United States
  10. so there are aspects of this article which I find hum. Yes one size does not fit all – so why generalise with West Africa and East Africa. African’s do divide in a way but its not so obvious and clear cut. Not all African’s view life through the “Vilsco” spectrum of use of colour.
    Loved and glad that Laa made her comment – I shiver at some of these phrases and challenge these views in my work. Its a global world and please do not try and use Orientalist views as a way of looking at a continent.
    Also one must look at the current changes in SA laws which relate to operating in other African countries and learn from it. Thanks also for Vineca comments- yes its a more level playing field and must viewed in that way. Its not one place needing the other, the world has being shown not to work that way. We need new thoughts and a bigger vision of working together.

    twitter_nyonyonyayra from Derby, Derby, United Kingdom
  11. Quite comprehensive, detailed and explaintory enough. Its a win-win situation in whatever way u look @ it. Partnership, franchise n so on creates job opportunity and more african designer can now be more visible and accepted world wide. If african isn’t short sighted, we would see the gains on the long run.

  12. I would add that a better understanding of retail and marketing must be engendered for this to really take off.

    International brands (e.g. Nike, Mango) using the frachise model to expand their presence will not necessarily mean that they will see a knock-on expansion onto sales and/or revenues/profits. This is because even the entrepreneur-franchisee who ‘rents’ the rights to showcase a brand (as a franchise) does not necessarily have what it takes to sell the most and use the stock most efficiently. This is what retailing is and not all entrepreneurs are retailers. ALSO, this is important because with with a more sophisticated local retail industry, there is more opportunity for local african fashion/design/manufacture to have a market to supply into. Rather than have to rely on international markets.

    (I have a background in international fashion merchandising and also I am based in Nairobi – and yes, it constantly shocks me with how poorly stocked, how high the prices are, how limited the product range is, and how badly located these shops for these fashion brands are.)

    AB from Kenya
  13. I for one would like to see every country on the continent prosper to become a world player in global finance and industry. It seems like the west is finally catching up to what’s been going on in Africa for the past 10 years because many of these designers have been determined to make it on their own by self-promotion and getting their products to the markets.

    The African consumer wants the same things that every one else want when it comes to their purchasing power and those brands that have opened stores on the continent saw that need.

    I also have to agree that the African continent doesn’t need the financial exploitation that it has suffered for decades without one return of capital to the very people who supply the labor, but has become the worlds largest ATM machine.

    Several brands have set up so called co-ops to create luxury products that sell at higher prices in the guise as charities. I’ve often wondered are the workers being paid enough to have a living wage that will propel them into a middle class lifestyle or are they just paid enough to live?

    China has made inroads into Africa and is now destroying their textile industry with their cheaper versions of African textiles and such. Africa is the future and through self-determination it will become a world player with or without the support of the west.

    twitter_divalocity from Alexandria, LA, United States
  14. I actually thought that this would be about the African fashion Industry selling thier products to the world. Love the clothes!!!

    CTB from San Fernando, San Fernando, Trinidad and Tobago
  15. I am a fashion enthusiast and while I love clothing or should I say cloth! To me it’s all a form of art. An expression of our selves …. Africa is a continent alive with possibility and filled with so much untapped energy. Colour, culture, difference … an endless list of ways of looking at all things we have in common and fashion being the aesthetic gateway to a deeper understanding of our existence in the world.

    As China’s inroads penetrate Africa deeper and deeper we must not blame capitalism for allowing it but look into ourselves and question why our consumption and need for the mass produced items vs items made out of craft. We have all bought into globalization and become a part of the madness. Those of us conscious enough to know that it’s not quantity but quality that feeds the soul must continue to forge ahead.

    As a South African “struggle” is part of who and what I am so I say lets all “struggle” ahead and support our country folk when they attempt to sell their fashion locally!

    As South Africa has the Proudly South African Brand so too should others support their Proudly made garments too.

    I know for sure, we can all survive off what we make and do for a living, it’s making peace with it that’s another struggle all on it’s own too I guess.

  16. Exploitation can only take place if we allow it. I don’t see this happening though with many African designers producing their goods locally. This is a start. I am a British Nigerian fashion lover toying with the idea of moving back to Nigeria. I would love a Zara store in Lagos. The majority of my shopping is done online. Net-A-Porter currently ships to South Africa and I’d be interested in seeing which other high end e-tailers follow suit and explore the continent beyond SA.