Op-Ed | Luxury Brands Are Wrong to Ignore Africa

With growth slowing in key markets like China, luxury brands should examine the numbers, overcome their fears about image and turn their attention to Africa, argues Johanna Collins-Wood.

View of Victoria Island, Lagos, in Nigeria | Photo: Bill Retherford

LONDON, United Kingdom — Earlier this year, Nigeria became Africa’s largest economy and the 26th largest economy in the world, valued at $509 billion, based on GDP figures that were recalculated using a base year of 2010 instead of 1990. Given Nigeria’s new status, as well as its new crop of millionaires and billionaires, who have become wealthy through oil (Nigeria is the 11th largest oil-producing nation in the world), Nollywood entertainment and other business ventures, one might assume that major luxury good companies would turn their attention towards Nigeria, as well as other emerging markets in Africa, as an important source of opportunity. That, however, is not the case.

Despite rushing to every other inhabited continent in the world, luxury retailers have steadfastly limited their investment in Africa. Louis Vuitton has only four stores on the entire continent, two each in Morocco and South Africa. Gucci has only one store in Morocco and two in South Africa. This stands in stark contrast to other emerging markets, like Latin America, for example, where most of the world’s well-known luxury goods companies have established a strong retail presence.

Without doubt, opening stores in Africa presents brands with significant logistical challenges. But the two primary arguments often given against wider expansion into the African market are 1) people who live in Africa are, overall, too poor to purchase luxury goods and 2) wealth in African countries such as Nigeria was acquired under questionable circumstances and brands could suffer a reputation problem if they were viewed as ignoring this. In a column earlier this year for The Financial Times, Vanessa Friedman highlighted both opinions, first quoting “the CEO of an enormously successful international accessory brand that will remain nameless,” who says he chose not to move into the Nigerian market because he “didn’t feel comfortable with where a lot of the money was coming from.” Friedman went on say that the decision by many luxury goods companies not to move into Nigeria and other parts of Africa was “in some ways, a question of image.”

What she does not say is that the “image” of Africa that many luxury goods companies appear to harbour is one of poor, struggling nations with poor, struggling people whose only method of obtaining wealth is to lie, cheat and steal. And luxury good companies do not want their carefully crafted brands associated with such a place. Readers may form their own opinion as to whether there is also a touch of racism at work here.

But whatever the reason for this poor image of Africa, it is, at best, simply incorrect. It is true that more than 60 percent of Nigeria’s population is thought to live in severe poverty. However, Nigeria also has more billionaires than any other African country. Lagos, the Nigerian capital, is Africa’s largest city and is home to a burgeoning wealthy class. With the Chinese market beginning to decelerate and Asian customers becoming more selective in the luxury goods they buy, retailers should be examining all their options for expansion. And, considering the industry’s skill in creating the desire for its products in every other continent, it is almost certain they could do the same in Nigeria and other parts of Africa.

The other argument for not moving into the African market — that money in Africa is acquired through illicit means — is simply ridiculous. Luxury good companies have never cared how customers acquired the money used to purchase their products. If they did, they would have to turn away significant numbers of customers from markets such as China and Russia.

The key consumer base for luxury goods has long since left Europe, moving West to the United States, but also East to the Gulf States and Asia, and South to Latin America, particularly Brazil. However, growth in China, the world’s largest consumer of luxury goods, is beginning to slow and there are concerns that the luxury market there is already becoming saturated. Brazil has been successful, but in order to maintain the exclusivity of their brands, luxury good companies may not expand much beyond the first-tier cities of São Paulo and Rio de Janeiro.

Luxury brands must anticipate the growth opportunities of the future and consider where to expand next. To wilfully ignore the business potential of the entire continent of Africa shows poor business judgment.

Johanna Collins-Wood is an American writer and lawyer based in London.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.

How to submit an Op-Ed: The Business of Fashion accepts opinion articles on a wide range of topics. Submissions must be exclusive to The Business of Fashion and suggested length is 700-800 words, though submissions of any length will be considered. Please send submissions to contributors@businessoffashion.com and include ‘Op-Ed’ in the subject line. Given the volume of submissions we receive, we regret that we are unable to respond in the event that an article is not selected for publication.

Related Articles

Post a Comment

11 comments

  1. I on the other hand have not experienced these problem when speaking to or getting the attention on Luxury brands, having secured some 110 brands for this region a combine business experience of over 50 years with my Business partner. we have experienced the other problem of securing the right Investment and support for this opportunity.

    Luxury Brands want to see the right foundation in Place and not here today and gone tomorrow concept. Along with the right environment this a happen.

    Nigeria must step up to the standards of the rest of the Planet, like it’s other emerging markets Like China,India, Brazil, or Mexico and not expect the world to do them any favors when it comes to the Images of these brands and the environment which is created. These brands want to serious business and not pet projects.

    Sidney Okudzeto from London, London, United Kingdom
  2. I totally agree with this article. I am Nigerian, living in Europe and a fashion designer as well. On the one hand, it is true that a large percentage of wealthy Nigerians, steal, lie and cheat and that money is acquired through illicit means. On the other hand, when did Luxury good companies begin to care about how their customers acquired the money used to purchase their products? And truly if they did, they would have to turn away significant numbers of customers from markets such as China and Russia. WELL DONE Johanna Collins-Wood!!!

    Motu Rola from Vienna, Bundesland Wien, Austria
  3. Thank you for this rebuttal– I read the earlier article by Vanessa Friedman and felt that it lacked any real depth and leaned heavily on old stereotypes.

    Luxury brands cater to the Nigerian wealthy in many of the stores in Europe and sales assistants are trained to cater to them across top brands.

    Issues of infrastructure and trade barriers are a real issue across the continent which do impede trade and that really should be a focus for future growth across the region.

    Samantha White from United Kingdom
  4. Luxury Brands are Wrong to Ignore Africa. What an amazing sentiment. The amount of impact and influence toward the further development of numerous economies these brands could have is powerful.
    But that is not what we are talking about here. Yet again, this is a conversation rooted in capitalizing on only the financial gain — how can we move to another spot, which is flush with untapped cash, to sell more product and in turn contribute to the bottom line?
    At what point did it just become ok for these companies to be prospering at the expense of the broader community — to overlook the economic distress of where they produce and sell and not have to be accountable? Whose problem do they think it is?
    It is everyones. It is a global responsibility to recognize that economic success MUST connect with societal value, i.e. Shared Value. It’s a concept that every industry seems to be picking up except for this one.

    Let’s not ignore Africa. Let’s recognize the need for education, skill development and investment from the private sector. Let’s acknowledge that 60% of the continent is under the age of 30. The youth has to undoubtedly drive the development of this continent for the next 50 years.
    You, luxury retailer want to open a store in Nigeria? Fine. But while you are at it, create a training program for the 200 million people between 18-24.

    Jordan Daly from New York, NY, United States
  5. Thank you for this article.
    I run a fashion and lifestyle social commerce website out of Lagos Nigeria.www.fashionablelagos.com and I will say Luxury Brands are doing themselves a disservice by not entering the Nigerian Market.
    The people who get their wealth through illicit means (a minority actually) shop for these brands in Europe anyway ,so they can be associated with their brands.
    Imagine just an e-commerce entry for these Luxury brands as a first step into Nigeria.I can see 70% of Nigerian girls coveting original Louis Vuittion Bags as opposed to knockoffs sold at the same price as original in this space.
    Nigeria,way to go!

    Olayinka Oluwakuse III from Lagos, Lagos, Nigeria
  6. Insightful article! perhaps, would be useful to know more. Any research out there that tells you what brands are popular, about entering the markets, etc?

    sherry mm from Mumbai, Mahārāshtra, India
  7. Interesting article. It would have been better if it were longer and explored the subject a lot more. I live in South Africa and have had the honour of working for both Louis Vuitton and Salvatore Ferragamo in Johannesburg and there is by no means a shortage of customers. We did very well and I believe this is a case of image and to some extent, environmental issues. It’s no secret that a lot of African countries are underdeveloped and infrastructure and logistics are a problem. At Vuitton, about 50% of our customers were South African, 15% were touring Asians, and the other 40% were people mostly from Nigeria and Angola. At Ferragamo a lot of our customers were Nigerian people. I remember this one particular Nigerian lady who used to come in to the store (Ferragamo) every other month and spend well over $50 000 every time. A lot of Nigeria and Angolan customer’s regularly take trips to Europe, New York and South Africa for shopping simply because the luxury retailers aren’t in their country. There’s most certainly a big existent luxury market on the continent at as a whole and it continues to grow every year. Africa is the next frontier, it’s the next Asia, and by that I mean it’s going to experience a major boom and it’s going to be interesting watching the brands that aren’t already here all trying to get through the door when earlier, African money wasn’t good enough. South Africa is a perfect example of the future of Africa. At present we have Louis Vuitton, Gucci, Bally, Tommy Hilfiger, Salvatorre Ferragamo, Fendi, Cartier, Dunhill, Burberry, Montblanc, Patek Phillipe, Hublot, Porsche, Lamborghini and many more. Fast retailers Mango, Zara, Topshop, Thomas Pink, GAP, Karen Miller and Wolford have also taken note with River Island, Forever 21 and H&M on the way. Luxury brands should wake up and take notice. The only luxury brand that hasn’t been able to sustain itself in South Africa, and in extention Africa, was Christian Lacroix.

    Vuvu Nqezane from Bisho, Eastern Cape, South Africa
  8. I am a stylist and personal shopper and most of my clients are Nigerians, I just think NOW is the time for Luxury brands to take Nigeria and Africa Serious!

    Tolulope Adepoyigi from London, London, United Kingdom
  9. “Which brings me to the real problem of Africa in general and Nigeria in particular. There is not a single institution that functions properly in Nigeria or in Africa, the few that do being leftovers from white rule in South Africa. The Nigerian army is totally corrupt, vastly underpaid, and indistinguishable from the terrorists, as are the civil service and the judiciary. Yet we in the West expect democracy in Africa to function as if it were Switzerland. At least this is how our civil servants and diplomats react when an atrocity such as the kidnapping and sale of girls for ten dollars each takes place. The great kleptocracy of Nigeria’s oil wealth is the only institution that functions perfectly in Africa, no ifs or buts about it. This is what Michele Obama should have said after the outrage, rather than turning it into a feminist issue.”

    Taki recently wrote about Nigeria and, right or wrong, perhaps this perspective is pervasive enough to deter expansion on to the continent.

    Kent McCarthy from Oroville, CA, United States
  10. You’re right, it is a load of rubbish that luxury brands care where their clients’ money is coming from. If that was the case then Louis Vuitton should shut their Delhi boutiques ASAP. Most of their clients pay full cash (they even have a cash counting machine) because it is all black money coming from industrialists and extremely corrupt politicians.

    Hanadi Habib from India
  11. This is an Interesting and thought provoking article, I’m a Nigerian a Fashion Entrepreneur. This is a wake up call for Luxury Brands and Africa. No doubt Africa is the next wave of Economy especially Nigeria joining Brazil, China Indian and the rest.
    Luxury Brands are totally wrong to have rule out Africa.
    I unstand that Africa is still developing, and Nigeria, Ghana and the rest are developing very fast, Nigeria also has more billionaires than any other African country. Lagos, the Nigerian capital, is Africa’s largest city and is home to a burgeoning wealthy class. how long would they wait to see the full development. Lots of Nigerians travels abroads just to shop for luxury Brands. The key consumer base for luxury goods has long since left Europe, moving West to the United States, but also East to the Gulf States and Asia, and South to Latin America, particularly Brazil. However, growth in China, the world’s largest consumer of luxury goods, is beginning to slow and there are concerns that the luxury market there is already becoming saturated. Nice article

    shedrack hazoume from United Kingdom