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In North Africa, a Story of Morocco and the Rest

Morocco, Algeria, Tunisia and Libya may be North African neighbours, but their fashion markets are running at distinctly different speeds.
A rendering of the Morocco Mall in Casablanca | Source: Aksal Group
By
  • Robb Young

CASABLANCA, Morocco — Looking down at Earth from the awe-inspiring perspective of Outer Space, the Mediterranean coastline, at night, appears as if encrusted with a thick strand of white diamonds. Stretching from Spain to Greece to Turkey, the Levant and around towards the Nile Delta, the shore sparkles as an epic reminder of just how many people are clinging to the edge of this sea connecting three of the world's most central continents.

No less impressive is the final stretch that glimmers along the shores of the Arab-Berber region of North Africa known as the Maghreb. More than 85 million people live in modern-day Morocco, Algeria, Tunisia and Libya. At their closest point — the Straits of Gibraltar — the Maghreb and Europe are less than 15 kilometres apart, but the uninterrupted string of lights that embellishes the sea they share belies their vast differences. Trade, colonialism, migration, world wars, ancient empires and even a new Union for the Mediterranean bind them together. But even today, large swaths of the Maghreb remain much more tense and volatile than the lands just on the other side of the water.

Only Morocco has escaped political instability in recent years and, as such, remains the most dynamic, flourishing and investable country in the Maghreb. So much so that Prada unveiled two standalone stores there last year, both men's and women's, in the colossal Morocco Mall, erected a year earlier in the country's commercial capital of Casablanca. Anchored by a huge outpost of the Galeries Lafayette department store, the megamall has attracted Louis Vuitton, Armani, Dior, Fendi, Ralph Lauren, Gap, Banana Republic, H&M and scores of other fashion brands.

"When I returned to Morocco from France, where I studied at a French business school until 2000, the Moroccan fashion market barely existed," says Sofia Benbrahim, editor-in-chief of the Moroccan edition of L'Officiel, which is operated through a license between Paris-based publisher Les Editions Jalou and local media group Geomedia. But in the nine years that have passed since her homecoming and the launch of the magazine she edits, Benbrahim has witnessed profound changes, she says, thanks in part to early entrants like Cartier and Zara who paved the way for others.

"By the time the first issue of L'Officiel Maroc hit the newsstands, many luxury brands were already represented in multi-brand stores and fast-fashion brands were opening their second stores in Morocco. But the business of fashion has definitely changed here since the Morocco Mall opened up.  Although it may still have some difficulty ensuring reasonable growth, it has encouraged many major brands to make a step into the country. Since then, another mall opened in Casablanca with more high-street and mid-market brands called Anfa Place and another [in the Casablanca Marina] is supposed to open in the next three years."

When asked who really spearheaded the recent boom in the fashion market, many insiders in Morocco point to Salwa Idrissi Akhannouch, one of the country's wealthiest female entrepreneurs and the chief executive and founder of Aksal Group. Aksal is the property, retail, luxury brand management and franchise conglomerate that, together with Saudi-based Al Jedaie Group, built the futuristic Morocco Mall. Before that, they also opened the Zara megastore in 2004, which was then the third biggest in the world. But mall fever had gripped the country even before Akhannouch's coup with the Morocco Mall.

The Rabat Mega Mall, where the likes of Diesel, Lacoste and Etam can be found, bowed in 2005 in the national's capital and second largest city, Rabat. Similar brands can be found in Almazar Mall in Marrakech and several new shopping centres are planned in grand projects in Tangier as part of mixed-use urban developments. Through Aksal's aggressive expansion of retail clusters around the country to anchor franchised brands like Zara, fast-fashion and popular high-street labels have reached beyond the country’s commercial centres. They are now present as far west as Agadir, a resort city on the Atlantic coast, and the ancient city of Fez, Morocco's third largest with about 1 million people, which attracts tourists from around the world.

The explosion of mall retail space around the country has since lured major operators of other high-street and fast-fashion brand franchisees from the Arabian Gulf, who extended their territory from the GCC (or Gulf Cooperation Council, a political and economic union including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) to include the wider MENA (Middle East and North Africa) region. Alhokair and Nesk from Saudi Arabia and Al Shaya from Kuwait are three of the major players now planting many of their brands in Morocco, as a result.

Fflur Roberts, head of luxury goods at Euromonitor International, reveals that between 2007 and 2012, real consumer expenditure in Morocco increased by 28 percent, and the fastest-growing category over this period was “miscellaneous goods and services,” which includes luxury goods, which grew by 36 percent. "The luxury segment has especially strong promise in tourist resorts along the country’s Mediterranean coast, which is increasingly visited by tourists from the EU. Casablanca, which is seeing strong population expansion, due to the job opportunities presented in its business and commerce segments, is growing into a formidable market, boosted by its high-income homes.  Marketers should look to this city for the development of retail complexes and a growing middle class [which] has expanded steadily since 2006, seeing a rise of 13.1 percent, due to population expansion and strong economic growth," she said.

Jamila Halfichi, the fashion editor of Asharq Al Awsat, a pan-Arab newspaper distributed widely in the Maghreb and all around the Arabic-speaking world, has also witnessed Morocco's transformation over the past decade. "Since the ascension of King Mohammed VI to the throne, Morocco has also seen the burgeoning of a vast middle class and greater social mobility. In my opinion, it's this growing middle class which is eager to embrace all that is luxurious and say goodbye to shopping in markets and souks and all that it entails in terms of traditional bargaining," she says. "They're still finding their way into this new domain and while they can't afford the high prices of high-end luxury for everything, they still aspire to it and some will be buying luxury accessories to set off outfits of more affordable labels."

"But for many of them, brand awareness is still in its infancy. Some have never even heard of Dior or Louis Vuitton, and many will be shocked to hear the price of a ring from Cartier or Chaumet — a ring that in their mind they can buy for a fraction of the price at a gold market. They're still are not educated about the “4C's” of diamonds (color, cut, clarity and carat) and many of them don't care, which all leads to the same conclusion that some are still not knowledgeable enough about luxury to justify spending on it."

According to L'Officiel's Benbrahim, there are several other challenges that international brands need to be aware of within this segment of the market — namely, the lack of brand loyalty, increasing competition from homegrown brands backed up by a strong national textile industry, and the enduring power of the caftan.

"The clientele here can be very volatile, switching from one brand to another, depending on what’s new in the market. Then, there's the Marwa effect — Marwa is ‘the Moroccan Zara’ — which has begun its push out of Morocco and into international markets including Spain. At the other end of the market, there are the couture caftan designers who've become major players too. Many wealthy clients would rather pay £4,000 on a locally crafted caftan than on a Dior dress. In my business, magazine sales double and triple when I put a caftan in the cover. It's just the reality here," she says.

"Which is why after expanding into the men's market with L'Officiel Hommes Maroc, we developed a bi-annual magazine called L'Officiel L'Intégrale Caftan dedicated 100 percent to caftans that we sell in Morocco, and soon in Tunisia and around the Middle East. We all know the popularity of the product."

Morocco's nouveau riche and middle classes may be buying luxury goods and fashion labels in the big malls and new retail developments, but most of the wealthy continue to shop abroad and in small, family-run multi-brand boutiques in Morocco that have imported small quantities of mainly French designer and Italian brands for years.

Some of the more powerful multi-brands in Casablanca today are Studio 14 (which sells brands like Lanvin, Balenciaga, Givenchy, Bottega Veneta, Marc Jacobs, Phillip Lim), Le Boudoir (Chloé, Nina Ricci, and Céline), Très Confidentiel (Dries Van Noten, Ann Demeulemeester, Marni), Cosmopolite (Carven, Jimmy Choo, Tod's, DVF) and others, including The Private and Cachou by Rose.

"Whether out of habit or out of snobbery, from what I can see, old money as well as the super rich do still like to shop either in the fashion capitals or in boutiques where they have built a long personal relationship dating back to their mothers and fathers," says Halfichi.

In the other Maghreb countries, wealthy and middle class consumers alike have far fewer choices in what are much more underdeveloped markets, so those who can afford to travel abroad tend to spend their money on clothes and accessories in Europe or the Middle East.

Despite the wealth gained from its vast oil reserves, Algeria was under an official state of emergency for the 19 years preceeding 2011, while the military dictatorship battled Islamic terrorists. More recently, the Libyan Civil War and the Tunisian Revolution shook those societies to their very core.  Considering that these three countries only emerged from their respective ashes two years ago, it is remarkable that there is any noticeable activity in the fashion retail sector at all — but there is.

In the denim, athletic and sportswear segments of the market, Mercure International Group has brought Nike, Puma, Adidas, Asic, Levi's and Guess to all four of the Maghreb markets and to sub-Saharan Africa too. The Monaco-based firm founded in Dakar in the 1970s by Lebanese-Senegalese entrepreneur Adnan Houdrouge has been aggressively expanding his City Sport multi-brand chain of athletic brands in Tripoli, Tunis and Algiers and franchised stores for denim brands in Tunis.

A few intrepid fast-fashion and mid-market retailers have also been aggressive outside Morocco.  Through its Tunisian partner Tuntex, Zara has a branch in the Tunis City Mall, while Mango operates more than a dozen stores in the Maghreb. The British department store Debenham's opened a few months ago in Tripoli through a franchise with Husny Bey Group (HB Group) subsidiary United Fashions. The company also owns the Libyan franchise rights for Marks & Spencer, Next, Aldo and some 15 other brands, some of which are already up and running in both Tripoli and Benghazi in a country still smarting with war wounds. Nevertheless, most experts remain cautious about an immediate boom beyond Morocco.

"Unemployment and poverty, unfortunately, can lead to many problems and stall a country from developing properly, especially if the benefit of this economic development does not trickle down to the lower classes. Unfortunately, the other Maghreb countries are still lagging behind in terms of social and political development and have economies that are far more rigid, uncompetitive and more closed to foreign investment. They are still struggling with old ideologies and political problems," says Halfichi.

Dr. Florence Eid-Oakden, chief executive and chief economist of the MENA market research firm Arabia Monitor believes that even Morocco could get caught up in future regional instability exacerbated by the Arab Spring. "Though Morocco suffers from lower political risks, its economy remains vulnerable to exogenous shocks," she says. "The challenge would be to build upon existing strengths to maintain economic growth against a backdrop of turbulence in the region. In Algeria, structural reforms will be necessary to encourage private investment."

"Persistent security concerns and the precarious political situation in the Maghreb are factors that would likely keep smaller investors, domestic and international, side-lined in the medium term. This is one way which larger distributors, able to absorb costs and risks, could establish a strong presence and gain first-mover advantage. [But] in many instances, adequate frameworks to promote competition are either non-existent or outdated."

Eurmonitor's Fflur Roberts, on the other hand, seems more optimistic about Algeria and Tunisia at least. "By African standards, income inequality is low in Algeria and rapid urbanisation, especially in the north of the country, is providing strong opportunities for consumer take-up… And although Tunisia started the Arab Spring movement in 2010 and continues to suffer its after-effects, the country has enjoyed steady rises in income and expenditure on the back of strong economic growth and a young, consumption-hungry populace," she concludes.

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