South Africa continues to be at the forefront of the African luxury market, according to the The State of the Luxury Market in Africa 2024 report by Luxity.
The report said that SA remains a leader in the luxury market for Africa, boasting the highest number of luxury stores on the continent.
Major malls, such as the V&A Waterfront, continue to position themselves as luxury destinations, with the development of new luxury wings that cater to this growing demand.
With the largest number of high-net-worth individuals, those who have at least $1 million (R18.1 million) in liquid assets, in Africa and a strengthening market sentiment, Luxity co-founder Michael Zahariev anticipates the luxury market in SA to continue outperforming global growth.
The luxury market in Africa continues to evolve and grow, with 2024 marking a year of notable developments, both globally and locally.
Global luxury market
According to the report, the International luxury market is facing challenges, especially in key regions like China. Despite significant growth in 2023, the luxury market in China is expected to slow to mid-single-digit growth in 2024.
Factors that have contributed to the struggles of the global luxury market include:
– weakened consumer spending
– shifting buyer priorities toward bargains
– a slower-than-expected economic recovery.
The report showed that various luxury brands such as Gucci and Burberry, have experienced steep declines in sales and are resorting to unprecedented discounts to attract cautious consumers.
Luxury e-commerce platforms like Farfetch and Yoox Net-a-Porter (YNAP) have also struggled, with YNAP pulling out of China and Farfetch narrowly avoiding bankruptcy through a deal with Coupang.
Broader trends in the luxury industry point to a slowdown, with personal luxury goods projected to grow by only 3-5% in 2024, compared to stronger growth in previous years.
The current landscape is impacted by factors like geopolitical tensions, inflation, and economic uncertainties that have influence consumer confidence, especially in Europe and the United States.
Resale value of local and international brands
According to the report, in analysing the resale values of luxury brands, a clear distinction has emerged between fashion ateliers and watch/jewellery companies.
Brands primarily associated with watches and jewellery including Rolex, Hublot, and Van Cleef & Arpels, have notably outperformed fashion brands in terms of resale value retention. Rolex stands out by reselling at 104.9% of its retail price.
This is an indication the exceptional investment potential of luxury watches and jewellery.
On the other hand, luxury fashion brands like Hermès, Chanel, and Louis Vuitton have shown robust performance, keeping their resale values between 60% and 68%, outperforming many other fashion houses. Hermès retains a value of 67.7% which indicates the enduring desirability of the brands iconic bags.
The report gave a special mention to the only South African brand on the list, Browns.
Despite being relatively smaller on the global luxury stage, Browns boasts a resale value of 66% and an average resale price of R55,000, which is impressive in comparison to well-established global luxury brands.
This means that Browns has managed to carve out a notable position within the competitive luxury market, standing alongside international giants like Chanel and Louis Vuitton.
IOL Business