Luxury Retail Industry in Africa
The word ‘luxury’ comes from the Latin equivalent of ‘excess’. In the present context, luxury refers to goods and services that oversteps fulfilling any basic need but addresses higher levels of motivational or aspirational needs like those stemming from self-actualization and self-realization. Luxury may appear as extravagance to many but then a need is a need. One may strive for owning a house as much as another may crave for a foreign trip every year.
Wealth is an important requirement for fuelling the demand for luxury goods and the presence of HNWIs (High Net Worth Individuals) is a stark sign for it. According to The AfrAsia Bank Africa Wealth Report 2019, Africa is home to about 140,000 HNWIs with net assets of USD 1 million or more each. The same report highlights the following figures for Africa:
– Approximately 6,900 multi-millionaires
– Approximately 310 centimillionaires
Those are exciting numbers from the perspective of luxury retail brands. Even the luxury retail consulting firms in Africa know this. In terms of revenue, Africa’s luxury sector is worth more than USD 6 billion. About 40% of the HNWIs of the continent are from South Africa, Nigeria, and Kenya making these countries ideal retail luxury markets. These are also the countries where the malls and eCommerce retailing is flourishing which shows a full potential for establishing premium retail outlets for delivering a superior in-store experience with the edge of providing and availing the benefits of eCommerce.
Challenges Faced by Luxury Brand Retailers
Managing a luxury retail business is different from any other retail vertical. The differences mainly arise in the form of understanding unique customer behaviour, high-value inventory management, need for excellent staffing solutions, and high-end customer support. These aspects are discussed below as they often emerge as challenges for retailers in this sector.
Bringing the brand closer to customers
Luxury is entangled with the living and lifestyle of its customers. Customers should be able to associate their brand experience with their individuality and aspirations. And that includes every touchpoint, every interaction, and every transaction.
High-end customer support
The HNWIs who are spending a substantial amount on luxury goods expect more than the value for their money. The new competitive edge in the luxury sector comes from customer support and services provided by retailers and brands. Nothing short of world-class customer support and service system would do. Customers are highly aware of how fashion and luxury retail brands are working elsewhere in the world and service standards maintained in the industry. Maintaining the luxury standard requires a lot of knowledge and market research, in order to help you in this YRC provides Luxury brand consulting, and Luxury Retail Consulting services.
Maintaining a fleet of trained staff
Luxury products are bought by a unique section of the society. They usually carry a high degree of awareness of not just the products but also how luxury retail services are supposed to be. This puts the team on the floor at a spot of the big responsibility of representing the luxury brand or the luxury store. Thus, the floor sales team needs professional training and development. This is preceded by the necessity to have a well-planned recruitment strategy.
Being process-driven
Being a process-driven enterprise is a universal requirement for any business and not only in luxury retail. The differences in luxury retail arise by the way of heightened consideration for customer experience, inventory management of high-value items, extra layers of measures for security and safety of the inventory, well-defined authority-responsibility relationships, well managed supply chain, well crafted omnichannel strategy for customer convenience etc. The sophisticated specifications involved here need to be identified and mapped through SOPs.
Preventing loss and damage to inventory
Because of the high value of the products, loss prevention is one of the topmost priorities in luxury retail. Once the retailer takes over the inventory from the suppliers, the onus is on the former to ensure the safety and security of the inventory. It could be for the warehouse or the store or in local transit. Thus, luxury store management must account for the necessary systems and procedures to prevent any loss, theft, or damage to products.
Rising above the ordinary
Retailers can no longer hide under the shine of the luxury brands they are selling. They must make strong efforts to elevate the customer experience. The experience delivered to customers must echo ‘luxury’ and ‘brand-associated identity’ throughout the customer journey. From professional interior design and layout planning to expert teams on the floor and robust operations, everything needs to rise above the ordinary in luxury retail.
How YRC (Your Retail Coach) can help you through its luxury retail consulting services: a glimpse
Starting from market research, product development and business model development to defining operations and staff management, YRC offers a gamut of Luxury Retail Consulting services aimed at helping luxury brand retailers establish a solid luxury retail business in Africa. Here is a glimpse of our Luxury brand consulting services for Africa.
YRC conducts a thorough and comprehensive assessment and analysis of the target market covering a wide range of variables with the aim of providing a detailed picture of the market and extracting actionable insights. The further goal is to help clients make informed decisions on selecting and defining a target market segment, brand positioning, pricing, competitive stance, growth strategy, digital transformation strategy etc. To provide this service, YRC works as a Luxury Retail consultant for the growth of your business.
In business model development services, our team of luxury retail consultants will help you identify and map the framework of value-chain and internal capabilities mapping how your luxury business will create the intended value-based offering through a system of internal capabilities.
In our Luxury brand consulting, business plan development services, our focus is to address the commercial viability of your business project through demand forecasting, purchase planning and inventory calculations, projected sales turnover and revenue, projected profit and loss statements, ROI and breakeven analysis, etc.
Customer experience is a critical area of work for luxury retail businesses. In luxury retail, customers come back to the brand and not the store or for freebies. YRC’s CX experts will help you define the customer journey for your business and every vital touchpoint shall be covered to correctly identify the sweet spots and the pain points.
We highlighted earlier that in luxury retail, businesses must rise above the ordinary, have a high-end customer support system, manage high-value items with safety and security, and deliver a superior customer experience. The common thread that runs through all these requirements is being process-driven. And SOP is the answer to becoming a process-driven enterprise. In SOP development service, our Luxury brand consulting service consultants follow a planned and proven process towards coming up with robust operational procedures for clients’ business processes.
Franchising is a common market entry/expansion strategy in luxury retail as well. But in this case, luxury brands are extra cautious of sharing their brand name given the very small chunk of the population that constitutes the market size for them. Hence selecting the right Luxury Retail consultant is very crucial. Done right, franchising is a win-win situation for both franchisors and franchisees. In franchise consulting, YRC offers assistance in the areas of expansion strategy, franchise business plan, SOPs, franchise agreement, franchise marketing, and franchise audits.
We are a boutique retail consulting firm. To know more about our luxury retail business consulting services for Africa or if you have any query, drop us a message and we will get back to you.