Advice and Opinion

The luxury retail sector shows signs of growth, says Broll

Preston Gaddy, Divisional Director: Strategic Retailing Leasing: Broll.


Although the luxury retail sector is South Africa is still in its infancy stage, take up of space in the luxury sector has grown over the past five years.

The introduction of certain luxury brands has created much needed impetus and renewed patronage at shopping centres such as Hyde Park Corner while Sandton City has always enjoyed good patronage in Johannesburg as well as the V&A Waterfront in Cape Town with many more reportedly eyeing South Africa as the ideal location to expand into. Furthermore, the opening of the Mall of Africa in Johannesburg in April 2016 will see more brands entering the luxury retail sector.

According to Preston Gaddy, Broll Divisional Director for Strategic Retail Leasing, the continued growth in tourism from the African continent will see demand increasing in the local luxury market.

“There is limited retail offering that can house luxury retail and these are naturally confined to major metropolitan areas. In coming years, Umhlanga in Durban will also see a retail format showcasing luxury retail and we will see more brands entering other African cities that are slowly “catching up” when it comes to formal and luxury retail offerings”, says Gaddy.

The opening of Diamond Walk at Sandton City has now placed this super-regional shopping centre on par with some of the top malls globally, akin to that of The Village at Westfield, London’s ultimate luxury enclave. The V&A Waterfront benefits from millions of tourists who visit the Cape Town annually as well as an affluent local market.

“Arguably, Sandton remains the commercial capital in Sub-Saharan Africa and the influx of business tourists, mostly from the continent has led to an increase in demand for luxury brands.”

Gaddy points out that in Nigeria, although the city of Lagos houses some global luxury brands, iconic luxury brands such as Burberry, Prada and Gucci are still lacking.

Similarly, major African cities such as Luanda in Angola, Lusaka in Zambia and Nairobi in Kenya are largely under represented with luxury brands. Therefore, the preferred destinations on the continent for luxury retail remain Sandton and Cape Town.

Within the ultra-wealthy band of luxury goods consumers is an “elite club” who put emphasis on the fact that they bought their new Gucci handbag at the Champs Elysees store for example, and in some cases, prefer to shop abroad for these items. Although import duties are high in South Africa and can also prohibit such purchases, certain luxury items can be found cheaper while shopping abroad by this “elite club”.

Asked what defines luxury items, Gaddy says these are certainly items that are beyond the reach of the overwhelming majority of the South African consumer.

“When one pays +R20,000 for a handbag, or a pair of heels, one can consider that item to fit into the “luxury” sector and it’s only a miniscule percentage of the local market, as well as tourists that buy these luxury brands. Even the average high income earner will aspire to these brands, but may not necessarily be able to afford them”

He says the store ambience and design of these luxury stores is certainly a cut above your standard retail offering. No clutter, a minimalist approach and high-end furniture are the order of the day. Impeccable as these luxury stores are, they are also intimidating both from a fit-out and even store attendant and service perspective to the average consumer.

“Consumers who can afford these products expect an indulgent experience and personal attention.”