Kenya is home to 8,962 dollar millionaires according to Knight Frank’s The Wealth Report 2016, with the country having the fourth-largest number of dollar-millionaires in Africa. Over 5,000 of these high-net-worth individuals live in the capital Nairobi.
This, and the growing appetite for luxury brands among the middle class drove The Luxury Network to set up its second franchise on the continent in Kenya, after South Africa. The network has 25 offices across the world and aims to create mutual benefit for luxury brands by providing direct access to one another’s high-net-worth clients. Currently, there are eleven members signed up to the network in Kenya.
New breed of luxury consumers
According to the IPSOS African Affluent Survey 2016, a new crop of consumers, aptly referred to as the HENRYs (High Earners, Not Rich Yet), are driving much of the growth in the luxury market. Although HENRYs have less spending power than the ultra-affluents, there are about ten HENRY households for every ultra-affluent.
“Young people are ready to save up and sacrifice to buy a luxury product. As their income grows, they are likely to be long-term buyers and ambassadors of the brand,” says Michael Mwai, CEO of The Luxury Network in Kenya. This also presents luxury brands with a new group of customers to target, away from their traditional customer base.
Opportunities for the luxury market
Personalisation and emotional experiences are two of the key trends in the industry. As the concept of luxury becomes more personal and moves away from the latest must-have labels, consumers look for meaningful products and services that enable them to make a statement about themselves, not about the brand.
This has also opened up more sectors to the luxury market, among them: events, legal services, health care, personal grooming, financial services and communication.
For luxury companies, the experience goes far beyond the interaction during purchase. As Michael puts it, “Luxury customers are not just buying into a brand but rather into the whole experience. If customers love the experience, they will buy more and recommend the products to their peers.”
Africa’s luxury market continues to advance, despite fluctuations in economic growth, as the definition of luxury moves from logos to becoming more subtle and personal as noted in the IPSOS survey.
These developments continue to be felt closer to home in Kenya as more brands line up to join the Luxury Network – from the airline, automotive, high-end beverage, fashion and financial sectors.
Michael would like to see a future where more Kenyan designers and manufacturers develop high-quality premium and luxury products to sell in the global marketplace.