Kenya’s luxury consumer emerges from the shadows

Pierre Cardin store Two Rivers outlet on June 4, 2018. PHOTO | DIANA NGILA | NMG

That Kenya was ranked the second-largest luxury market in Africa after South Africa in the Africa Wealth Report in April was not by accident. This puts Nairobi on the same footing as Johannesburg, Cape Town and Lagos that lead in the uptake of luxury.

From cars, premium alcohol, jewellery, footwear, expensive dinnerware and exclusive cruise ship trips, high-net-worth individuals (HNWIs) in Kenya spare no cent in their quest to acquire the finest things and experiences life has to offer.

In malls across Nairobi, luxury shops have taken over quite a sizable floor space. At Two Rivers Mall, some sections look like a mini-high street in London, Paris or Milan. Brands such as Giordano, Loius Féraud and Swarovski are on the same corridor that features an endless list of shops selling watches and fragrances.

Besides clothing and accessories, there are at least five shops selling luxury kitchen and dinnerware in this mall, and shops such as Paris Land, and Lockwood Africa that sell furniture and home décor.

This is replicated at Sarit Centre, where a shop that sells premium lamps and chandeliers shares the same floor with one dealing with premium aged beef and jewellery.

So, who is the average luxury buyer in the country? What do they spend their money on?

Westgate Mall is the home of Little Red, one of the oldest luxury shops in the city that sells ready-to-wear, made-to-measure and bespoke outfits.

This family-owned business stocks a host of international brands, among them (Nikki) Oji Wear, Michael Kors, York perfume, Valentino for Women and Luisa Spagnoli. Little Red is also the approved local distributor of Hugo Boss brands in the region.

A silk Etro shirt at the shop sells at $1,275 (Sh151,725). “This is pure silk and absolute luxury. Pricey, but excellent quality,” says Karim Fazal, the director. Everything stocked here is handpicked by Karim. ‘‘When we go shopping in Europe, we sit with our suppliers to go through the fabrics, including the colour selection, to determine if the products will suit the Kenyan consumer,” explains Raeesa Karim, his daughter.

“When a product is hitting a store in London, it is also in Little Red in Nairobi. We are never a day or a season late,” she adds.

Karim notes that some of the fabrics are so rare that you would not get 80 pairs of suits for each material globally.

‘‘They’re very personalised and unique in that way. They are not mass produced. If you are wearing a Dormeuil suit in Nairobi, meeting someone else in a similar suit would not be very good. You may see them outside the country, but the likelihood is still very minimal.’’

What defines the Kenyan who buys these types of outfits? What are the demographics like?

“It is mostly the 50-year-old and 60-year-old Kenyan man and woman who buys them. Luisa Spagnoli products, which we stock, is popular with the Kenyan female CEO and business leader. People tend to imagine these brands are for expats, which is erroneous. We stock them for Kenyans,’’ says Raeesa.

Besides the older, well-established man or woman, there is also the younger generation of luxury consumers, who are between 10 and 15 years into their careers.

These buyers in their 30s and early 40s obsess over customisable Design Italian Shoes (DIS).

“The sneakers are super funky and the buyer can personalise them,” Raeesa says, and observes that while the space of made-to-measure has been male-dominated, more women now are going for these outfits.

Karim notes that Kenyans have been buying luxury for many years, except this was a small market for a long time.

“The economy has transformed in leaps and bounds from what it used to be. Our people are becoming upwardly mobile [with increased disposable incomes]. We are a very hard-working nation. People want a good life not just for themselves but for their families as well. Awareness is also growing around aspirational shopping.’’

In the made-to-measure category, Raeesa says the wearer has the latitude to pick their linings, collar style and working buttons, cuff details and even imprint their initials.

On what luxury means to him, Karim says: ‘‘If I want to enjoy my life, with the caveat that I have worked hard, I will have the car, house and holiday of my dreams. But I also want to dress up for every occasion. I want fine clothes, a nice watch and jeans.’’

Anesu Sagonda, a luxury and lifestyle management consultant, who selects the very best for the rich, says the African consumer has evolved in the last 10 years from one whose decision to spend money was heavily influenced by family, friends, colleagues and social media, copying.

Now, they are deliberate about acquiring items and experiences that suit individual tastes and preferences.

“There is also a growing consciousness about supporting African luxury. There is demand for Nigerian to South African fashion brands, handbags and accessories. Luxury items that are made on the continent by Africans.’’

She observes that top on the list of purchases for the African luxury consumer are clothing items, footwear, jewellery, handbags for women and men, weekend bags and watches for men “and what people wear to work, for events and to parties.”

On the rise of dollar millionaires, Anesu says this means Kenyans will become more demanding of what they want.

“I noticed when I was in Kenya a couple of months ago that there are a lot of international food items I consider niche, but which sell freely in Nairobi. A little expensive, yes, but they are there and people are buying them frequently and confidently,” she says.

Karim, though, argues that even as the number of millionaires grows, Kenyans are not showy.

“There are many millionaires in this country but Kenyans are quite discreet. They never show it. They like to live an understated life, which I think is a good thing.’’

Anesu says a spike in luxury purchases will continue in the coming months, as people spend money saved during the pandemic when travel was suspended.

“People want to buy. They want to see things. They want to have experiences. Having stayed at home during the pandemic, people are realising you can have a bar at home with fantastic alcohol and showy glassware. They are also getting nice dinnerware and exotic foods so that they can have fantastic dinner experiences at home.”

Consumers of luxury are now going beyond physical things, she says.

“People want to enjoy experiences such as travelling in style on a yacht or driving through the French countryside in a Ferrari. In particular, the East African consumer wants to travel across the continent instead of going to traditional destinations such as Dubai, the US and Europe like everyone does.’’

The cars...

So, what vehicles are high-net-worth Kenyans buying?

UK-based Kenyan auto expert and enthusiast Mike Mwai says Mercedes, BMW, Range Rover and Toyota Land Cruiser 300 Series (flagship) are popular among Kenyans, with the outgoing and younger wealthy customers often settling for highly customised versions.

“Some buyers will import their vehicle of choice, even if that means buying a Ferrari or Rolls Royce Ghost,” he says.

By June 2021, DT Dobie had sold 38 Mercedes-Benz cars, leading in the luxury segment, according to data from the Kenya Motor Vehicle Industry Association. Inchcape came second, selling 18 Land Rover models, 14 BMWs and two Jaguars.

Mwai, though, notes that Kenya still does not have ‘‘some of the truly luxurious brands’’ such as Rolls Royce, Ferrari, Lamborghini, Bugatti and Maseratti that are popular elsewhere on the continent.

“We tend to go mostly for Bentley, Range Rover, Mercedes-Maybach and Porsche as well as other premium brands like BMW and Jaguar. Nigerians and Egyptians have an appetite for brands such as Lincoln and Cadillac that come in left-hand drive.”

The market price for a new 2022 Mercedes Maybach GLS 600 is in the range of Sh19 million while the asking price for a 2015-2018 model of a Porsche Cayenne GTS is between Sh10 million and Sh17 million.

Chris Ndala, the DT Dobie Kenya managing director says Africans like to gift themselves when they have a sense of achievement.

“The person buying this type of car in Kenya is a high achiever. This is someone who has changed their lifestyle. They have changed where they live and the type of house they live in and now they are changing how they move,” he explains.

Ndala notes that this buyer, unlike most buyers, is least worried about fuel consumption of the vehicle they are paying money for. He explains: “If you are buying a GLS and then ask me about how much fuel it consumes, I will advise you to go finish paying school fees and come back later. When you are having your “me time” you are not fussy about how much fuel the car will consume. Even you want it you have it.’’

He adds that the concern about fuel consumption mostly counts for someone buying a Mercedes truck for business.

Are there significant differences in terms of what cars Kenyan men and women buy?

“Our vehicles are unisex but in some segments, there is a particular model that would fit a woman better than a man. In our Mercedes category, there is general preference for E-Coupe among ladies.”

Does the rise in the number of wealthy Kenyans have any implications on the luxury vehicle market? Has there been any substantial increase in the number of purchases?

“We have seen a shift from C-Class, which has been our traditional mover of volumes, to 4×4 (four-wheel drive, that is the GLE and GLS. There are more orders for GLE coming in. That [high buying power] is often translated even into the particular models consumers go for, and the specs of the various car brands that we sell,” says Ndala.

‘‘The end user wants to have as much comfort in their car as they have in their house. It’s an exciting moment ahead,” he adds.

The C-Class vehicles on sale today, he says, are mostly in the used car market. “When I was new here, I asked my sales general manager to be careful with the 4×4s, because of the roads. But he seemed to know better. Today, we have a higher intake [and uptake] of these vehicles which are now our biggest sellers.’’

He says reliable financing has been a key factor in the uptake of luxury cars, with banks facilitating the majority of the payments.

“About 90 percent of my sales are financed by banks. The institutions have come up with facilities that enable their customers to pay for experiences. It is the trend in the market.’’

Ndala says this will grow even further with the age limit on user car imports. “The question has always been: what solutions do you have for the buyer of used cars when they stop coming into the country?”

Having peaked at 14,000 new vehicles (sold) last year, Ndala says new vehicle sales in the country will hit the 20,000-vehicle mark in three years.

Anesu’s prediction for the next five years? “Consumers want to see more of African products, which are already gaining traction.”

“My clients are telling me: ‘we do not want you to organise travel to Europe.’ They now want to explore and experience our continent in its abundance of beauty and diversity,” she adds.

To capitalise on this preference for African destinations, Anesu has set up Tembea Africa, an agency that will facilitate travellers on the continent.

Raeesa insists that trust is key in the luxury business. Nearly every customer who walks into Little Red is known by name by the attendants. Being a fourth-generation business, Karim says, it is more than just the money customers bring to them. It is more about the relationships.

“We know where our products are coming from. Pal Zileri, for example, will tell you the name of the person who did the 120th stitch in your outfit. This way, customers don not come to us worrying about authenticity,’’ Raeesa adds.

In terms of bouncing back from effects of the pandemic, Ndala observes the luxury car market was well on course until the third quarter of the year when the semiconductor deficit hit manufacturers globally, limiting production.

“We had peaked so well in 2021. The shortage of chips, though, affected us negatively. Unfortunately, this situation will take until mid-2023 year to stabilise. Maybe it is a good challenge to have. Everything sells out as soon as it lands at our showrooms.”

Mwai says with regards to brands, only sustained economic growth will attract new niche luxury brands.

“For now the current premium brands will enjoy the custom of the old-school wealthy, the uber rich and wannabe wealthy folk (cash rich),” he says.

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