An analysis of trading densities across major retail centres in South Africa shows that stores geared towards luxury brands are booming in the country.
The inaugural Clur Luxury Brands Index – part of the Clur Shopping Centre Index – shows that luxury retail outstrips all other segments in the country when it comes to trading density.
Clur International tracks performance for listed and unlisted property funds at more than 4 million square metres of prime retail space across South Africa and Namibia.
In the group’s index for the second quarter it found that South Africa showed annualised trading density at R39,879 per square metre, a growth of 8.4% on the June 2022 figure.
However, the luxury brands index showed trading density at R356,851/sqm – outperforming the all centres index by a massive 795%.
Growth in the sector at 15.8% was 7.4% better than that for all centres and beat the June CPI by 10.4%.
“Translating into US dollars, this density at approximately $20,000/sqm has impressed international observers,” Clur said.
The group said the outstanding performance of luxury brands as a category can be gauged from trading densities for other leading sectors.
- Barrows and kiosks are second best with a trading density of R170,439/sqm;
- Accessories, jewellery and watches followed at R116,132/sqm;
- Technology came in at R104,405/sqm;
“The demand for luxury brands points to an under-traded position in centres, suggesting a favourable path for responsible new space take-up,” Clur said.
“That aligns with findings that elsewhere in Africa, the sector is highly under-traded. According to Statista, a global business intelligence and data platform, the African luxury goods market is expected to grow by 6.6% to US$6 billion between 2023 and 2028.”
Clur noted that there is a growing aspirational middle class set to add to the number of wealthy individuals across Africa, as well as increasing “lipstick index” behaviour in the harsh economic climate.
The lipstick index is a descriptor of consumer behaviour where shoppers turn to non-essential goods and low-cost luxuries like cosmetics even in times of economic duress.
This was also recently displayed by the latest Consumer Financial Vulnerability Index (CFVI) from Momentum and Unisa, which showed that South African consumers are finding money to splurge on “feel-good” purchases even though they are still under economic strain.
“There is also significant growth in the market for pre-owned luxury goods. Luxity, SA’s biggest pre-owned luxury seller, has predicted that by 2027, one in 10 luxury items in Africa will be pre-owned.”
A boom in luxury shopping despite South Africa’s economy being in the doldrums is only one of the country’s retail idiosyncracies.
Rural retail centres are seeing something of an awakening in South Africa, with smaller (10,000sqm to 20,000sqm) shopping malls being built in more remote areas of the country. For many of these regions, these centres are significant first-time developments.
But larger shopping malls are also very much part of the landscape – including those boasting luxury retail as part of their draw.