The price of oil has been falling steadily since 2014 and there are signs that it will remain volatile in a foreseeable future. This trend has resulted in a drastic reduction in revenues and a subsequent economic slowdown in the countries whose economy heavily depends on oil. One such country is Congo Brazzaville, a top ten oil producer in Africa. Per the World Bank, the oil sector accounts for 65% of its GDP, 85% of its government revenue.
With a 40% decline in oil revenue, the country entered in a “crisis” in 2016. This has directly impacted the spending of Congolese households, regardless of their social status.
Traditionally Congolese families mark Christmas and holiday seasons with buoyant, even extravagant days-long celebrations. But now, in Pointe Noire, the country’s second largest city and home to the oil companies, hundreds of businesses and consumers have become frugal. They have dropped non-essentials from their shopping basket. This is precisely what keeps Vanessa Prince up at night. She owns and runs 7 Chemin des Anges, a Pointe Noire based luxury interior design and decoration boutique and is the exclusive distributor of Flamant, a Belgian high-end brand.
Vanessa Prince is a global serial entrepreneur. Coming from a Belgian family, her life trajectory counts young and happy years in Kinshasa DR Congo, a first real job in Johannesburg South Africa, three years in Antigua, then Brussels Belgium, then a return to Africa by the way of DR Congo, Ghana and now Congo Brazzaville. Having run various businesses in Africa, she is supposed to have seen it all. Nevertheless, she admits the current times in the Congo come with unprecedented challenges.
This is an extract of our extensive discussion at a luxury boutique hotel and her store.
PG: Could you tell me a bit about how you operate these days?
VP: In general, I have one container coming from Europe every month by boat. Now it’s up to three shipments every month by air. At the end of the year, I do crystal, wood, silver, glass and almost no funky colours. In December, I mostly sell to individuals, in January-February, it’s corporate clients.
PG: What has been the first tangible consequences of the oil crisis?
VP: A lot of businesses have closed. It’s astonishing. Among the few ones left, some are agonising. With less money to spend on decoration, customers now mix luxury and low-end in their purchases. I have opted for going further in the high-end category.
PG: In Africa, the Congo stands out by its people’s familiarity with luxury. They know about labels, brands and origins in almost everything from fashion, automotive to food and furniture. This is symbolised by the world-renowned culture of Les Sapeurs. At the same time, this love for high-life and luxury is not immune from the current difficult times. How risky is it to go further upscale in your product offering when customers cut back on luxury? Will they keep on coming to you?
VP: There’s no such thing as expecting that the customer comes to you. You must go find them wherever they are, from hotels and homes to events and restaurants. That’s how I work now. I am out there most of the time. Sometimes I even travel to Brazzaville, I have friends who tip me on potentials visiting the city, others who recommend me to their networks, we help each other.
It’s more hustle! Now I work a whole lot more with instagram, facebook, whatsapp, etc. People visit the store much less, except for Christmas since they have gift lists.
Another new situation is the rise of the last-minute purchase. A customer calls me “I have a birthday tonight; I have a budget of 100K. Please organise a delivery at that address”.
Customers don’t even say what they want me to deliver! On the other hand, that shows that they trust me. So, gone is the time when they would come at the store and do serious shopping.
PG: The last-minute purchase is also growing because people have less time for in-store shopping. They are moving to online shopping and if they can find a merchant who guarantees timely delivery at their door, then they have less reasons to go to a physical store.
VP: If that’s the case then the customer will be missing out on so many things. OK, you call me for a cocktail glass, but maybe you would have liked the silverware piece sitting just on the side. You may say “build a website”, but I had one in Kinshasa and people didn’t use it. Facebook and Instagram are much more powerful here. There is always something going on there. What I would hope is that on top of social media, people would visit the store and experience the great service.
PG: The most recurrent reasons people give for deserting physical stores is the awful traffic jams, the lack of parking space, the lack of pedestrian facilities and so forth. All these are factors that shape the customer experience. But at the same time, they are beyond your control as a retailer.
VP: I believe it should be like the Grand Hotel [a Kinshasa-based five-star hotel hosting a galleria where Vanessa used to run a store]. You come for a meeting, you have a room there, you find stores there. Or like the Radisson [a Brazzaville-based five-star hotel also hosting a cluster of high-end boutiques]. Pointe Noire doesn’t provide that infrastructure to retailers, we are all scattered here and there. You must know who is coming in town, you must get access to these social circles…
I have longstanding customers who have never visited my store! I know they would change if we had a place where all retailers would be gathered under one roof. I’ve heard about a new hotel opening soon, maybe a mall is attached to it…
PG: A mall is not a panacea. The location, the tenants, the management…you need to take a hard look at these factors before moving there. I see so many cases of malls struggling because the conditions for success are simply not there.
VP: True. I was offered a space at that place [undisclosed name of a local elite hotel]. But their guests are not my targets. I truly believe in local customers, in people moving up the social ladder with my brand firmly established in their habits from day one.
PG: What about a pop-up store at that other luxury hotel there [undisclosed name]?
VP: They don’t fancy seeing visitors and shoppers coming in and out. They want to be a hotel primarily. They prioritize tranquillity and exclusivity for their guests. Also, in terms of logistics, it’s not that simple for a deco store to move things.
PG: Standalones tend to be great formats in certain circumstances.
VP: My ambition remains strong: increase my retail space. Go bigger. I want to do more. At one point, I wanted to get a house. In that option, I would have to dramatically up my game in terms of going out and attracting customers. But then, on the client side, will the purchasing power remain strong or even increase in the times we live in?
Right now, it’s Christmas, I am getting busier and busier, but during the rest of the year, it fluctuates a lot. In Kinshasa, it’s very stable, regular, logical. Here it’s good but different.
PG: I also found that, maybe due to the difficulty of making plans in this state of the economy, cash changes hands quicker. So, consumers have a different approach to spending. In their eyes, the expense that can wait, will wait longer; the expense or obligation that looks unmissable will get the cash. This is how people still spend on non-essentials. For instance, you may see a lower number of weddings but you still see monumental weddings with people spending big on florals, fashion, food, etc.
VP: I agree. A few days ago, someone calls me: “I have guests today, I need glasses, different types…for cocktails, champagne, wine, water…can you deliver?”. I reply “Sure, I can be there in ten minutes”, “OK, no tags, clean, ready”, “I just need to go to the warehouse: ten minutes” I say, “Great. While you are on your way, grab me some great wines and top class champagnes!”
VP: True story. There are more and more like this. The other day, someone who is tendering with a big oil company calls me and says “They are coming to visit our offices. Everything has to match their standards”. We were talking about decorating the whole office building, starting with the conference room and the CEO’s office.
I ask him “What’s the deadline?”, “fifteen days”. I get there and find out that I have to look after the plasterwork, the painting and so much more beyond mere decoration…in just fifteen days! We met the deadline. Since then, I got contracts with the same customer for other offices, other projects.
Another case was about delivering tens of Christmas trees in a matter of days. Suddenly the client didn’t want to work with their usual provider and called me. Sometimes customers call and start with their budget “I have XXX, send me something!”
Thus, the amount of work outside the store increases dramatically. Nevertheless, working in-store is better because it allows customers to discover, to widen their horizons, to be curious and adventurous again.
PG: What other changes do you see in this climate?
VP: Everybody is a deal maker or an information provider or a facilitator now. They know someone who knows someone who knows someone who needs this or that. So, I work well with everybody and value everybody’s contribution. I stick to my specialty, I do what I do best; and let everybody else pitches, recommends, facilitates.
Sales processes may be shorter or lengthier, but they involve more and more middlemen. That sits well with me as I love earning their trust at every stage, in terms of doing the right thing, respecting them.
PG: Where else do you make a difference?
VP: I offer only current collections. Customers find here what they would find right now in Paris or Brussels. This is in sharp contrast to what you find at other stores, where they sell leftovers, stuffs from two-three years ago.
PG: If you had to single out one thing you had to adapt to, what would it be?
VP: Discretion. In some other African cities, people are more show-off. Here, riches highly regard discretion. They don’t want to be seen or perceived in a certain way. When they are in the store, they want privacy and tranquillity. So now, on Saturdays I open only upon appointments.
PG: How is it going?
VP: Decent returns so far.
PG: Where do you see yourself progressing?
VP: There is serious money here, that’s for sure, but there is less cash circulating. Debtors request more time for payment. As a sole trader, as a relationship business, it’s not a comfortable seat to be in when customers owe you money and you have to send reminders.
I try to make a better case for payments in time, one that will drive them to pay, not because they owe me money, but because it helps me keep on delivering the high-quality service. A customer who owes money is in an equally uncomfortable seat.
I don’t have bad debtors. I am lucky that so far, the direct relationship with the customer – not their company but the one who called and purchased – is preserved. They have the courtesy not to say “deal with my financial director or go see my accountant”.
This is Starbucks Reserve Eastern DR Congo Lake Kivu. A premium coffee on sale in USA and Canada only, for a limited time. It is produced by a partnership between Starbucks and the Eastern Congo Initiative, a project linking 4500 small-holder farmers to the global marketplace. The Hollywood actor and director Ben Affleck who is a backer of the Initiative said: “This is not charity (…) this is good business”. Precisely.
Arabica coffees from Rwanda, Ethiopia, Tanzania and a handful of other African countries have seen their market value growing exponentially in recent years. They are now luxury products for which connoisseurs in Europe and America are ready to spend big, not only in terms of consumption but also in terms of premium merchandise and exclusive events. Additionally, mass consumers’ affinity for African coffees keeps on growing and has become a key driver of the robust health of the coffee industry. As a result, roasting and selling coffee entered this year’s Top 10 Ideas For Making Money according to various business press outlets.
But a number of analysts, among them participants to the 2016 World Coffee Conference, have lamented that premiumisation – the fact that African coffee becomes highly prized – creates yet another dependence of producers on exports and the subsequent volatility of international prices and demand. They have called for the development of coffee consumption at local level. The belief is that if African consumers drink more coffee and cultivate a strong coffee culture, producers will be enticed to produce more and better coffee. A finding of my on-the-ground research is that a serious relationship between African consumers and coffee is exactly what’s happening.
From Casablanca and Nairobi to Johannesburg and Cairo, coffee drinking is on the rise and a coffee culture is gaining exposure and prominence (in Ethiopia, coffee drinking is already a well-established tradition). A most recent instance is the much publicized entry of the world’s largest coffee store chain Starbucks in South Africa in April. “The coffee market has been growing over the last five years and there’s been quite a big consumer education around premium specialised coffees” Carlo Gonzaga, the CEO of Taste, Starbucks’s partner in South Africa, told the Financial Times.
On the ground in Johannesburg, such establishments as Motherland Coffee and Doubleshot are thriving. At the Motherland store based in the upscale shopping district of Rosebank, there is sometimes not a single seat left. I find a special attention is being given to professionals on-the-go but I also find a strong community. Among many regulars, I met a fashion designer, an executive in the construction sector, various creatives; all use the store on a daily basis as a co-working space, a meeting room, even as a showroom (the fashion designer sometimes comes with samples of future collections). They all give the sense of space, the high quality of the espresso, the company’s longstanding dedication to African coffee as the reasons for their loyalty to the brand.
The coffee shop Doubleshot, located in the hot spot of Braamfontein, acts as another epicentre of the coffee culture. You can literally enjoy the aroma of the roasting coffee from outside the store as it pervades the air in the adjacent streets. Inside, coffee lovers find an array of incentives to embrace coffee as a ritual, an experience or a voyage, from the real roasting, blending, brewing of coffee beans to sitting at the bar counter offering a panoramic view on the action of Joburg’s inner city.
According to the coffee industry organization ICO, coffee drinking has also increased in countries such as Cameroon, the Ivory Coast, Kenya and Uganda. In Kenya, for example, consumption has jumped 46 per cent in the four years to 2014.
While the volumes remain relatively low in comparison to other continents, all industry stakeholders express no doubt that, as the middle class keeps on growing, there is a real, tangible coming of African coffee aficionados. The question is now whether they will find enough coffee to satisfy their expectations, both in quantity and quality.
ADVERTISER: Turkish Airlines
MARKET: Kinshasa, DR Congo
CHANNEL: Outdoor advertising
“Experience a relaxing moment in our business class »
This billboard is situated at one of the best spots in Kinshasa, precisely where the two busiest arteries meet, namely the Boulevard du 30 Juin and the Avenue des Batetela. The first is home to ministeries and public offices, the second is the address of upscale boutiques, restaurants and elite hotels.
In general, advertisements for business class air travel feature the following recurrent ingredients : a man or woman, middle-aged or senior, in a corporate or classy suit, travelling alone, the tie knot loosened, the shoes off, the laptop or the book handy or nearby… The suggestion is that you are no longer in the office but quite not yet off work. Getting the essence of both the office environment and the five star hotel room, you can either keep on being productive or get the much deserved rest. This traditional messaging is where the Emirates ad herein below belongs to.
Turkish Airlines ad proposes a script where business travel is not a solo, self centered affair, but rather a couple travelling together. Turkish Airlines Business class has less to do with work and more to do with indulgence. Gone are the laptop, the book and the whole arsenal of corporate attributes ; here the de-rigueur attire is wide open neck, short sleeve top for Madame and a V-neck jumper for Monsieur : they are in the business of offering themselves a special, tranquil treat.
Also absent in this ad is the usual abundance of sophistication that other airlines resort to when advertising superior classes, from the full-flat-bed convertible ergonomic seat to the LCD touchscreen TV and the branded amenities kit. Here, the only signs that you are not in economy are the fine entrée (sans premium drinks) and the spacious cabin.
Ultimately, I find that what Turkish’s ad depicts looks like what various carriers (Virgin Atlantic, British Airways, etc.) used to offer a few years ago : Premium Economy. It was an intermediate level between economy and business class, where you would get more legroom and a slightly enhanced economy service. By being subdued, almost frugal in presenting what is supposed to be sparkling and luxurious, this ad risks of leaving the targeted audience – affluent Congolese consumers – unconvinced.
As, by all measures their fortunes kept on growing in the last two decades, rich Congolese consumers have come to express a greater thirst for sophistication and ultimate experiences, notably in air travel. For the most part of this vast country (Africa’s second largest), maritime, road and rail travel is either non-existent or difficult. Air travel is therefore a daily affair for business travellers and private jets are a thriving business. As a result, all-too familiar with premium treatment, they now expect to be wowed when it comes to flying on international routes. And they would be more attracted by The Emirates’ advert which uses the same « relaxation » slogan but peppers the picture with plenty of symbols of materialism and opulence. If you have been in the rich Congolese social circles in Kinshasa, you know extravagance is a habit.
In recent months, Emirates and Turkish Airlines have showed steady aggressiveness among the non-African carriers courting African travellers. Both have publicly cited Africa as a priority opportunity, have augmented their capacity and extended their network. But in terms of sales pitch, they differ in a striking fashion. Having in mind that Dubai remains a preferred destination for African shoppers, Emirates has opted to compete with the heavyweight argument of increased free baggage allowance. On the other hand, Turkish Airlines proposes to make the world more accessible along trade routes, showing no hesitation to open routes with frontier, even fringe markets such as Somalia. While it remains to be seen whether playing the accessibility-trade card attracts affluent travellers, there is little doubt it has a sizeable chance to resonate with the African middle-class as these travellers are showing greater affinity with all-in destinations, such as Istanbul, which offer trade, shopping, tourism.
As wealth outside of South Africa grows, fashion houses and other luxury producers are looking to reach this largely untapped market.
But while high-end consumers tend to be more resilient to economic shocks than most, the slowdown in emerging markets is being felt by luxury retailers globally. Analysts predict a corresponding slowdown of expansion into African markets. Continue reading at Thisisafrica