Rise of the In­dian lug­gage in­dus­try: from util­ity to fash­ion ac­ces­sory

The In­dian lug­gage mar­ket has, over the years, shed its tra­di­tional util­i­tar­ian tag and has evolved as a life­style of­fer­ing. In­creas­ing busi­ness and leisure trav­els cou­pled with ris­ing dis­pos­able in­come and or­ga­nized re­tail­ing have led to in­creased de­mand

Images Retail - - FRONT PAGE - – By Na­marita Kathait

Re­mem­ber when Hri­tik Roshan acted as the poster boy of VIP com­mer­cials, mak­ing all the girls swoon and all the boys wish they could carry a VIP lug­gage like him. How about when Amer­i­can Touris­ter com­mer­cial be­came an ex­em­plary mar­ket­ing tac­tic?

And we cer­tainly can’t for­get the rise of Fas­track bags that pen­e­trated the school and back­pack mar­ket suc­cess­fully by cash­ing in on the ‘cool quo­tient’.

In the past, con­sumers have al­ways sep­a­rated lug­gage from fash­ion. Lug­gage was a util­ity, not a style ac­ces­sory. To­day, lug­gage brands are work­ing ex­tremely hard to com­pletely change this per­cep­tion of In­dian con­sumers. In fact, the mar­ket over the last few years has be­come tremen­dously com­pet­i­tive. From es­tab­lished brands like VIP and Sam­sonite – try­ing to com­pete for the throne – to new en­trants such as Da Mi­lano, try­ing to es­tab­lish a strong­hold in the In­dian mar­ket, the In­dian lug­gage seg­ment is on the move!

The seg­ment has, over the years, shed its tra­di­tional util­i­tar­ian tag and has evolved as a life­style prod­uct. In­creas­ing busi­ness and leisure trav­els cou­pled with ris­ing dis­pos­able in­come and or­ga­nized re­tail­ing have led to in­creased de­mand for lug­gage. Within this cat­e­gory, the de­mand for brand names has grown, as con­sumers as­pire for goods that count as sta­tus sym­bols.

The seg­ment – which is grow­ing around 18 per­cent CAGR – is ex­tremely stream­lined and is look­ing at a good next few years. Ac­cord­ing to a re­port by Ken Re­search, the In­dian lug­gage in­dus­try will reach ₹102,857 mil­lion by FY’2018.

Dy­nam­ics of the In­dian Lug­gage Mar­ket

The In­dian lug­gage mar­ket can be broadly seg­mented into or­gan­ised and un­or­gan­ised sec­tors, with the un­or­gan­ised sec­tor still oc­cu­py­ing a ma­jor­ity share. The over­all lug­gage mar­ket in the coun­try stood at be­tween ₹3,000 crore to ₹4,000 crore in 2016, ac­cord­ing to mar­ket es­ti­mates, with ap­prox­i­mately 50 per­cent of this dom­i­nated by or­gan­ised play­ers.

Fur­ther seg­men­ta­tion is also done on the ba­sis of make or ma­te­ri­als, and this seg­men­ta­tion sug­gests that soft-shell lug­gage holds the max­i­mum share of the mar­ket, mostly be­cause of its easy-fit in small spa­ces.

The mar­ket is also di­vided on the ba­sis of the types of bags such as ca­sual, travel, busi­ness and school back­packs.

Fac­tors Driv­ing Growth

Over the last 14 years, In­dia’s lug­gage in­dus­try has grown at an av­er­age rate of al­most 13 per­cent. The last fi­nan­cial year has recorded a growth rate of 18 per cent and is ex­pected to reach 20 per cent in the present FY.

The growth of this in­dus­try has been im­pacted di­rectly by the growth of travel in­fras­truc­ture such as na­tional high­ways, air­ports, rail­way sta­tions which contributed sig­nif­i­cantly to the de­vel­op­ment of the travel in­dus­try in In­dia. Over the years, both do­mes­tic and in­ter­na­tional air travel has shown con­sis­tent dou­ble-digit growth. It is also ex­pected that In­dia will ac­count for 50 mil­lion out­bound tourists by 2020, thereby pre­sent­ing favourable prospects for the lug­gage in­dus­try.

Mod­ern re­tail­ing and new fash­ion trends are also ex­pected to drive the sale of ca­sual bags and travel lug­gage bags cat­e­gory over the fore­cast pe­riod FY’14 to FY’18 ac­cord­ing to Ken Re­search.

Not just that, lug­gage has also be­come an im­por­tant part of the wed­ding trousseau, with even peo­ple in tier II and III cities buy­ing branded suit­cases and strollers dur­ing the wed­ding sea­son.

Mil­lenials, who con­sti­tute a con­sid­er­able por­tion of In­dian pop­u­la­tion, travel and like to travel hands free, which in turn has ini­ti­ated growth for the back­pack-duf­fle bag cat­e­gory.

The ru­ral seg­ment of the pop­u­la­tion is also not be­ing ig­nored, with ma­jor play­ers seek­ing lay­ing greater em­pha­sis on prod­uct in­no­va­tions such as hand­bags for women and eco-friendly bags.

“In­dia is one of the fastest grow­ing economies in the world and the most price sen­si­tive with a wide un­tapped mar­ket be­low the price range of Amer­i­can Touris­ter,” says Chief Ex­ec­u­tive Of­fi­cer at Sam­sonite South Asia Pvt. Ltd, E.P. Suresh Menon.

Rise of Mod­ern Trade Chan­nels

As per a Nielsen re­port, hy­per­mar­kets have be­come a favourite des­ti­na­tion for the ur­ban shop­pers and as al­most all lug­gage brands are vis­i­ble there, they can eas­ily make an in­formed pur­chase.

Lug­gage has been pur­chased pri­mar­ily through tra­di­tional brick and mo­tor mech­a­nisms com­pris­ing of dealer out­lets, com­pany owned stores and fran­chisees. How­ever, owing to the chang­ing times and needs, mod­ern trade chan­nels will con­tinue to lead the growth.

Lead­ing hy­per­mar­kets of In­dia have also reg­is­tered growth in this sec­tor. From a cat­e­gory point of view, for Big Bazaar, daily travel is around 30 per cent and out­door travel cat­e­gory is 70 per­cent. Ma­jor growth driv­ing prod­ucts are school bags, back­packs and hard trol­leys.

As per HYPERCITY lug­gage as a cat­e­gory has been grow­ing at an av­er­age of 55 per­cent for the last five years. Al­most 1,000 sq. ft. area is ded­i­cated to this par­tic­u­lar cat­e­gory in all HYPERCITY stores.

The pic­ture is pretty much the same with Metro. Lug­gage there con­sti­tutes 10 per­cent sales of the non-food seg­ment, with 20 per­cent av­er­age growth in the last five years.

Lead­ing Play­ers in the Or­gan­ised Sec­tor

Sam­sonite, V.I.P and Sa­fari con­sti­tute ap­prox­i­mately 95 per cent of the to­tal or­gan­ised sec­tor of the lug­gage in­dus­try. Brands like Da Mi­lano, Delsey, Tommy Hil­figer con­sti­tute the rest. V.I.P is the leader with an al­most 47 per cent mar­ket share, fol­lowed closely by Sam­sonite (45 per cent). Sa­fari ac­counts for the rest.

V.I.P In­dus­tries Pvt. Ltd.: V.I.P, which started its re­tail jour­ney in 1971, has pres­ence in all three seg­ments – Premium, Mass and Econ­omy.

For years now, VIP In­dus­tries Ltd has been the lead­ing player in bags and lug­gage. Since leav­ing its pre­de­ces­sor Uni­ver­sal Lug­gage – which used to make an aris­to­cratic range of moulded lug­gage in 198485 – far be­hind in the mar­ket share, VIP has be­come a house­hold name in In­dia. In 2014, it oc­cu­pied 60 per­cent mar­ket share rul­ing the or­gan­ised sec­tor.

How­ever, Sam­sonite slowly caught up to VIP, largely be­cause VIP is be­ing per­ceived as an age­ing brand. VIP In­dus­tries faced stiff com­pe­ti­tion from Sam­sonite, and its mid-priced brands like Delsey and Amer­i­can Touris­ter, which of­fer con­sumers sleeker and more con­tem­po­rary de­signs within the same price range.

Sam­sonite South Asia

Pvt. Ltd.: is a sub­sidiary of Sam­sonite In­ter­na­tional S.A and was launched in In­dia in 1997. It has be­come a favourite among the niche ur­ban con­sumers and holds over 90 per cent mar­ket shares in the premium cat­e­gory (over Rs 10,000 price tag). The cat­e­gory ac­counts for around 10 per­cent mar­ket share.

Af­ter VIP re­fused for a joint ven­ture with Sam­sonite in 1998, it col­lab­o­rated with Ramesh Tain­wala, who is now the CEO of Sam­sonite In­ter­na­tional. VIP then fought back, by in­tro­duc­ing many more youth-ori­en­tated de­signs and back­packs via its Sky­bags range.

“From man­u­fac­tur­ing only suit­cases in early ’70s, V.I.P In­dus­tries now has an evolved of­fer­ing of a vast range of prod­ucts like poly­car­bon­ate strol­leys, Ny­lon-based strol­leys, printed lug­gage, hand­bags, back­packs, wal­lets and travel ac­ces­sories through var­i­ous brands un­der its port­fo­lio. To­day, V.I.P In­dus­tries is syn­ony­mous with lug­gage, which is the core prod­uct cat­e­gory,” says MD, V.I.P In­dus­tries Pvt. Ltd, Rad­hika Pi­ra­mal.

Both lug­gage man­u­fac­tur­ers are now coming up with more youth-ori­en­tated prod­ucts, which are light­weight with more in­no­va­tive and space ef­fi­cient de­signs. This is in part be­cause the younger pop­u­la­tion is keen on travel and ad­ven­ture, in­creas­ing the de­mand for hands-free and has­sle-free lug­gage in In­dia. This trend is fur­ther ex­pected to pro­pel var­i­ous bag man­u­fac­tur­ers to come up with a va­ri­ety of bags and back­packs which are scratchre­sis­tant, water-re­sis­tant and con­ve­nient in na­ture.

“For Sam­sonite, we have lug­gage, back­packs, travel ac­ces­sories, in brand AT, with all th­ese, we have a very spe­cial back to school cat­e­gory with back­packs, ruck­sacks, mes­sen­ger bags, bags for tod­dlers…we want to cap­ture the en­tire life­time of a con­sumer. From the mo­ment you have started trav­el­ling, we want to ful­fill all your lug­gage re­quire­ments,” Di­rec­tor, Sam­sonite In­dia Pvt. Ltd, Anushree Tain­wala, told IMAGES Re­tail.

An­other brand which has re­ceived a very pos­i­tive re­sponse from cus­tomers over the years is Da Mi­lano.

“The re­sponse to our prod­uct has not only been en­cour­ag­ing but it has also ac­cel­er­ated growth of the busi­ness in terms of prod­uct de­vel­op­ment, de­sign­ing, ex­pan­sion and fur­ther mo­ti­vates us en­hance

cus­tomer ex­pe­ri­ence,” says MD Da Mi­lano, Sahil Ma­lik.

The brand is cur­rently plan­ning to launch a new sub-brand of hand­bags and ac­ces­sories with lower price brack­ets. It has 58 stores (and grow­ing) in 17 cities in In­dia. The plan is to grow to 100 out­lets across 34 cities in the next five years.

“Da Mi­lano is a prod­uct and ser­vice en­tity. Its range is un­par­al­leled. The leather pro­cured is har­nessed and fin­ished with fea­tures that are de­signed based on the style as­pi­ra­tions of the day, the cus­tomer feed­back and util­ity. The crafts­man­ship en­sures a blend of the ori­ent with west and pro­duced at plants that are the state-of-art. Four-five sea­sonal port­fo­lios in a year meet the crav­ing and yearn­ing re­quire­ments of an elite cus­tomer base. De­sign and mer­chan­dis­ing en­sures style & com­pet­i­tive­ness that leaves com­pe­ti­tion in awe of Da Mi­lano and just run­ning out of breath chas­ing the new con­cepts and de­signs of Da Mi­lano,” he adds.

Ma­lik is op­ti­mistic about the growth prospects of his brand de­spite the oligopolis­tic na­ture of the lug­gage re­tail in­dus­try in In­dia.

“Growth in busi­ness is a grad­ual process ir­re­spec­tive of na­ture of the mar­ket. At Da Mi­lano we are con­stantly striv­ing to match the as­pi­ra­tions of the cus­tomers per­tain­ing to travel needs and carve a niche for the brand in that seg­ment,” he says.

Sa­fari In­dus­tries (In­dia)

Ltd. too joined the race to be­come the top lug­gage re­tail com­pany in 1974, though it be­came a dom­i­nant player only in the past few years. The com­pany is rapidly gain­ing ground in the mass-premium sec­tion. It ac­quired Ge­nius Leather­craft and also for­ayed into the school bags seg­ment.

Ac­cord­ing to Sr VP Sales, Sa­fari, Indranil Roy, “Our Com­pany is one of the 100 fastest grow­ing com­pa­nies in In­dia. There is a tremen­dous scope for this com­pany to be a Rs 1,000 crore com­pany in next three-four years.”

Go­ing the On­line Way

Sam­sonite has al­ready made plans to launch its newly ac­quired e-com­merce site ‘E-bags’ soon. E-bags founded by Peter Cobb, an ex- di­rec­tor of Sam­sonite will pro­vide a di­rect chan­nel for Sam­sonite to mar­ket their brands Amer­i­can Touris­ter and Hart­mann by the end of 2018.

With con­sumer’s grow­ing lik­ing to­wards dig­i­tal shop­ping, Sam­sonite is look­ing to grow their dig­i­tal busi­nesses and in­crease their sales from 32 per­cent to 50 per­cent.

Apart from be­ing present in hy­per­mar­kets, lug­gage re­tail­ers are also tap­ping on­line mar­ket­places in­clud­ing Flip­kart, Ama­zon, Jabong, Snapdeal, Shopclues, Myn­tra, Jun­glee. Sa­fari is also re­vamp­ing its own on­line por­tal and Sam­sung has been us­ing e-com­merce to sell fur­ni­ture for a long time now.

Sky­bags from V.I.P are avail­able on the com­pany’s on­line por­tal, as well as on other e-mar­ket­places, while the mother brand V.I.P is avail­able on Snapdeal and Ama­zon.

Clubb In­ter­na­tional is an­other name in the lug­gage in­dus­try that is do­ing won­der­ful things with their e-com­merce plat­form Clubb Cart. The brand has a mul­ti­port­fo­lio in­clud­ing items rang­ing from jute bags for women to leather ex­ec­u­tive bags.

“Clubb is most pop­u­lar in mid­dle class seg­ment brand. Those who can­not af­ford high-end and most ex­pen­sive brands,” says Manag­ing Di­rec­tor, Clubb In­ter­na­tional, Tarun Mul­lick.

The brand has en­tered into the on­line space with Club­b­cart. “There is a huge dif­fer­ence be­tween Club­b­cart on­line & Club­b­cart off­line stores. Off­line sales are much higher than the Club­b­cart on­line store. It is not even com­pa­ra­ble. But where are on­line plat­forms are con­cerned like Ama­zon, Flip­kart & ebay, Clubb is highly suc­cess­ful like its off­line coun­ter­part,” Mul­lick ex­plains.

The brand is now opt­ing for the Om­nichan­nel ap­proach, be­cause, as Mul­lick says, “to sus­tain growth in to­day’s com­pet­i­tive en­vi­ron­ment, one must ex­pand off­line as well as on­line”.

“Th­ese days, it is im­per­a­tive to have mul­ti­ple touch points to reach cus­tomers. Though the foun­da­tion of our brand was through re­tail chan­nels

– a more per­son­al­ized way to reach cus­tomers – on the other hand we un­der­stand that an on­line mar­ket­place helps reach a wider net of po­ten­tial clients who might other­wise not know we ex­ist,” con­cludes Da Mi­lano’s Sahil Ma­lik.

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