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 per cent 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 Rs 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 Rs 3,000 crore to Rs 4,000 crore in 2016, according to market estimates, with approximately 50 per cent 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 per cent. 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.
Th e 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, 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 per cent. 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 per cent for the last five years. Almost 1,000 sq. ft. area is dedicated to this particular category in all HyperCITYstores.
The picture is pretty much the same with Metro. Luggage there constitutes 10 per cent sales of the non-food segment, with 20 per cent 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, 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 1984-85 – far behind in the market share, VIP has become a household name in India. In 2014, it occupied 60 per cent 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 per cent 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 scratch-resistant, 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 and 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. Th ere 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 per cent to 50 per cent.
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 multi-portfolio including items ranging from jute bags for women to leather executive bags.
“Clubb is most popular in middle class segment brand. Th ose who cannot aff ord high-end and most expensive brands,” says Managing Director, Clubb International, Tarun Mullick.
The brand has entered into the online space with Clubb Cart. “There is a huge difference between Clubb Cart online and Clubb Cart offline stores. Offline sales are much higher than the Clubb Cart online store. It is not even comparable. But where are online platforms are concerned like Amazon, Flipkart and e-Bay, 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 offl ine 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.