 "John Abraham-Skybags")
There is quite a stir in the branded luggage space as its oldest and staid player gears up to take on competition. The Dilip-Piramal-owned VIP, synonymous with travel luggage in India, is doing all it takes to retain its edge in the Rs 2,100-crore organised luggage market. Apart from working up the noise around its zany sub-brand Skybags, endorsed by youth hearthrob actor John Abraham, it is entering new categories that are growing but were untapped by it so far.
It has recently entered categories such as backpacks and ladies handbags, especially in the mid-segment. The managing director, Radhika Piramal, 34-year-old daughter of Dilip Piramal, says that VIP has an overall share of 50 per cent of the market, ahead of rivals such as US-based Samsonite. Yet, it does not lead in the mid-segment priced at Rs 3,000-10,000 per bag.
In the last few years, Samsonite, the world's largest travel luggage brand, has been chipping away at VIP's share in a segment that is one of the fastest-growing in branded luggage, as disposable incomes and aspirations of urban consumers grow.
While VIP leads in the sub-Rs 3,000 price-point, which has a lion's share of Rs 1,300 crore of the total pie, it lags Samsonite in the premium (above Rs 10,000) and mid segments that account for Rs 800 crore.
American Tourister, the mid-market brand from Samsonite, says E P Suresh Menon, chief executive officer, Samsonite South Asia, has been able to make a dent with new designs and features. He claims Samsonite has a share of 60 per cent in the mid-segment, with VIP (flagship brand) and some products of Skybags at 35 per cent and the balance held by players like Safari (another old brand operating since the 1970s). Piramal, however, contests these numbers saying that VIP is the leader in this price band, even though she declines to share her estimates. Trading its consumers up, then, is the challenge that VIP seems geared to take on. Piramal claims VIP is going beyond being a budget baggage maker, diversifying into handbag (with Caprese) and backpacks (with Skybags).
Piramal says,"We have seen the demand in handbags in the range of Rs 3,000-10,000 being more than high-end luxury handbags. So, we are targeting the middle and upper-middle class women with our new range. Our observation is that compared to one-two travel bags in every Indian home, there will be four-five handbags. We need to capture this trend."
VIP is taking a calculated risk in backpacks that it has launched under Skybags. While backpacks have become de rigueur with even young professionals, besides school and college-going kids, VIP has to contend with numerous competitors in the space. Apart from American Tourister from Samsonite, which has a strong backpack range, there are indigenous favourites such as Titan's Fastrack and Wildcraft.
Piramal says that VIP has no choice if it has to evolve and position itself as a luggage maker for the new generation. "Indian consumers are changing, they are becoming younger, more casual and confident. Earlier, people would use suitcases for business travel. But backpacks have become common today among the working youth," she says. Piramal also says that e-commerce platforms such as websites and online marketplaces contribute almost 10 per cent of her company's sales, channels that have been fast adopted by young consumers. As many as 46 new backpacks have been launched in the last few months.
The backpacks too would be priced between Rs 1,000 and 3,000 will help lift up Skybags into the mid-market. VIP has another sub-brand, Alfa, which operates in the lower end along with Skybags. While these two brands have around 70-75 per cent of the lower end of the market, Safari has around 25-30 per cent.
For Samsonite, it may lord over the nebulous but high-margin preium segment, costing over Rs 10,000 per piece with 90 per cent share, but the lower end of the market is not something that it is willing to forego. "We are leaders in the premium and mid-end. We have no presence in the lower end. But we are working on foraying into this category. It is a crucial segment that we need to stitch up," he says. It had tested the waters in the space, dominated by VIP, with a sub-brand, AT in 2012-13, priced at Rs 1,800 but it was quickly phased out. Samsonite had also launched High Sierra, outdoor-activity bags, in 2013. Its US-acquisition, Hartmann, will make its debut this September and play in the luxury space, which is small, but evolving, says Menon.
