‘Opportunity in mass markets is thrice that of in urban cities’
Baggit, which has been in the handbag business for three decades, has now set its sights on the mass market. Nina Lekhi talks to Venkata Susmita Biswas about introducing an affordable range of handbags to give “Chinese products a run for their money”, foraying into the travel bags segment, and more.
Baggit is currently offering a 60% discount on its website. What’s the kind of recovery you’re seeing in sales, after the slump last year?
While the financial losses are undeniable, we have been working on stimulating demand and improving sales month on month. One of the key changes during the year was that we shifted our focus from offline retail to online platforms to drive sales. At the end of January, our sales volume is 80% that of January 2020; and in value terms, it is at about 70%.
Our average selling price has dropped, as our average discount has increased by 7-8%. We have had to discount our products because we needed to give buyers, who are possibly buying their fourth or fifth bag, a reason for purchase. Since September, we have seen a steady revival. For instance, in August, we were at 30% of 2019 level. As we begin FY22, we expect to return to pre-Covid level.
How much are online platforms contributing to your overall sales now?
We now earn about one-third of our sales from e-commerce platforms. As offline retail picks up pace, our e-commerce sales will settle at 25-30% of overall sales. We are present in 400 multi-brand outlets, 64 exclusive brand outlets and 500 mom-and-pop stores. Offline retail will continue to be a strong sales channel for us.
How do you plan to grow the business, given that people are less inclined to purchase accessories during these times?
Going forward, we do not want to discount the brand. We are reengineering our design and fabrication processes to bet on large volumes by reducing the average selling price. We are rediscovering ‘Bharat’ or middle-India, where the consumer has limited budgets and none of the current brands are catering to that demand. This is a market where a buyer may not be willing to spend Rs 2,000 on a handbag, but are looking for durable products for about Rs 700. At this price point, we give consumers — who were possibly buying unbranded products from roadside sellers — an option to buy a branded product that can last seven to 10 years at a pocket-friendly price. Our estimate is that the opportunity in the mass market is thrice that of in urban cities.
How do you propose to straddle the Rs 700 to Rs 3,000 price points?
We plan to introduce a new brand, tentatively by autumn-winter. Once we crack this mass market, we can give the imported Chinese products a run for their money. As this market may not be best served through online — since consumers may not have credit cards, internet access or other tools for online shopping — we plan to tie up with value format retail outlets such as Spencer’s and Metro Cash & Carry, to distribute our products.
Baggit has always concentrated on handbags and wallets. Will you be foraying into other product categories?
We may add travel bags, both the trolley kind and backpacks suitable for solo trips and hiking, to our mix. This is to cater to the growing demand from youngsters who travel for pleasure and adventure.
Your latest marketing campaign positions Baggit as a ‘Made in India’ label. How big a selling point do you think this is, considering Xiaomi, a Chinese brand, has remained unaffected despite the negative sentiment?
I believe the question is whether a consumer has the emotional attachment to buy an Indian product if all other parameters are the same. If a Chinese product is superior in features and price, naturally the consumer has fewer incentives to choose an Indian product. We want consumers to buy Baggit products because they are better than Chinese products, and produced locally; not just because they are made in India. Therefore, we are focussing on making durable products, and aiming at lowering the average selling price by increasing scale.