According to Euromonitor International, the luggage market in India was valued at Rs 8,495 crore in 2019 and is estimated to degrow to Rs 7,305 crore in 2020, due to the impact of the Covid-19 pandemic
The luggage category has taken a big hit this year as travel came to a standstill, severely impacting its outlook for FY21. Some of the big players operating in the segment, the likes of VIP Industries, Safari Industries and Samsonite India, have reported a decline of 80-90% in sales in the April-June quarter. Lifestyle enterprises such as Wildcraft, Tommy Hilfiger and United Colors of Benetton, that have a presence in this segment, are feeling the pinch, too.
The impact has been augmented as the nationwide lockdown imposed from the last week of March till May coincided with the peak season for these companies. Sudip Ghose, managing director, VIP Industries, says, “Our sales in the first quarter of FY20 stood at about Rs 560 crore; this year, we were able to achieve only 10% of that (Rs 58 crore). The recovery is going to take time, and we do not see ourselves reaching the pre-Covid levels this year.”
Even though restricted travel has resumed, the demand for products like trolley bags, suitcases, rucksacks and other travel accessories remains subdued — around 30-35% in July, as compared to pre-Covid levels. According to Euromonitor International, the luggage market in India was valued at Rs 7,205 crore in 2017 and grew to Rs 8,495 crore in 2019. The company estimates that the market will degrow to Rs 7,305 crore in 2020, due to the impact of the Covid-19 pandemic.
As these companies wait for the travel market to pick up again, they are going back to the drawing board. Samsonite India, for instance, is relooking its retail strategy. The company has four brands operating in this market segment — Samsonite in the premium segment, American Tourister in the mid-level segment, the entry-level brand Kamiliant and backpacks under High Sierra.
“We had a strong retail network of about 500 outlets, but have now shut down 20% of our stores. By doing so, we aim to make the existing stores more attractive for customers,” says Jai Krishnan, CEO, Samsonite India. The company is building its omnichannel strategy, and claims to have seen an uptick in e-commerce sales, which earlier contributed 12% to its overall sales.
Meanwhile, VIP Industries is taking the discounting route. The company, which houses brands like VIP Bags, Skybags, Carlton, Aristocrat, Alfa and Caprese, is offering discounts of up to 50%. “The first quarter is a big season for us, and we had stocked up for it. However, due to the lockdown, we were not able to sell and, hence, are high on inventory now, which we would like to push out,” says Ghose.
Both these brands have cut down their advertising spends for this year, but have increased spends on the digital medium.
Wildcraft is betting on this phase to bring disruption to the market, and create demand for products like rucksacks and travel cases. “We believe that the consumer is going to transition from being a tourist to a traveller, and will seek more experiences and travel light going ahead,” says Gaurav Dublish, co-founder, Wildcraft India. He says Wildcraft has upped spends on television tenfold, and plans to make its travel gear available at 10,000 points of sale in the next one year, from the 1,200 currently.
A recovery in this category, experts predict, could be expected only in FY22, as demand will remain muted. “Mass travel is not going to come back for some time now. There might be a partial recovery during October-December due to the festive and wedding seasons, but this year is a write-off for most brands offering discretionary products,” says Devangshu Dutta, chief executive, Third Eyesight.
Dutta says these companies would need to reinvent by foraying into other product segments until the demand for their core product offering returns.
Because consumers are likely to opt for domestic destinations in the next few months, Rishav Jain, senior director and lead – consumer and retail sector, Alvarez & Marsal, says that there could be a shift in preference towards smaller and convenient bags.
Jain says these companies could face challenges in the medium term, too, apart from struggling with low demand. “While most of these players are downsizing their business at the moment, they could potentially face challenges in operational scale-up as demand resumes,” he adds.
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