Bags and accessories brands recalibrate their retail strategy to make up for lost business
Lockdowns, work-from-home and fewer occasions to step out or splurge meant that bags and accessories were among the least sought-after categories in 2020. This category shrunk by more than 50% in FY21, according to Angshuman Bhattacharya, partner and sector leader (consumer products & retail), EY India. Brands like Lavie, for instance, saw a 50% decline in sales during this time, compared to FY20; while Baggit says the average consumer budget came down by almost 40%.
Bags and accessories brands are building their online presence, increasing marketing spends, launching new product categories and foraying into small markets to make up for lost business.
As the adoption of lifestyle accessories picks up, a revival is round the corner for this category. Pakhi Saxena, head of CPG and retail, Wazir Advisors, says the bags and accessories market in India is expected to reach $14.5 billion by 2024, up from $5.75 billion currently.
Most brands have had to shut down stores that were not performing well. Lavie has shuttered around 15 of its EBOs, while Hidesign shut 15 and Baggit closed down four stores.
During the pandemic, Lavie invested in computer-controlled cutting machines, stitching machines and gluing machines to improve business efficiency. Today, 60% of its products are manufactured in India; in 2019, the brand was fully dependent on imports. The company, which caters to consumers in the 15-45 age group, aims to exceed its pre-pandemic sales numbers by 50%. Laptop-friendly handbags, embellished clutches and pouches are some of the new products the brand is focussing on at present.
“In the next couple of years, consumers will also see a 30-40% rise in prices of our products,” says Ayush Tainwala, CEO, Bagzone Lifestyles, the company that manages brand Lavie. On the offline retail front, the brand plans to build its presence in tier II and III cities, and “get out of high-rental malls and departmental stores that probably don’t have a great future”.
Besides launching its own range of masks — which did not quite take off — Baggit started investing in advertising online on third-party portals which it had never explored before. This year, the company plans to launch a “mass market brand”. “This new brand will help us penetrate further, and reach mom-and-pop stores and multi-brand outlets through a network of distributors,” says Nina Lekhi, MD and chief design curator, Baggit.
The online retail channel, Lekhi says, has emerged stronger for the brand — from contributing less than 20% to its overall sales two years back, this channel brings in almost 50% sales today. Baggit is revamping its website and working on an omnichannel strategy, allowing for the ‘click and collect’ facility, among other initiatives.
For Hidesign, airports brought in close to 35% of the business in pre-Covid times. The lockdown put a serious dent in its turnover. To make up, Hidesign resorted to heavy discounting post lockdown, and pushed its ‘custom make’ feature across stores through which customers can co-create a product. In Q1 FY22, the company saw its sales reach 57% of pre-pandemic level. The brand expects the festive season to bring its business back on course. “We plan to achieve a 15-20% growth in FY22 over pre-Covid levels,” says Dilip Kapur, founder and president, Hidesign.
A big challenge for bags and accessories companies during the pandemic was to deal with an excess of unsold inventory, as consumers were buying only essentials. A dip in travel-related shopping added to the woes. “Additionally, this segment has a huge dependency on China for its supply chain, which was significantly impacted last year. There was a slow transition as brands started shifting their focus to territories such as Vietnam, Taiwan and India,” says Rajat Wahi, partner, Deloitte India.
The second half of 2021 has brought some respite as brands have started to reopen stores, and consumers have resumed work, travel, eating out and shopping to an extent. “Therefore, sales are gradually coming back to 60-75% of pre-pandemic levels,” says Bhattacharya of EY, adding that a complete revival is possible over the next two quarters.
While the pandemic accelerated the industry’s shift to online channels, analysts say that a retail strategy that offers a personalised virtual experience to consumers — like live streaming from a showroom, virtual fashion and trade shows, and engaging with influencers on social media — will be imperative for growth.