The past year was one of transformation for VIP Industries with the company renewing focus on the value segment. Here, the company’s MD, Anindya Dutta, talks to Christina Moniz about the reasons for making the shift in strategy and the brand’s plans for retail expansion. Excerpts:
VIP Industries closed the last quarter of CY22 with a good 31.76% growth in profit. What steps did you take to recover from the Covid shocks?
Our performance last year has to be seen in the context of the previous two pandemic years. Revenues had come down to near zero in the first quarter of the pandemic. It was in 2021 that the revival began. Though CY22 started on a volatile note, we saw travel bounce back quickly, and with it, demand did too.
We made a few strategic decisions during the last year. We altered our supply chain during this time and scaled up our manufacturing. We have more than doubled the production from Bangladesh within a year. Our design and development, which was third-party-led and where we relied on Chinese partners, also became in-house.
The entire year was completely about transformation for VIP Industries
We had lost market share in the value end of the market during the pandemic . With our new manufacturing strategy and by bringing in cost efficiencies, we have started to gain back some of the share we had lost.
So how have the different brands in the VIP portfolio grown over the past year?
The company has seen almost 20% growth over the pre-Covid base of 2019-20. Our key growth brands, prior to Covid were VIP and Skybags. Our fastest-growing brand in the last couple of years has been Aristocrat, which operates in the value segment. That was a conscious push, because that was where we lost share.
The Aristocrat brand has grown by over 70% on our FY20 base. Our key strength continues to be our mass premium brands, VIP and Skybags, which really picked up in the second half of the year during the wedding season and with travel making a comeback.
How big a challenge is the unorganised segment in the value end of the market?
A large part of the opportunity and competition in the value segment lies in the unorganised sector. The industry is still really fragmented, with about half the market still unorganised. After Covid, however, the organised players saw good tailwinds with consumers choosing established brands and also because the supply chain for the unorganised sector was impacted.
VIP made a conscious shift from being a luggage player to more of a lifestyle brand about a decade ago. Has the move paid off?
Over the last decade, we have seen a growing trend where consumers perceive every accessory as an extension of themselves and their personality. This is true also for a category like luggage. Social media has played an important role in creating this shift because vacations today need to be ‘Instagrammable’. Consumers are flaunting their attire and accessories at airports and holiday destinations.
VIP Industries also made this transition in a big way through brands like Skybags that are design-led and resonate with younger consumers. We have done the same with VIP and Carlton, albeit with a more formal touch. The shift has made the brand stronger and we are now seen as more than a luggage company.
Moving forward, our ATL advertising will largely focus on Skybags and VIP, while there will be more of in-store activation and BTL marketing for Aristocrat. We will also push our women’s handbags brand, Caprese.
What are your plans to ramp up your retail footprint?
We were at around 400 stores prior to Covid and we came down to about 250 during the pandemic. We have been opening stores aggressively since last year and should be at the 500 mark this month. Going forward, we will open more stores in tier-II cities and beyond.
Distribution has always been our strength over these five decades. We have the highest penetration and are present across almost 800 towns in the country. Our target is to be present in every town with a population of over 50,000 by the middle of the next financial year.