The 18,000 crore luggage industry of India is in the midst of a shakeup as the new-age players challenge the dominant legacy companies. According to a Crisil report, the luggage industry grew at a 3 per cent rate annually for the last 3 years and is expected to grow at 5-7 per cent this fiscal year.
While the industry grows at a steady pace, the new-age companies are growing at a much faster rate. The Crisil report stated that the organised players currently have a 45% share in India’s luggage market, but the new-age players now control 25 per cent of the organised luggage market. The margins of the legacy players have declined 8 per cent YoY in FY25. The report explains that this is due to the increased competition from the new-age players.
What is giving the new age companies an edge?
The new-age luggage companies are focusing on fast-moving and contemporary designs across different segments of luggage. Crisil highlighted that “Their focus on catering to the aspirational class and low-cost private-level production is helping them compete with the legacy players with deep pockets and an extensive distribution network.”
Rahul Guha, Senior Director, Crisil Ratings, said that the new-age companies have doubled their market share over the last two fiscal years, despite the legacy players continuing to invest in online channels. “Superior designs, low-cost private label-based production, controlled overheads and wider reach through distribution across e-commerce will enable new-age luggage makers to grow faster than the large, legacy ones.”
Luggage sector inventory
The Crisil report elaborated that the legacy players have cleared their low-margin inventory, and overall, the industry has adequate industry capacity. Due to this, there will be low debt addition in the sector this fiscal year.
“The inventory level will correct to about 3 months this fiscal from 4 months in the past two fiscals as manufacturers clear their older stock. Capacity addition during the last 2 fiscals has resulted in 70-75% utilisation currently,” added Himank Sharma.