BRANDED LUGGAGE RETAILwww.themegallery.com BY: MANIK ARORA MFM-1 OBJECTIVES To study the luggage industry and its nuances in the international scenario. To study and analyse Indian luggage industry in the retail context. To study the feasibility of setting up of a branded retail outlet for luggage in Patna. RESEARCH METHODOLOGY: Secondary Research- The secondary data and theoretical information regarding the luggage retailing and market would be conducted using reports, trade journals and internet. Primary Research- Questionnaire survey to understand the scope of opening a branded retail store for luggage would be done with customers and retailers. Sample size - 100 Sampling method ± convenience & judgmental LUGGAGE INDUSTRY AS A WHOLE The luggage industry as a whole has increased over the years. With the recent weight restrictions on luggage added by the Airline industry, sales should continue to increase over the years to come. The industry (US) revenue for the year 2006 was approximately $720,000,000. The gross profit was 34.14% . There were 193 establishments in this industry that year. Total import export value for the year 2006 was $4,408,764,000. There were 164 countries that conducted foreign trade with the US. The top trading Countries were: China, Canada, Italy, Vietnam and Mexico. Their combined total represents approximately 85% of all Imports and exports. Total import value for the year 2006 was $3,703,527,000. This represents a 15.9% increase for the year 2005. The US. had imported industry related merchandise from 122 countries in 2006. The top importing Countries were: China, Italy, Vietnam, France, and the Philippines. Now mandating only that members have an office in the United States. with an estimated 30 percent of U. bags and cases continue to send more production offshore.S.S. production facilities. Insiders point to JCPenney's Jaguar line as having the second-largest market share. Also reflecting trends in the apparel industry. makers of luggage. By all accounts.S. Whereas international sourcing accounted for an estimated 65 percent to 70 percent of their production. market share. like the apparel market. followed closely by Atlantic Luggage Co. .US LUGGAGE RETAILING SCENARIO The U. luggage and leather goods market.. is growing at about 3 percent to 4 percent annually at retail. where the sector accounts for about $7 billion. changed its rules several years ago and no longer requires potential members to have U. $700 million. the 90-year-old. is the big fish. the industry's leading trade group. the Luggage & Leather Goods Manufacturers Association (LLGMA). publicly held Samsonite Corp. with 7 percent of overall sales. In fact. which captures approximately 6 percent of the dollars. M A J O R P L A Y E R S . 30000-60000 totes Briefcases and work Rs. Louis Vuitton is an international trendsetting enterprise that employs more than 9.32000-40000 Rs.45000-75000 Rs.50000-90000 bags Clutches Rs.30000-60000 Rs.175000-285000 Rs. Men¶s bags Messenger bags and Rs. Shoulder bags and totes Top handles Clutches Travels Softsided luggage Rolling luggage Hardsided luggage Accessories . It was founded in 1854 by Louis vuitton.32000-40000 Rs.500 people in more than 300 locations in 44 countries around the world. It¶s a division of the holding company LVMH.10000-15000 Hand bags Headquartered in Paris.70000-150000 Rs.45000-75000 Rs. after the well-known and welltravelled author Rudyard Kipling.1500-4500 Rs.2400-4500 Rs. Kipling is part of VF Corporation. three friends in the fashion capital of the world created a line of casual and colourful bags .10000-17500 Rs.2500-4500 Rs. creativity and entrepreneurial spirit.9000-10000 Rs.The Kipling story is one of great passion.5000-10000 Rs.000 multi-brand stores.1500-4500 Rs. 6 million Kipling bags are purchased from Kipling¶s 215 stores and 450 corners and shop-in-shops. In 1987.4000-7500 Rs.4500-7500 Rs. Hand bags Shoulder and hobo Satchels Totes Cross body Clutch/wristlet Rs. or from 4.5000-18000 .They named the brand Kipling. a global leader in branded apparel and accessories.3000-12500 Backpack All purpose Laptop backpack Wheeled Luggage Wheeled Duffles and weekenders Travel and totes Carry on acceptable Rs. Every year.9000-10000 Rs. Travel The company's breakthrough came soon after when Koffler devised a new line that was significantly better than that of the competition.. Rhode Island in either 1932 or 1933 with his life savings. Cabin bags Suitcases Duffles and small bags Rs. he named it American Tourister. He was determined to produce luggage priced at $1 in the midst of the Great Depression.1200-5000 Rs.1000-2000 Rs. Immigrant Sol Koffler founded American Luggage Works in Providence.2500-4000 Rs. Astrum was renamed the Samsonite Corporation two years later. American Tourister was acquired by Astrum International. In 1993.1200-2000 Business Laptop cases Attaché/briefcases Rs.2200-2400 Rs.1000-1600 Casual Backpacks Laptop backpacks .600-1000 Rs. which also made Samsonite luggage. American Tourister has now become a lower-end version of its Samsonite sister brand. 9% IN 2008 INDIAN LUGGAGE MARKET ± 2000 CRORES ORGANISED ± 1000 CRORES UNORGANISED 1000 CRORES PREMIUM ± 350 CRORE MID RANGE ± 400 CRORE ECONOMY ± 250 CRORE .INDIAN LUGGAGE MARKET ACC.4 % BETWEEN 2003 AND 2008. BAGS . LUGGAGE AND LEATHER GOODS RETAIL SALES IN INDIA INCREASED AT A CAGR OF 16. TO DATA MONITOR REPORT . WALLETS AND PURSES SALES LED THE LUGGAGE AND LEATHER GOODS WITH A SHARE OF 57. LUGGAGE BRANDS MARKET SHARE MERIC N TOURISTER 10% S MSONITE 15% VIP 50% RISTOCR T 15% 0% . . Innovations were very few. Quality of the Indian luggage at that time was suited mostly for the low end mass market and not for the premium end quality conscious customer. Till then competition was restricted to sales. The manufacturing process concentrated more on volumes than on quality. The battlefield now comprised VIP Industries and Safari to name a few until the entry of world number one the $737 million Samsonite International. a bottom and a lock to keep it intact. People had got used to the old type of luggage which had a top. The reason: lack of quality awareness among the customers. the companies were more interested in volume sales rather than satisfaction. Service and customer satisfaction didn·t assume importance. In short. in late 1996. it was more of selling than marketing. .Pre-1997 During this period. And surprisingly. nobody was complaining. presence of multinational and freer import of luggage helped the Indian consumer to access international quality luggage. We assumed that the best was Samsonite or Delsey and we tried to come close to their standards. former CEO. The Indian consumer today has more choice than before.¶ While between 1990 and 1996 VIP had registered only eight new designs in the next two years (1997 and 1998) the company registered 16 design patents. Sanjeev Aga. ³A few years back we were not aware of our own strengths. we feel that we must do better to outsmart them in the market. In fact it ushered in a phase where even the domestic companies showed the keenness to compete with the foreigners instead of following them. . Liberalized baggage rules.Post-1997 This was the period when the industry witnessed a paradigm shift in terms of quality and service. But now. VIP Industries says. .ENVIROMENT ANALYSIS Political Environment: Government has placed the raw materials required for the industry under OGL (Open general license). affects the tourists. The positive signal in the export of finished of purchases of the growth of the product and very little luggage. There is no policy to control performances of the burgeoning grey market. the luggage industry. Indian market. Technology has made it possible for companies to go for a large production (VIP is 12000 per/day (286 models) & Samsonite is 1500 per/day (85 models) The luggage industry¶s growth rate is dependent on the level of business & leisure activity in the This season There is no restriction on witnesses a spate country. Raw materials can be freely imported. promoted as The growth in the status for International prices of raw tourism industry consumers & materials are highly flexible. Social Environment: Luggage sales show a peak during the marriage season. Economic Environment: Technological Environment: Technology is also developed in manufacturing of the luggage with specialized moulding materials used to mould the plastic material. economy works barriers were there for well for the foreign firms to enter into Brands are luggage industry. PORTER·S MODEL . 633.868 Rs 28. Patna also has the highest per capita saving in the state at Rs 675.155 Rs 22.768 Rs 43.PATNA SCENARIO Bihar's latest Economic Survey for 2007-08 says as much: Patna's capita gross district domestic product is Rs 31. Average Per capita income Per capita City income Patna Bangalore Kolkata Hyderabad Greater Mum bai Delhi All India Rs 31.768 Rs 40. Across the state. the city also has highest per capita spending share on health and education (in 2006-07) at Rs 674 and Rs 5.958. Highest per-capita fuel consumption and the highest per capita income at Rs 6.946 .441.441 Rs 29.394 Rs 27. Scope of branded luggage in Patna To check the scope of branded luggage in Patna. Retailer survey Sample size : 20 ( Judgmental sampling) Customer survey Sample size: 50 (Judgmental sampling) . It has been done for retailers and customers both. primary research has been done in Patna though questionnaire survey. RETAILER SURVEY . .Luggage market 40% ORGANISED UNORGANISED 60% Share of organised retailing is 40% and of unorganised is 60% Although the share of unorganized market is less than organized but still organized market is growing at a very fast pace in Patna. CONSUMER PREFERENCE FOR LUGGAGE 20 18 16 14 12 10 8 6 4 2 0 Series1 Consumer have maximum preference for soft 2 wheel strolley . duffle. wheel duffle and hard suitcase . AMERICAN TOURISTER AND SAMSONITE MINIMUM PRICE OF AMERICAN TOURISTER MINIMUM PRICE OF SAMSONITE MINIMUM PRICE OF VIP BRIEFCASE SATCHEL BACKPACK VANITY CASE SOFT SUITCASE HARD SUITCASE WHEEL DUFFLE DUFFLE SOFT 2 WHEEL STROLLEY HARD 2 WHEEL STROLLEY SOFT 4 WHEEL STROLLEY HARD 4 WHEEL STROLLEY 6 9 132 11 16 26 21 2 7 21 3 27 4 4 89 7 12 11 19 17 2 149 2 23 36 39 .COMPARARTIVE ANALYSIS OF PRICES OF VIP . MAXIMUM PRICE OF AMERICAN TOURISTER MAXIMUM PRICE OF SAMSONITE MAXIMUM PRICE OF VIP BRIEFCASE 3550 6000 SATCHEL 1750 2900 4000 BACKPACK 2100 1300 2100 1450 VANITY CASE SOFT SUITCASE HARD SUITCASE 1800 3500 5400 6500 WHEEL DUFFLE 3600 1600 2400 DUFFLE 6500 8000 4900 7000 4500 17000 SOFT 2 WHEEL STROLLEY 19000 HARD 2 WHEEL STROLLEY 19000 SOFT 4 WHEEL STROLLEY HARD 4 WHEEL STROLLEY 6000 18000 . MARKET SHARE OF SOFT AND HARD LUGGAGE SOFT LUGGAGE HARD LUGGAGE 35% 65% Share of soft luggage is 65% Soft luggage market is capturing the share of hard luggage market. . CUSTOMER SPLIT FOR VIP CUSTOMER SPLIT OF OTHERS NEW CUSTOMERS REPEAT CUSTOMERS NEW CUSTOMERS REPEAT CUSTOMERS 10% 21% 90% 79% Repeat customers of VIP is 90% and for others it is 21%. . Customer loyalty for VIP is maximum in comparison to other brands. AVERAGE FOOTFALL 30 29 25 22 OFF SEASON 20 18 15 MARRIAGE SEASON 8 6 7 10 5 0 VIP SAMSONITE SAFARI Average footfall for VIP is 29 and for SAMSONITE it is 22. Luggage industry is mainly depend upon marriage season . P verma road .LOCATION ANALYSIS S.P VERMA ROAD BORING ROAD DAKBUNGLOW CHAURAHA EXHIBHITION ROAD 19% 10% 52% 19% 52% of the luggage shops are located on S. CUSTOMER SURVEY . CONSUMER PREFERENCE BRANDED NON BRANDED 23% 77% Consumer preference for branded luggage is 77%. And for non branded it is 23% . .BRAND AWARENESS 50 40 35 25 15 35 VIP AMERICAN TOURISTER SAMSONITE ALFA ARISTOCRAT SAFARI Brand awareness of VIP is 100%. ALFA AND ARISTOCRAT AMERICAN TOURISTER SAMSONITE SAFARI OTHERS 8% 10% 14% 52% 16% Although brand preference for VIP is maximum With 52% .BRAND PREFERENCE VIP. REPEAT PURCHASE Once in 6 month Once in 3 year Once in year More than 3 year Once in 2 year 2% 18% 10% 20% 50% 50% of the customers do repeat purchase in 3 years . Chart Title 1K TO 2K 2K TO 4K 4K TO 8K MORE THAN 8K 10% 34% 30% 26% 30% of the customers spend 2k to 4k for one time luggage purchase and 34% spend more than 8k. . .BRIEFCASE SATCHEL BACKPACK VANITY CASE C A T E G O R Y SOFT SUITCASE HARD SUITCASE WHEEL DUFFLE DUFFLE SOFT 2 WHEEL STROLLEY HARD 2 WHEEL STROLLEY SOFT 4 WHEEL STROLLEY HARD 4 WHEEL STROLLEY 0 500 1000 1500 2000 1750 1300 1400 1700 2150 2500 2300 2300 MAXIMUM PRICE MINIMUM PRICE 4150 4350 4300 4400 2500 3000 3500 4000 4500 RANGE Price preference by consumers shows that the consumers have preference for mid range luggage. .PREFERENCE EXCLUSIVE BRAND OUTLET MULTI BRAND OUTLET LOCAL VENDORS MALLS 6% 20% 44% 30% 44% of the consumers have preference for exclusive business outlets and 30% have preference for mbo¶s. 2 3.6 and for quality is 2.Weighted average rank 4.4 2 1.8 3.6 quality price fashion design durability Weighted average rank for price is 1. . In Patna. VIPIL with its brands VIP . Most preferred place to open a store in Patna is S. Soft luggage market is eating up the share of hard luggage. There is a shift in demand of the customers for luggage As VIP is in the luggage business from very long time. duffle. the loyalty for VIP is maximum in Patna also.FINDINGS THROUGH SURVEY Retailer survey Although the share of unorganized market is less than organized but still organized market is growing at a very fast pace in Patna. So. luggage industry mainly depends upon marriage season. . wheel duffle and hard suitcase. Consumer have maximum preference for soft 2 wheel strolley . ALFA and ARISTOCRAT is a big fish in market because of its wide distribution channel.P verma road. Although brand preference for VIP is maximum but others brand are also growing in Patna. Brand awareness of VIP is maximum. Consumers have maximum preference for exclusive business outlets. Price preference by consumers shows that the consumers have preference for mid range luggage. . Repeat purchase is maximum for once in 3 year which shows that customer frequency will be less than in this industry.Consumer survey Considering luggage is a one time purchase consumer preference for branded luggage is more. Reason: A) Because of duopolistic nature of this industry consumers don·t have much choice in choosing brands . Existing brands other than SAMSONITE and VIP can widen their product range and can launch new products and new brands catering to different segments.SUGGESTIONS 1. B) Because of duopolistic nature of this industry consumers don·t have much choice in choosing brands . Reasons: A) Development and growth in Patna.2) There is a good scope for any new brand targeting mid segment customers to come into Patna and start the business. THANK YOU .