“ T O S T U D Y T H E M A R K E T S H A R E O F 5 K I N D S O F L U G G A G E B A G S

I N A H M E D A B A D ”

BY I L E S H G H E VA R I YA

MRACH 2016

TABLE OF CONTENT• Introduction of industry• PEST Analysis • 360 degree analysis• Product portfolio• Competitor analysis for VIP industries• Primary Research

Research MethodologyAnalysisBrand wise saleBrand wise Market shareCategory wise saleCategory wise Market share

• Findings• References

INTRODUCTION OF INDUSTRYThe Indian Luggage Industry is mainly engaged in the production of • Trolley bags, • bag packs, • duffel bags, • laptop bags• business travelling bags• Current Growth: 10-15% CAGR per annum• The luggage that people carry varies according to needs and choices and

this variation in needs and requirements makes the consumers to demand luggage in various styles and this provides the reason for the luggage products to be so diverse in terms of utility.

• The luggage market of India is undergoing a lot of innovation and development in the context of increasing the convenience of people. Innovation has led to the coming up of water-proof luggage and “the smart luggage” called pluggage. Pluggage provides various facilities like charging of phone, weighing scale and inbuilt speaker.

• The luggage market can be segmented on the basis of organized and unorganized segment where unorganized sector still occupies majority share of the market. Further segmentation could be done on the basis of make or materials and this segmentation suggests that soft-shell luggage holds the maximum share of the market, mostly because of its easy-fit in small spaces.

• The luggage market is mainly driven by the growth in the Indian travel and tourism industry as with more people travelling, the luggage they carry will increase proportionally. The more people earn, the more they spend on recreational activities like travelling. Luggage is an indispensable part of travelling and now it is becoming a status symbol too. Moreover the increase in urban population and increase in per-capita income have led to increased demand for products from the luggage industry. In addition to this, with the increased number of school going children, the demand for school bags have also increased and it has resulted in increased production in the luggage industry.

MARKET SIZE

2006 2010 2015*0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

14.2 26.054.7

10.9

20.3

43.4

7.0

11.5

20.3

Market Size

Casual Bag Segment Travel Bag Segment Business Bag segment

Sale

s val

ue in

bill

ion

in IN

R

Drivers

• Increasing disposable income of consumers• Enhanced visibility of products

• Lifestyle product• Organized sector:45%; Unorganized sector: 55%

CHANGING TRENDS

• The franchisee model• High end segment: tying up with global brands • Mid segment: value for money products• Large pool of consumers attracting Foreign players • The preference of consumers is now shifting to soft luggage

HOW BAG MANUFACTURERS SEE THE MARKET...- by Type

– Suitcases/Pullmans– Garment Bags and Carriers– Totes and Casual Bags– Carry-ons– Business Bags– Sport Bags– Backpacks– Daypacks

- by Material- by Hardware- by Accessories

• Government allows importing of raw material under OGL thereby easing the import of raw material

• Prices of raw material are flexible

• Cost structure of final product is affected by Excise duty, Import duty, Custom duty, Sales tax

• Luggage industry grows with the growth of Tourism industry

• Performance of luggage industry also depends on level of business and leisure activities

• Potential growth of 10-15% is making India a hub for multinational companies

• Luggage sales increases during festive seasons, marriage occasions, vacations

• Brands are positioned as status for consumers and tourists 

• Luggage industry has seen shift from tin trunks, suitcases made of plywood to technologically superior plastic moulded suitcases

• Aesthetics, comfort & convenience are taken care of while designing the luggage

• Various features were implemented such as combination locks, wheels, handle, light weight material etc.

• VIP spends around 7% and Samsonite spends around 9% on technology

PEST ANALYSIS

Rivalry among competitors (High):

1. Growth : Moulded luggage (8%-10%); Soft luggage (25%)2. Lack of switching cost 3. Heavy investment makes exit difficult

Threat of Substitute (Medium):1. Soft luggage substitutes for moulded luggage2. Soft luggage is flexibility in size, design makes

Bargaining Power of Buyers (Medium):

1. Targeted customer base is huge2. Many players in organized sector 3. Huge unorganized sector

Threat of New Entrant (low):Entry Barriers:1. Distribution channel of Existing players2. Heavy investment by new entrant required; returns cannot be expected soon3. Excellent brad awareness of existing players

Bargaining Power of Suppliers (Medium):

1. No substitute raw material available2. Material can be imported as PP under OGL (VIP and Samsonite)3. The unorganized sector source their material from local sellers

360 DEGREE ANALYSIS

KEY VENDORS

PRODUCT PORTFOLIO OF VIP INDUSTRIES

PRODUCT PORTFOLIO OF VIP INDUSTRIES

PRODUCT PORTFOLIO OF VIP INDUSTRIES

Brands Products Target AudienceCarlton Backpacks, Messenger

bags ,briefcases, Duffel bag, Trolley bag

BusinessmenTagline : New Face of Business

VIP bags Backpacks, Messenger bags ,Duffel bag, Trolley bag

Quality conscious customers

Skybags Backpacks, Messenger bags , Duffel bag, Trolley bag

Travelers who like to make a style statement everywhere they go

Caprese Auxiliary Pocket like Purses/MursesFanny packs ,Small accessory cases

Fashion conscious ladies

Aristocrate Backpacks, Messenger bags ,briefcases, Duffel bag, Trolley bag

Durability and cost conscious people. 

Alfa Backpacks, Messenger bags ,briefcases, Duffel bag, Trolley bag

• Cost conscious people• Value-for-money brand 

*Mainly focused product category is coloured red

PRODUCT PORTFOLIO OF SAMSONITE

Brands Productssamsonite Backpacks, Messenger bags ,briefcases, Duffel bag,

Trolley bagAmerican Tourister Backpacks, Messenger bags ,Duffel bag, Trolley bagHartmann Backpacks, Messenger bags ,Duffel bag, Trolley bagTumi Backpacks, Messenger bags , Duffel bag, Trolley bagSpeck Backpack

PRODUCT PORTFOLIO OF SAMSONITE

*Mainly focused product category is coloured red

PRODUCT PORTFOLIO OF SAFARI

Brands Products Target AudienceSAFARI Backpacks, Messenger

bags ,briefcases, Duffel bag, Trolley bag

Cost conscious people.Affordable products

*Mainly focused product category is coloured red

PRODUCT PORTFOLIO OF WILDCRAFT

Brands Products Target AudienceWildcraft Backpacks, Messenger

bags ,Duffel bag, Trolley bagAdventure Enthusiast

*Mainly focused product category is coloured red

Wildcraft Usually have more capacity than

VIP More Durable Although VIP’s products are more

stylish

Samsonite

Perceived more trendy by the consumers

More durable Although VIP is a more cost

effective choice

safari  VIP is perceived to be a better

brand- more durable Has more Variety Is cost effective

Hidesign Efficient with handbags VIP is famous for trolley

Online offerings to provide luggage or bags on rent- https://www.rentluggage.com/ Upcoming innovative products like- mobile cupboards or cupboards made of cloth which could be carried around

Direct CompetitionSubsidiary Products

Indirect Competition

Liberty LOUI VUITTONAdidas GucciNike Victoria SecretPuma Chanel

Fastrack

Local or small players Lower end:- Cost effective segment.Local or small players

Brands Competitive advantage

Briggs & Rileys

Strong brand Perceived as High quality Positive customer views

Tumi Customer service Pricing

Timberland  Is very strong in certain local

markets Distribution channel

Anne Klein Preferred more by women High variety

Major

International

Competitors

Other Competitio

n

Repl

acem

ent

Co

mpe

titi

on

Direct Competitio

n – Core Products

COMPETITOR ANALYSIS FOR VIP INDUSTRIES

THE FRAMEWORK

This analysis of the luggage industry is based on the following 5 user based Classification of the luggage:Commuter Bags:These are luggage that you take with you to office or school on a daily basis. 1. Backpacks, 2. messenger bags 3. briefcases Travel Bags:This type of bags find use in longer travel itineraries and can be a 4. Duffel bag, 5. Trolley bag

*I have not considered “auxiliary Pockets” in this research

WHAT ARE USERS DOING WITH THEIR BAGS?

WHAT ARE USERS DOING WITH THEIR BAGS?

PRIMARY RESEARCH

RESEARCH METHODOLOGY

Sample size:50 (Consumers)

10 (retailers)

Sampling technique:Stratified sampling

Research instrument:

Well structured questionnaire.

Data analysis:1) Excel Models

2) Pie chart and Bar graphs

Data analysis software:Microsoft

excel

Research territory :Ahmedabad

*we have not used SPSS for analysis because of time constrain

ANALYSIS

We asked daily commuters and travelers to rate their bags on these 6 attributes...

1. style2. professional appearance3. carrying capacity4. durability5. comfort6. organization / pockets

COMMUTERS CHOOSE BACKPACKS FOR COMFORT, MESSENGER BAGS FOR STYLE, BUSINESS CASES FOR THEIR PROFESSIONAL APPEARANCE, DUFFLE BAG AND TROLLEY BAG FOR CARRYING CAPACITY .

RESPONDENT RETAILERS (AHMEDABAD)1) GOBLIN Bags 'n' More, parimal garden2) The Luggage Factory, satellite3) Luggage Point, satellite4) Shreeji Luggage Corner, narayanpura5) Bag Palace, paldi6) Prachi Luggage, Ankur cross road7) Green Channel The Luggage Shop, ellisbridge8) Gurukrupa Bags & Luggage shop, Meghaninagar9) Masco Luggage, gomtipur10) Jay Maruti Bag Shop, Vastrapur

BRAND WISE SALE*Values in INR

BRAND WISE MARKET SHARE

VIP industries20%

safari12%

samsonite22%

wildcraft11%

otherbrand/Un-organised sector

35%

Market share

VIP industriessafarisamsonitewildcraftotherbrand/Unorganised sector

CATEGORY WISE SALE*Values in INR

CATEGORY WISE MARKET SHARE

17.6; 18%

5.8; 6%4.5; 5%

33.8; 34%

38.3; 38%

Market share

Backpacks Messenger bags Briefcases Duffle bags Trolley bags

FINDINGS

• Samsonite and VIP industries are biggest market player in Ahmedabad territory with market share of 22% and 20% respectively.

• 60% of Samsonite’s sales coming only from American Tourister.• Skybags and Alfa together fetch 55 % of VIP Industries’ sales. • Demand of Trolley bags and duffle bags are highest in luggage bag category with

market share of 38.3% and 33.8% respectively.• Commuters choose backpacks for comfort, messenger bags for style, business cases

for their professional appearance, Duffle bag and trolley bag for carrying capacity.• Users are not completely satisfied with any of the five main types of luggage bags.

They want better style, professional appearance, and organization/Pocket.

Luggage bags have two fundamental problems...• No single bag works well in all situations.• There’s no easy way to carry more than one bag.Users may deal with these challenges in a variety of ways...• Buy lots of different bags & use a different bag for different situations• Borrow bags from other people• Buy one bag and try to force it to work in every situation• Buy a ‘hybrid’ bag• Carry multiple bags

FINDINGS

OPPORTUNITY

• The Analysis revealed that the ‘select a single bag’ solution was not satisfying all of the user needs.

• And the alternate option of carrying multiple bags had its disadvantages.• These issues points to opportunities that exists in the commuter bag

market

REFERENCES

• Travel Goods Association, http://www.travel-goods.org • The Wikipedia encyclopedia• survey data• http://www.MarketResearch.com• http://www.vipindustries.co.in/brands.php

FUTURISTIC SUITCASES

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