Catalyst

Case logic

HARISH BIJOOR | Updated on August 21, 2014 Published on August 21, 2014

CT22_BIJOOR



Case logic



How big is the modern luggage market and how does one crack it? Are there opportunities ahead?



New Delhi

Jaspal ji, modern luggage retail is estimated at Rs 1,600 crore. Traditional luggage retail is much larger by a big multiple. This is not an estimated number, but could as well be as large as eight times organised modern luggage.

Typically luggage retail picks up as a nation’s GDP grows and its people get peripatetic.

In India, however, the replacement cycle of luggage is long and slow. People who wear the best of clothes, the best of shoes and belts, carry the worst of luggage. Luggage is largely seen to be of a functional nature and not cosmetic at all. Standard travel luggage is replaced once in 18 years, as per a study of ours in this category. That is way too long by international standards.

As of now, department stores will offer the best avenues for luggage retail, as more and more people will gravitate towards multi-stocking outlets rather than outlets with a limited range. The latter are fine for the top end, but for the belly of the market, which is the mid- and low-end, mass distribution through department stores is the answer. Apart from this, there is a need to evangelise styling and put an accent on the cosmetic side of luggage too. A focus on the feminine gender is also important to spur sales.

The key to success is distribution as well - wide distribution that takes luggage retail out of the deep by-lanes of cities, right onto the high-streets and right onto the departmental stores where people go to shop for dal, cheeni, chawal and atta.



Private label branding is growing, I hear. Some gyan please?



New Delhi

Kamini, private labels are strange in many ways. The prime appeal is value for money at the bottom of the pyramid and snob value at the top of the pyramid.

In India, there is a move in two directions. One is the “unique value” segment where products that do not exist in the market as of now, enter. These are innovative products that deliver value. In many ways, private label manufacturers in this category have learned from Amway and what it does. I would say that Amway is the biggest private label brand as well in many ways within the Indian context. Then at the top end, unique value is signified by building snob value into brands that distance themselves from mass brands on the counts of unique design, limited editions and high price.

Regular brands in categories that started as commodities and with modest premiums, and those that have progressively increased the distance between commodity and brand a bit too obscenely, need to be very, very worried about being bitten by private labels. This is the reason that big power brands from Hindustan Unilever and Procter & Gamble, for instance, have chosen to either cut prices or hold their price lines static for a while now. Brands in commodity categories and brands that have not invested in adding technological bells and whistles, such as microwave ovens and televisions, need to be worried too. Constant product and service innovation is a hedge against private labels catching up with brands.

Eventually, India will manufacture a fair number of private label brands itself. This will happen when the country’s prosperity indices taper off. And that is a while away. When we do reach that stage, India will be manufacturing private labels in large volumes for the export markets of the US and Europe and more, and for the Indian markets, the same facilities may as well be manufacturing brands that skim good margins. That is the contradiction of the current pattern of development that is focused on developing economies as opposed to the old format of the developed economies ahead in the race.



Harish Bijoor is a business strategy expert and CEO, Harish Bijoor Consults Inc. Send your questions to >[email protected]



Published on August 21, 2014
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