One half of the factory of leather goods brand Hidesign in sun-soaked Puducherry looks pretty much like a forest. You make your way through tall grass on a brick-laid path beside cool lotus ponds, across a small bridge on a snaking rivulet, out of which you almost expect a croc to come lunging at your feet. The scores of trees, the thick vegetation and buzz of crickets make you forget you're in an industrial zone as you head for the cottage in a far corner where founder and President Dilip Kapur meets visitors over a sumptuous home-made lunch.

Cyclone Thane, which devastated much of the Union Territory's vegetation in December, didn't spare Hidesign's factory either where many misshapen trunks of grand old trees stand, testimony to the force of wind speeds which touched 140 kph.

The cyclone is now a bad memory, but Hidesign's Kapur is prepared to ride the winds to grow the company even faster. While the leather goods brand has been growing at 20-30 per cent in the past few years, Kapur wants to pitchfork Hidesign to the plane of a luxury brand.

In a month, the Rs 120-crore Hidesign expects to be on that path when it launches a range of hand-crafted luxury wallets, clutches and handbags by Milanese designer Alberto Ciaschini. Ciaschini, who has been associated with Hidesign since 2004, will fuse Swarovski crystals and the Hidesign expertise to launch the range. Ask Kapur about Hidesign's brand journey and why this iconic brand itself cannot be leveraged as a luxury brand, he is thoughtful. “We had some debate - if we were going to upgrade the Hidesign brand with an average selling price of Rs 4,000, would customers see value in a product (under the same brand) which will sell at five times as much. We needed a differentiator,” he explains.

With Alberto Ciaschini, which will soon be unveiled in 20 top Hidesign stores across the metros, the brand will take a leap in terms of the leather used, the designs and the colours. The price will start at Rs 10,000 and go on up to Rs 25,000 for handbags and will be introduced in 18 styles. The brand, which will take up a portion of these stores, will have the legend, ‘handcrafted by Hidesign' (and while Ciaschini can have his name, the brand vests with Hidesign). “It fulfils the need for a contemporary design and status for the Hidesign brand,” emphasises Kapur.

Eventually, the plan is to take the luxury brand to multi-designer luxury stores and exclusive branded stores. The brand expects to rake in Rs 8 crore in the first year. “We expect Alberto to do wonders for brand Hidesign; the margins will be better, even though the risks are also greater,” adds Kapur.

A senior executive of a top brand-led consumer goods company says this is a good move as most luxury goods connote Europe. “For watches it's Swiss, perfumes it's French and so on, and leather is definitely an ‘Italian job', so an Italian-sounding brand can make a connect.” While there's a huge gap between high-end luxury brands and premium brands such as a Hidesign, “through the introduction of this label, we plan to bridge that gap”, adds Kapur.

The brand's journey

In the past decade, Hidesign has had a makeover in every sense. An export brand earlier, today it sells 65 per cent in the Indian market. Exports too have been flat. From being a decidedly male brand known for its office satchels, today 50 per cent of buyers are women.

Kapur says he's often asked why he didn't have a lower-priced brand than Hidesign. While it chose not to, the leather goods maker is looking for growth elsewhere. Its tie-up with the Future group for the Holii brand of ladies' handbags few years ago has worked out well, he says. The brand grew 60 per cent last year and is now a Rs 20-crore one.

Now the trick is to leverage the brand to accessories. Sunglasses, priced in the Rs 3,000 to Rs 4,000 range, will be in its stores later this year. “We want to make the experience more interesting for the customer and also get them to spend more money in our stores,” says Kapur.

A range of fashion pens and scarves are on the cards and even footwear, eventually, for which it is working with a German company in the leather belt of Ambur. “Something we have to keep telling our designers in Europe is that the mean age of the customer in India is 25 while in the West it would be more like 41 to 42 years,” emphasises Kapur.

Brand Manager Dipen Desai says that is a constant challenge, connecting with young customers. Facebook is the medium it uses to interact with customers on new offerings and he says there are over 55,000 active ‘fans' on Facebook for the brand which allows it do a lot of online promotions. Online is still a small proportion of sales but grew more than three times to Rs 45 lakh last year.

Moving with the times

It's important too for Hidesign to keep tabs on changing trends. Showing an exquisite leather iPad case, Desai says the ‘device' landscape is changing at a rapid pace. “All the office stuff you carry, everything has become smaller, from mobiles, laptops to cameras, so our bags too have been getting smaller and lighter.”

Asked if the trend of well-groomed and suited men heading off to work with a backpack in tow, accepted in the workplace, is affecting sale of leather office bags, Desai says those who love the feel of leather will stick to it.

Hidesign, he says, does have a range of backpacks priced between Rs 6,000 and Rs 7,000, but leather being an inherently heavier material than nylon the market is limited by that. “But, we have been making our bags lighter and smaller,” he's quick to add.

Competition is there in pockets, from brands such as Baggit in the West, Calonge in the south, Da Milano in the north, but the biggest threat is from the unorganised sector, especially cheap Chinese imports.

Kapur says several PE funds have been beating a path to Hidesign's door to invest but he's happy ploughing back profits to grow. Luxury brand Louis Vuitton has a 5 per cent stake in Hidesign and it will have the right of first refusal if he wants to bring in any new investor, he says. “For LV, it's a stake in a company in a fast-growing market, and we've benefited from LV's advice on building a luxury brand,” says Kapur, pointing out that the company was valued at Rs 300 crore a few years ago when the stake sale happened.

The executive, quoted earlier, a huge admirer of the Hidesign brand, says the imagery Hidesign conjures may appeal to an older audience and Hidesign needs to give itself a young touch. The trend of office-goers abandoning briefcases and leather bags for backpacks too is a threat, he points out. “The brand has had some excellent print campaigns but all the top luxury brands use television to reinforce the message; those stories are missing from Hidesign,” he adds.

Kapur is confident that Hidesign is accepted in the circles that matter.

Vouched for by the fact that The Economist bought 12,000 bags to gift to new subscribers. Or, that all the delegates of the recent BRICS conference in New Delhi, including the wives of four heads of state, were gifted Hidesign bags! A brand can't bag weightier endorsements than that.

Many facets to the business

Hidesign's Dilip Kapur is an astute businessman who has diversified away from his primary love of product design.

He runs two boutique hotels in Puducherry, Promenade and Duplex, which, he says, have seen flat growth the past year.

He's collaborated with the Taj group for a beach resort 25 km from town on the highway to Chennai which Taj will manage. His wife, Jacqueline, runs her own store, the 12,000 sq. ft. Casablanca, in the main shopping area of town, the bustling Nehru street, and together with Hidesign's flagship store has seen a 12 per cent growth.

Brand Ayesha, named after his daughter, has grown the fashion jewellery and accessories business almost 100 per cent to Rs 8 crore.

comment COMMENT NOW