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Luggage-maker VIP eyes mass, premium segments

Abhishek Law Kolkata | Updated on April 19, 2018

Sudip Ghose, CEO, VIP Industries

The country’s largest luggage and backpack-maker VIP Industries has seen GST come-in as a great leveller. As the price difference with the unorganised sector shrinks, the luggage-maker is looking to focus on the volume segment with mass brands ‘Alfa’ and ‘Aristocrat’.

In the premium category, it will focus on after-sales service as a differentiator especially for the ‘Carlton Edge’ series.

According to Sudip Ghose, CEO, VIP Industries, the mass and premium segments will be in-focus this fiscal.

“We have seen a double-digit growth last year (FY18). This year too, growth will be good with our focus on the mass and premium segments,” he told BusinessLine in an interview.

Market sources say that it is the mid-market segment (₹3,000 and above) where the company has its strongest presence through brands like ‘Skybags’ and ‘VIP’. The other major players in the domestic luggage market include American Tourister, Samsonite, Safari and Delsey.

GST – a leveller

In fact, Ghose explains how the introduction of GST has benefited the company in the mass segment, where the unorganised or unbranded players had a price advantage. Price difference between VIP and unbranded ones were quite high in the pre-GST era.

For example, a branded offering (of Alfa or Aristrocrat) came at ₹3,000, while unbranded offerings were less than half the price at ₹1,200. A reduced tax incidence in the new regime, stringent custom rules – leading to a slowdown in inflow of Chinese products, and increased compliance have pushed up the cost for unbranded players by nearly 25 per cent.

Accordingly, VIP has introduced its mass range starting ₹1,700 – a mere 13 per cent over the unbranded segment. It has also brought down prices to be more competitive, sources say.

“With GST, unbranded offerings are now expensive. We are also refocussing on the mass segments at lower price points,” Ghose said. These mass brands account for one-fourth (25-28 per cent) of the company’s turnover.

Premium push

In the premium segment, the push will come through brands like Carlton and Carlton Edge. Plans are afoot to introduce a “lifetime warranty” scheme for Carlton Edge where the company will replace or service its offerings, in case of any damage caused because of airport handling or otherwise.

Nearly, 20 per cent complaints received by luggage companies relate to a damage during travelling or at airports.

Published on April 18, 2018

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