Luggage makers Samsonite, Safari and VIP Industries saw a significant decline in their growth rate as last year’s high base weighed on the March quarter earnings amid a weak wedding and travel season this year.
Samsonite’s India business fell 10% year-on-year during the quarter compared to 108% growth a year ago, while Safari saw its growth rate slide to 21% from 57% last year. VIP Industries saw its sales growth taper off to 14% from 26% a year ago. Most companies in the segment indicated that there would still be strong growth but not similar to the resurgence seen immediately after Covid-19.
“The pandemic has completely altered travel habits and frequency. This quarter’s performance was a temporary blip mainly due to high base since we have doubled our business in the last three years, which is not sustainable every quarter. So our optimism remains that the sector will not see any slowdown for a long term although the growth rate may change,” said Jai Krishnan, CEO, India at Samsonite South Asia.
In its global earnings call, US firm Samsonite, the world’s biggest luggage maker, also said that the Indian business may be down compared to historical levels, when it doubled its sales, but is expected to grow in mid-single digits due to high base.
“India is the one market where we have strong number two, number three competitors as well. What we are seeing in India is a lot of promotional activity. Our competitors are also discounting. There’s a lot of high inventory positions as well. And so, the overall market in India, there’s a lot of bags,” Reza Taleghani, chief financial officer at Samsonite, told analysts.
In 2022, India had outpaced China to be Samsonite’s biggest market globally but a year later, China regained the top spot after easing travel restrictions.
The luggage business in India is estimated at less than ₹50,000 crore, with organised players accounting for about a quarter of the industry. VIP Industries, Samsonite and Safari control nearly 90% of the branded segment. In the past few years, the industry has grown steadily, led by changing lifestyles, growing middle class and availability of low-cost airfares, although growth was completely halted during the first year of the pandemic.
“Confidence on doing double-digit growth for the year is behind two, three things,” Neetu Kashiramka, managing director at VIP Industries, told analysts. “One, we feel that by doing right we will start to gain market share and if the industry is growing, and most of the people are saying that the industry will grow 12%, that is the confidence I am getting, we should do 1% or 2% better than industry. And that’s how I am saying that we should do double-digit growth. Travel is doing well if you look at airline data, if you look at the hotel industry. At this point of time, it is giving positive signals.”
Consumers are shifting towards hard luggage because of better looks and durability. In the past five financial years, the market share of hard luggage has shot up to 55% from 33%. A recent RedSeer report said revenge tourism is driving consumers to travel more and spend on quality luggage, and brands are offering competitive and aggressive pricing to boost their sales. A reduction in goods and services tax by the government has also made branded luggage more accessible than ever, narrowing the price gap between branded and unbranded models.
