Samsonite mulls luggage priced below Rs 2, 000

BANGALORE: Samsonite's president for Asia Pacific and Middle East, Dr Ramesh Tainwala although based in Hong Kong was well aware of India's growing spending appetite.Yet, it was only on a recent family holiday to interior Rajasthan did he realise how rapid this transformation was in smaller Indian cities. He was keen on showing his children a bullock cart but there was none in sight.

"We did not see any farmers ploughing fields. What we saw was a four-wheel drive at most homes, everyone had a mobile phone and many even had iPads," Tainwala says in disbelief. "This base clearly would want luggage and messenger bags too," he adds.

The luggage maker, which was globally listed on the Hong Kong stock exchange in 2011, had for long been focused on offering sophisticated solutions to its consumers at Rs 10, 000 and above in India. With brand American Tourister it addressed the Rs 5, 000 and above price segment but it was only a year back that it made a departure from its premium-focused strategy by playing in the Rs 2, 000-5, 000 price segment as well.

"We are at the stage when we think why stop at the price point of Rs 2, 000," Tainwala, who was in Bangalore this week, says. He estimates the luggage market in India at Rs 5, 000 crore, of which half is catered to by unorganised players.

"People are willing to upgrade to national brands as long as it is a reasonable permium. They are willing to pay 10-15% more," Tainwala says.

Samsonite plans to widen its horizon in India across tier III and tier IV cities because brand AT in the Rs 2000-5000 price point already accounts for 10% of its revenue. The company abbreviated American Tourister into AT for this price segment as it did not want to invest in creating a separate brand.

"VIP Industries was having a honeymoon at this price segment until we entered," he says, adding that Samsonite had overtaken VIP by market share in end 2010.

Earlier, Samsonite's aim was to earn greater share of the wallet of a sophisticated consumer who was trading up. "When you are in a known zone, you become comfortable. But you cannot step down to another price segment with the existing business model," he says.

The company has created an independent vertical for brand AT. While earlier, knowledge of English was a prerequisite to join Samsonite, they found that it was a hindrance when tapping smaller cities.

The company also tweaked its product to suit the market's needs. Since new luggage purchases are typically linked to marriages in smaller cities, the company launched a marraige hamper in Bihar-a red suitcase, beauty case and briefcase for men.

Its luggage was designed to accommodate Indian's need to over pack. It did not focus on the robustness of wheels for brand AT as people do not tend to drag their luggage as much in smaller cities and prefer to lift it, he says.

While the company introduced swipecard locks to offer convenience for the frequent business traveller with Samsonite, even the number lock became a deterrent for the lower end of the market. Since this consumer typically tied a rope around the suitcase, the company launched a belt with lock&key to appeal to this consumer.

"The preception of value is different for the consumer in smaller cities. They typically look for security," Tainwala says.