This document provides an overview and analysis of the Indian luggage industry. It discusses the industry's current size and growth rate, as well as trends like consumers shifting to softer luggage. It then analyzes the industry using Porter's Five Forces model and provides a SWOT analysis of major player VIP Industries. Competitors like American Tourister and Samsonite are also analyzed. Issues facing the industry like increasing competition and the prevailing unorganized sector are discussed. The document concludes with recommendations for VIP Industries around innovation, handling competition, expanding e-commerce, and maintaining financial stability.

1. Strategic Management
Submitted by:
Aditya Khare Aditya Thakare Cheena Pasrija Joydeepta Biswas
Indian Luggage Industry

2. Contents
• Overview
• Industry Analysis – PEST
• Porter’s Analysis
• VIP – Company Analysis
• VIP – SWOT Analysis
• VIP – Competitor Analysis
• Issues
• Recommendations and Implications

3. • Current Growth: 10-15% CAGR per annum
• Expected to reach over INR 100 billion approx. by 2015
• Drivers
• Increasing disposable income of consumers
• Enhanced visibility of products
• Lifestyle product
• Organized sector:45%; Unorganized sector: 55%
Changing Trends
• The franchisee model
• High end segment: tying up with global brands
• Mid segment: value for money products
• Large pool of consumers attracting Foreign players
• The preference of consumers is now shifting to soft
luggage
Overview
14.2
26.0
54.7
10.9
20.3
43.4
7.0
11.5
20.3
2006 2010 2015*
SalesvalueinbillioninINR
MARKET SIZE
Casual Bag Segment Travel Bag Segment Business Bag segment

4. •Government allows
importing of raw
material under OGL
thereby easing the
import of raw material
•Prices of raw material
are flexible
•Cost structure of final
product is affected by
Excise duty, Import
duty, Custom duty,
Sales tax
•Luggage industry grows
with the growth of
Tourism industry
•Performance of
luggage industry also
depends on level of
business and leisure
activities
•Potential growth of 10-
15% is making India a
hub for multinational
companies
•Luggage sales increases
during festive seasons,
marriage occasions,
vacations
•Brands are positioned
as status for consumers
and tourists
•Luggage industry has
seen shift from tin
trunks, suitcases made
of plywood to
technologically
superior plastic
moulded suitcases
•Aesthetics, comfort &
convenience are taken
care of while designing
the luggage
•Various features were
implemented such as
combination locks,
wheels, handle, light
weight material etc.
•VIP spends around 7%
and Samsonite spends
around 9% on
technology
Industry Analysis

5. Rivalry among competitors (High):
1. Growth : Moulded luggage (8%-10%);
Soft luggage (25%)
2. Lack of switching cost
3. Heavy investment makes exit difficult
Threat of Substitute (Medium):
1. Soft luggage substitutes for moulded luggage
2. Soft luggage is flexibility in size, design makes
Bargaining Power of Buyers
(Medium):
1. Targeted customer base is huge
2. Many players in organized sector
3. Huge unorganized sector
Threat of New Entrant (low):
Entry Barriers:
1. Distribution channel of Existing players
2. Heavy investment by new entrant required; returns cannot
be expected soon
3. Excellent brad awareness of existing players
Bargaining Power of Suppliers
(Medium):
1. No substitute raw material available
2. Material can be imported as PP under
OGL (VIP and Samsonite)
3. The unorganized sector source their
material from local sellers
Porter’s Analysis

6. • VIP has dependably been a business pioneer
and a class characterizing brand
• Six different brands
Carlton, VIP bags, Skybags, Caprese, Aristocat
and Alfa
• Partnered with Oglivy to handle advertising
and public relations of all the brands
• In the organised segment, VIP Industries is the
market leader with 60 to 65 per cent share
across all the brands
• Distribution is their strength
VIP Industries
• Only a few companies competing against
VIP – American Tourister and Samsonite
being the major ones
• Only brand to have a presence in Rural and
Semi-Rural market
• Gradually taking a step forward in E-
commerce sector
• Strong retail presence
• Plan for re-entering the kid’s bag market
• Launch of Eco-friendly bags, Acura

7. • Prevent theft of luggage – digitally-enabled bags
with a companion mobile application
• Powerbag luggage – built-in battery to recharge
any electronic device
• Bringing in more technical innovation
• Penetrating more into rural markets by
promoting Alfa bags
• Worlds 2nd largest; Asia’s largest
• Huge customer base
• Caters to all section of the society
• Diversified product range – suitcases to hand
bags
• Efficient manufacturing facilities
• VIP failed to anticipate certain product
categories such as ladies handbags, and
therefore was a later entrant into them
• Not leveraging upon the E-commerce boom
• Competition from unorganized sector in middle
and lower segment
• Entry of international bag manufacturers in
premium bag segment
T
W
O
S
SWOT Analysis

8. American
Tourister
 Usually have more capacity than VIP
 More Durable
 Although VIP’s products are more stylish
Samsonite
 Perceived more trendy by the consumers
 More durable
 Although VIP is a more cost effective choice
Princeware
 VIP is perceived to be a better brand- more
durable
 Has more Variety
 Is cost effective
Hidesign
 Efficient with handbags
 VIP is famous for trolley
Online offerings to provide luggage or bags on
rent- https://www.rentluggage.com/
Upcoming innovative products like- mobile
cupboards or cupboards made of cloth which
could be carried around
Direct Competition
Subsidiary Products
Indirect Competition
Liberty LOUI VUITTON
Adidas Gucci
Nike Victoria Secret
Puma Chanel
Fastrack
Local or small players
Lower end:-
Cost effective segment.
Local or small players
Brands Competitive advantage
Briggs & Rileys
 Strong brand
 Perceived as High quality
 Positive customer views
Tumi
 Customer service
 Pricing
Timberland
 Is very strong in certain local markets
 Distribution channel
Anne Klein
 Preferred more by women
 High variety
Major
International
Competitors
Other
Competition
Replacement
Competition
Direct
Competition –
Core Products
Competitor Analysis

9. • Increasing Consumerism
• Better understanding of product quality and increased disposable incomes
• Increased fashion quotient
• Increasing western influence
• Increasing Competition in Domestic Market
• Indian luggage market growing and hence drawing attention
• Perceived threats- Samsonite and American Tourister
• Emerging threats- Calonge, Dandy, Hidesign
• Prevailing unorganised sector
• Franchising
• Initially big retailers
• Gradually moving to franchisee model
Issues

10. Recommendations and Implications
• Keeping up with the demand
• Category defining brand
• Core Competency- Innovation and setting trends
• Range of polycarbonate luggage bags
• Handling the competition
• Competition lacks advertising, thus awareness
• Alfa brand to tackle unorganised market
• Handling e-commerce
• Overhauling of online sales website
• Partnerships with existing e-commerce players
• Virtual Integration for delivery
• Financial Stability
• Nearly zero debt-to-equity ratio
• “A+” credit ratings from past 3 years
• Interest coverage ratio very high compared to
other competitors

12. Appendix: Financial Analysis

13. Appendix: Futuristic Suitcases