Millennials may be prioritizing travel over handbag purchases, but one accessory is thriving as a result — luggage.The sector — valued at more than $30 billion — is experiencing steady single-digit growth, buoyed by an increase in travel worldwide. A shift in spending culture — away from material objects and toward experiences — is not the industry's only stepping stone. Populous regions where newly minted members of the middle class have begun exploring travel for the first time have provided the luggage industry with a host of new markets.Samsonite chief executive officer Ramesh Tainwala, sees this shift in consumer culture as a big opportunity. The company is luggage’s category leader, with a market share including Tumi estimated to be in the low- to midteens. It is far outpacing the industry’s 6 percent-or-so annual growth, reporting 15.5 percent sales growth in the 2016 fiscal year. The executive appeared unfazed by luggage start-ups like Away, noting that at $10 million in annual sales, they are “relatively small players.”“We are continuously growing double digits over the past couple of years because travel is a priority for people — food, entertainment, travel comes to the top of the list of priorities. Even if people are sacrificing anything else, they will not compromise.“People want to spend a bigger portion of their earnings on experiencing new cultures, new foods. Even for a short holiday. People in Hong Kong will go to Korea just for a meal — if you are willing to travel one or two days just to experience some food, that greatly helps our business,” said Tainwala.“When I was starting out, my priorities were to get a house and get married — buy a refrigerator, a television. I didn’t know when I started to think about travel. Now there is no hurry to do any of that, it’s more important to be well-traveled,” added the executive.Changes in airline rules have shifted Samsonite’s business. Tainwala notes that 30 years ago, carry-ons and duffels accounted for 7 to 8 percent of the firm’s sales. Today, they are between 40 and 50 percent.“People are taking more frequent trips, shorter trips. They want their belongings to be with them — they don’t want to wait for the luggage to arrive at the carousel. They don’t trust moving from one city to another,” he noted.The group is developing fibers and metal structures to ensure that its luggage is as light as possible — particularly given carry-on weight restrictions imposed by increasingly popular budget lines.Here, Tainwala discusses Samsonite’s various markets, price points, global scale and digital efforts in the face of churning cultural change.WWD: How much room do you see for growth?Ramesh Tainwala: If you look at it — in the last five years, our business has grown by 12.4 percent at a compound annual growth rate. The industry growth is 4 to 5 percent. The category’s growth is closely correlated with the growth in tourism. If you look at the World Tourism Organization, their statistics say that over the last five years, the number of passengers undertaking travel has grown by 3 to 4 percent.If you look, there are parts of the world where people travel in much bigger growth numbers — the Chinese have just crossed 100 million outbound residents per year last year. They are expecting by 2020 for that number to jump to 200 million, so doubling in four to five years is a humongous number.Very populous countries where the middle-class income is on the rise means that now the number of people becoming involved in the franchise of travel — income levels are barely high enough to reach basic necessities, now basic necessities include travel.WWD: How are you adapting to various cultures’ use of luggage?R.T.: We are planning a concept in Japan that you can rent luggage. In Japan, the homes are so small that after a holiday — where are you going to put the luggage? So we have the concept of renting luggage. It’s very Japan-specific, so there is a lot of focus on hygiene.We put the luggage into a car-wash machine of sorts — it washes any part that comes into human contact. It gets delivered with a vacuum-sealed wrap on it. They are fine with that — the need is not so much driven by cost advantage, and more driven by limitation of space.WWD: How do you uncover new pockets of customers today?R.T.: The Samsonite group now carries a wide price spectrum, with the top end of Tumi going up to more than $1,000. Samsonite is more mid-high at $200 to $600. Then we have Cumberland and American Traveler.The bottom end of the market is growing the fastest. More people want to travel, especially in emerging countries there is a new middle class. It’s a humongous population where people now recently are increasingly able to afford travel. We see ourselves focusing on this segment of the market and want to continue to deliver real value to the consumer — we don’t see ourselves getting into crazy price points.WWD: Where do you have an eye for growth next?R.T.: The market universe is about $32 billion, so we have a lot more room to grow. When we show up in a country like Afghanistan or Rwanda, we are often the only guys there, it could be just us and Coca-Cola. If we make ourselves genuinely the first in the category to show up in many countries, that is a big opportunity. The U.S. is our largest market and Latin America is our fastest-growing market. We are in more than 100 countries now. Not many accessories companies can claim that wide a distribution.WWD: How do you feel about brick-and-mortar versus online retail?R.T.: I feel brick-and-mortar is here to stay. We have to adapt it to new consumer behavior. Now the divide between online and off-line is more blurred. It’s difficult to say where the sale began. Very often a sale in-store started online, and they came in to look at the product and functionality before they made up their mind.Going forward online is becoming more and more important from a community point of view, but I don’t believe in the divide between online and off-line — I see it more as an omnichannel kind of thing. We are expanding to 50,000 points of sale worldwide with plans to expand by 200 to 300 points of sale annually.WWD: Why invest so much in retail?R.T.: For our product, retail becomes very important because the consumer wants to touch and feel the product. We are not just selling something abstract. It’s about how it looks and feels — does a laptop fit in there? Right now only 9 percent of sales are completely online.WWD: How do you counter the discount nature of today’s retail market?R.T.: I would say we have different outlooks for different brands. Tumi is our flagship; it doesn’t run on promotions and discounts. When it comes to Samsonite, about a quarter or so of sales come from promotional sales. When you get to American Tourist, that is a largely promotional brand. For Tumi, it’s definitely very sensitive not to create a perception of discounts in the mind of the consumers.
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