Indian luggage industry stands at around 10000 crores; which has grown at around 12%-15% CAGR over the last 5 years. It is slated to grow at another 15% over the next 5 years
The global industry stands at $50 billion and is expected to grow at 6%-7% CAGR.
This implies luggage industry of India is around 0.03% of the GDP. Global luggage industry is around 0.05% of the GDP implying India has lesser than global average penetration of luggage.
Out of the 10000 crores industry, organized sector is nearly 50% and unorganized is 50%. The organized sector has grown over the years driven by premiumization, reliability, lifestyle decisions and economies of scale. Also, implementation of GST made a lot of unorganized players unviable.
Within this 50% organized, that is 5000 crores – VIP has around 43% market share followed by Samsonite at 30% and Safari at 15% market share. The market is truly oligopolistic with 3 players commanding more than 85% of the organized market.
The average cost of luggage in the organized sector is around 2000; implying 2.5 crore units are sold by the organized sector alone. If we combine the unorganized market as well, this would imply around 6 crore units sold every year. This means 1 in every 5 households in India buys 1 luggage or backpack annually. This number is staggering given how the country has evolved from luggage being bought only on marriages to it being bought one in every 5 years!
Key drivers for growth include
- Premiumization – Luggage and backpack have become a fashion symbol and choice and not just a product for transportation.
- Travel – Increase in travel and upgrade of travel implies that the quality of luggage has improved significantly.
- Separate luggage and SKUs for every member – India has evolved from being a household having a couple of pieces of luggage to every member having their own specific luggage.
- Replacement demand – The demand for replacement of both luggage and backpacks have increased significantly.
Luggage and backpack companies in India can have a significant headroom for growth if they are able to capture the evolving trends in the industry as the growth potential is immense – combination of both value and volume growth.
