What do Bill Clinton and Barack Obama have in common, apart from the fact that they have both been Oval Office occupants? It seems in a line of 44 US presidents, they are the only ones who have diverged from the Presidential preferred luggage brand of sorts. Clinton used Samsonite when he held office, whereas Obama is a bit of this and a bit of that person as far as luggage brands are concerned. The rest, 42 presidents to be accurate, used Hartmann, a 150-year old American luxury luggage brand.
That is the vignette Ramesh Tainwala, president Asia Pacific and Middle East, Samsonite uses to describe one of the company’s latest global acquisitions — Hartmann for around $35 million. This acquisition comes close on the heels of another, American “urban active lifestyle” brand High Sierra ($110 million). Both will be launched in India next year, with the company investing around Rs 40-50 crore for that.
An avid film buff, Tainwala says movies are an excellent way of understanding a country’s changing cultural landscape. And the current crop
of Bollywood films reinforces his perspective of a yuppie, high-on-fashion quotient upwardly mobile Indian populace that will identify with High Sierra. As for Hartmann, luxury goods market may be small right now but it surely has potential.
For instance, in 2010-11, India had 62,000 ultra-wealthy households and this will catapult to 219,000 households by 2015, observes a report by Kotak Wealth Management and Crisil titled ‘Top of the Pyramid’.
From a strategic point of view, High Sierra and Hartmann along with American Tourister (AT) and Samsonite, will help the company to spread its offerings across the price band in the Indian market. Currently AT is priced typically up to Rs 2,500 whereas Samsonite prices itself Rs 7,000 and upwards. This void, between Rs 2,500-7,000 will now be filled by High Sierra (Rs 4,500- 10,000). And for the absolute luxury aficionado, there will be Hartmann (priced in excess of $2,000).
The company is betting big on High Sierra with a far more aggressive strategy, preferring the let’s-invest-long-term approach. Over the next three-five years, High Sierra will be made available across 25 cities, with 200-250 touchpoints. In comparison Hartmann will be available just across four — five retail points mainly because of limited environs to set up luxury stores in. An e-commerce website will also be launched, though more to mark the brands’ presence than with an intention of sales. Considering that though the Samsonite webstore has been up for around two years now, the company is selling just four-five pieces each month as per the company.
The push for High Sierra is not surprising. The luggage market in India is pegged at Rs 3,000-4,000 crore, with the casual bags, backpacks markets of an equal size, but not as well proliferated by branded players. This is typically the case, say market players, with the casual bags segment far outstripping the luggage market. Simple explanation: people may buy new luggage every five years or even more. But they buy casual bags far more frequently.
At a later point, Samsonite may even consider localising High Sierra’s production and designing specifically for the Indian point.
Luxury luggage though is at a very nascent stage in India, with most of the shopping being done outside India.
Samsonite contributes about one third to overall sales. The rest is constituted by AT. Over five years, the company hopes the split will vary, with AT continuing to be the majority player (60 per cent) and the rest split between Sams-onite and High Sierra. Hart-mann is expected to form a very small segment of the equation.