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Retail 2014-06-05

Bags, business & benefits

Like diamonds, handbags are also touted as every woman’s favourite accessory.   As branded market of handbags is increasingly hotting up, the industry is now set to scale newer heights. In an interaction with Amanpreet Kaur, Nina Lekhi, Founder, Baggit shares her views about the growing handbags market in India and tells in detail about the franchise opportunity that her brand endeavours to offer to the target franchisees.

Tell us in brief about Baggit.

Baggit was founded in 1990 with the desire to create a brand that offered a unique concept. Baggit pioneered and perfected the concept of using traditional handicraft skills to create modern designs with non-leather, eco-friendly materials and thus, becoming one of the favorite bag brands of Indian consumers. Baggit emphasises on making use of eco-friendly materials. Baggit defined bags as a style statement at a time when handbags were considered boring. With each new collection the brand explores current and futuristic style trends that ensures its buyers are always in style. Currently, we are present in 61 cities across India with 30 exclusive Baggit outlets and available in 300 multi-brand retail stores.

What according to you is the overall market size of handbags industry in India? How much share of handbags market in India have you tapped so far?

The women handbags market in India is estimated at Rs 2,200 crore. It is projected to grow at about 15 per cent annually in the next five years to Rs 4,000 crore. The majority of the market belongs to unbranded products, including local and regional brands. However, going forward the growth rate of the branded segment is estimated to be much higher than the overall market. Baggit has grown at a compound Annual Growth Rate (CAGR) of 30 per cent over the last five years.

 For your brand, which retail distribution model is feasible and profitable?  

Around five years ago, Baggit included franchise agreements into its revenue model, and today, five out of the company's 30 stores are franchised. Under the franchise opportunity, we are offering two different kinds of modules to franchisees. The first one is the – buy and sell franchisee. This is when the property is owned by the franchisee. The margin offered is 20 -25 per cent on net sales. All the expenses are borne by them.

The second one is the management franchisee model. The commission depends on the sale and cost of the property which varies from 7 –10 per cent. The expenses of the store are divided between the franchisee and the brand. We advise and allow the franchisee to take decision depending upon their convenience levels. Based upon the market conditions, the benefit with each model varies.

How many outlets are you planning to open by this year end ?

In 2014, we are planning to open 25+ franchisee stores pan India.

Franchise facts:

Investment Area Breakeven RoI
Rs. 4000/-per sq.ft as refundable security deposit + security deposit towards stocks. 300-600 sq ft 1.5-2.5 years 30%
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