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Dec, 21 2009

Right franchise for packed profits

With the world becoming a global village, the growth in the travel and tourism industry has been unprecedented. It has also given a fillip to the luggage industry. With changing times, the key players adapted well and to stay ahead in the competition, sta

With the world becoming a global village, the growth in the travel and tourism industry has been unprecedented. It has also given a fillip to the luggage industry. With changing times, the key players adapted well and to stay ahead in the competition, started introducing new products. However, still, the market is highly fragmented and most of the players are not branded and have a long way to go.

Shift in customer preferences

The bags and luggage sector is showing an optimistic indication of a maturing market with general stores giving way to branded outlets. Previously, people used to purchase luggage only during weddings. Now-a-days, people buy it on every other occasion, be it going abroad for vacations or studies. Handbags are not just a fashion accessory now, they have become a must in one’s wardrobe. These days, consumers like to go for attractive colours, convenient yet stylish, lightweight rather than hard luggage, well-organised interiors to manage clothes and smooth wheeling. Seeing this increase in demand, the companies are coming up with their concept of specialty stores that deal specifically in handbags and luggage accessories.

Franchising to fly high

If we look at the domestic market, one will find out that the women handbags market commands 47 per cent market share. However, 74 per cent of the market is still dominated by unorganised players. Considering the significant rise in the industry, organised players like Samsonite, VIP bags, Hidesign, Da Milano, Om Leather Artdeco, Witco, Safari Industries, In touch Leather are foraying into the market with innovative designs. These companies retail travel suitcases and business briefcases to bags, backpacks and travel accessories, including small and practical leather goods of all kinds. For men and women handbags, the brands present in the market include Allen Solly, Baggit, Jane Shilton, Bulchee and Dandy Collections etc.

Foreign luggage brands that came to India include Swiss lifestyle and luggage brand Victorinox, Tumi, Spanish brand Calonge in leather accessories, Louis Vuitton, Kipling, Giordano, Delsay, American Tourister, which made its entry through Samsonite, and UK-based luggage maker Antler, which entered into India through a marketing tie-up with Safari Industries.

Foreign luggage brands planning to enter India include Italian luggage brand Roncato and French company Le Tanneur.

Talking about its India entry, Fabien Thevenot, Export Director, Le Tanneur, said, “The approach we see in India is not to target independent franchisees but to find one franchisee for across the country, a kind of master franchisee but without sub-franchisees. Therefore, we favour direct approach with strong groups.”

Besides retailing bags and luggage, the branded companies also sell travel accessories of all kinds with a price range starting from medium, premium to high-end, all available under one roof. N.P. Singh, Director (Retail projects), Samsonite South Asia Private Limited, stated, “The Indian luggage industry has moved from unorganised to organised. Our brand presence is all over in India through EBOs and shop-in-shop in the departmental stores. This has made buying of a quality luggage very convenient to Indian consumer.”

The bags and luggage accessories’ players are aggressively looking at the franchise route to make their presence felt in the Indian market. They are not only considering the grade A cities but are expanding in grade B & C cities also. Anyone who wants to enter into the business world can go for franchising as VIP Industries, Samsonite, Hidesign, Da Milano are giving the franchise of their brands.

On offering support to budding franchisees, Singh explains, “We offer around 25 per cent margin to our franchisees as a standard support along with helping them to design their store with our in-house designing department. Samsonite also trains the staff of the franchisees with regular updated trainings on visual merchandising.”

On the other side, Sahil Malik, Managing Director, Da Milano, informs, “We follow business format franchising wherein the revenues are shared. We have some standard operating points for the operation of all of our stores (both company-owned as well as franchisee owned).”

Also, Da Milano has a complete team for ensuring that the operations are in accordance with the set SOP, which is headed by the operation managers. At present, Da Milano has six existing franchisees. Da Milano provides a full three weeks of training at its head office in New Delhi. In the first week, it covers all administration, sales and marketing, followed by two full weeks covering all technical areas, including the processes for leather tanning and type of leather prints. In the final week, it provides franchisees with the opportunity to put all this into practice in a safe, controlled classroom environment through role play, discussions and practical exercises. Also, the company imports 70 per cent of its leather and accessories from Italy. The company has two manufacturing units in Nalagarh, Himachal Pradesh and one tanning unit in Chennai.

Be distinct to ensure sales

In today’s transforming retail scenario, the branded stores are not only judged by the way the merchandise is placed but by its store interiors and exteriors also. It is pertinent for the store owner or the franchisee to pay attention to its store appearance to attract passer-bys and bring in walk-ins. So if you play your cards well, it can urge sales in the stores too. Ensure that the visual merchandising of the store is eye-catching to influence the consumer. A right mix of colour, lighting and flooring creates a perfect ambience which in turn attract more footfalls and maximize profits in stores. Malik adds, “Our visual merchandising is changed every fortnight. The mood and theme of such displays change accordingly at a regular period. The theme remains the same for a period of 15 days in all the company owned and franchise stores.”

With consumers becoming more quality and brand conscious in this segment, many organised players are focusing on scaling up their distribution channels to make their products available to the customers in the prominent retail locations, which attract high footfalls per day. The companies are coming up with their stores on high streets and shopping malls from retail distribution channels like EBOs, MBOs and shop-in-shop outlets in departmental stores. On assisting the franchisees in negotiating the lease and rentals for the location Singh says, “We help our franchisees to select a retail location. In case of further expansion, we prefer to take up the available location duly approved by us to set up a franchisee run store.”

Industry experts feel that the bags and luggage accessories industry in India is at present undergoing a consolidation phase. It is believed that the competition is expected to intensify with the penetration of international brands in the Indian market. In luggage accessories market, Samsonite and VIP are the leading players in the premium segment, which has a market share of 52 per cent in the popular segment.

Malik maintains, “By the end of 2010, we will be opening 50 outlets. Of them, 40 would be company-owned while the rest will be franchised.” Also, the company plans to expand its presence in New Delhi, Mumbai, Kolkata, Bengaluru, Chennai, Jaipur, Hyderabad and Pune. On the other side, Samsonite is open to explore franchise opportunities in Muradabad , Bareilly, Sri Ganganagar, Bharuch, Amravati, Solapur ,Rourkela, Behrampur, Kakinada, Rajamundry, Trichur , Tanjavur, Tirpur, Tirunarveli, Trichy, Vellore etc.

Looking at their extensive plans in India, the scope of the bags and leather accessories looks quite promising. The customer purchasing preferences in the age group of 15-35 years is highest in urban markets than in rural areas. Considering the high spending on handbags, luggage and other travel accessories, the companies are all set to fly high, with the franchise mode giving them the wings to conquer the sky.

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