The VIP journey: Growing the pie, growing with it

The branded category accounted for 20 to 25 per cent two to three years ago; it is 35 to 40 per cent now

VIP enjoys a legacy in India as far as the luggage category is concerned. How is the brand planning to take this legacy forward?

VIP has always been a market leader and a category-defining brand. The growth of the brand continues as it remains relevant to the current generation. The major strength behind VIP is the understanding of the Indian consumer; and as the consumer has evolved, the product has also evolved.

The basic strategy the brand has been working on is bringing innovations and presenting it to the mass market. Over the past three years, we have democratised the four-wheeler luggage market in India. Four-wheelers have always existed in the market, but the benefits of four-wheelers have now been communicated to the Indian consumer and those benefits were incorporated to the product with a consideration of the Indian travel conditions. Currently we are seeing a global trend of people moving from soft luggage to polycarbonate luggage. We are taking the lead in India in polycarbonate luggage and launched Verve. This brand helps us connect with the new consumer. The range of polycarbonate luggage is going to revolutionise the luggage category in India and slowly the market will follow VIP and move to this.

All the latest communication from VIP is looking to connect to the young consumer, and is around the benefits of these stylish polycarbonate bags.

We are not a nostalgic brand and from the older generation. We are moving with the times. More products are in the offing soon.

How are the five brands in the portfolio positioned differently? What is the TG for each?

All the five brands are standalone brands and not a subset of VIP.

We have the premium international brand from England - Carlton. We are distributors for this brand in India. It is a distinct product which is designed for the European market. With this brand we are targeting the premium end of the market.

VIP is in the middle of the market. This is in the mass premium segment as well as in the popular market. It is a leadership brand and has the largest market share. It brings breakthrough innovations for the benefit of Indian consumers.

We are looking to target younger consumers in various ways. Skybags is the stylish offering. Luggage is not seen as a stylish product. People spend a lot on watches, clothes, mobile phones and other accessories but are not bothered about the kind of luggage they are carrying. Skybags’ agenda is to increase the style quotient of consumers. It has printed and coloured bags. We didn’t expect the overwhelming response we received from these bags. The Indian consumer has taken to this style and the bold design.

We are looking to launch more designs and looking to enter the college backpacks, laptop bags categories here. With Skybags, we are not looking at the youth, but the young workforce - people between 25 and 35 years. This is a very different consumer. Skybags is not a new brand, but we reinvested in the brand three years ago. We got in John Abraham as brand ambassador two years ago as he is an inspiration for our target group. He has proven himself - that is what the young consumer is about these days. They are globally travelled and want the best of the global products. That is why the Skybags - John association makes sense.

Aristocrat is our ‘value for money’ product. People have bought it as it is a big brand with strong equity.

Alfa was earlier a sub-brand of VIP. Now it is a standalone brand that stands for durability. It plays the penetration game and looks to convert people investing in non-branded luggage to branded luggage.

Does VIP Industries have different creative agencies to handle the different brands?

Ogilvy handles all the brands as of now. We think that the category understanding is very important and that is why partnering with one agency handling all the brands.

Are there insights you can share on consumers moving towards branded luggage?

The branded category was at around 20 to 25 per cent (of the total luggage market) two to three years ago. It has grown to 35 to 40 per cent now thanks to these brands and the advent of competition into India.

VIP Industries is the market leader with 60 to 65 per cent share across all the brands in the organised segment. Competing brands are available only in certain pockets and price points and can’t compete with Aristocrat and Alfa - the two are at value price points where brands cannot afford to compete with us.

Another strength that gives us our high market share is our distribution - which is huge. We are available in a lot of towns which give us strength to hold up the brands without cannibalising each other.

We have seen the launch of brands like Giordano, American Tourister and Samsonite in the segment over the past few years. How has VIP looked to compete?

Competition-wise, there are premium brands at the high end. Lots of players have come and gone. Roncato, Giordano entered the market and left it.

Our stable competition would be American Tourister and Samsonite. They have really helped the category grow, benefits us the most. Anyone looking to advertise in the luggage space is most welcome as finally it helps us increase the branded pie size.

If I go by the market share, 65 out of 100 times people will purchase a bag from VIP Industries. Once people enter the branded segment, we are going to benefit as we are the market leaders and know that our offerings, price equations, distribution will prevail.

So other brands are most welcome to advertise. Unfortunately only one big player other than us in this market is currently advertising.

What presence does VIP have in the semi-urban and rural markets? How much does each contribute to sales?

The travel market can be of three different kinds depending on the duration of the travel. There is short haul travel (daily, routine); long haul (for a wedding or a vacation); and permanent travel (a girl getting married and shifting, or simply someone shifting).

If you look at the rural market, there is a lot of permanent shifting through marriages etc, but the other two types of travel are very limited. In SEC E, travel drops down by 35 per cent compared to the other SECs. When you go below SEC E, travel is even more limited, so luggage is not very huge. So viability becomes a big problem.

We are in the rural market through the marriage market and Alfa’s taking care of this. Girls moving in to houses in the rural area don’t normally get a cupboard. Their needs will not do with a soft bag; they need trunks. Alfa bags step in to cater to this need.

Other than this, as travel penetration improves, we will enter the rural market.

How much does e-commerce contribute to VIP’s total sales? Is this growing?

We started our e-commerce portal a year ago. We have a website called buytravelbags.com – which sells many brands, but mainly VIP’s brands. It is a one-stop solution for all kind of bags; from premium to affordable. We have more than 2700 units that can be bought from the site. We have a tie up with backend suppliers and deliver bags anywhere in India. In terms of percentage of total sales, e-commerce would contribute one to two percent.

This is not very big currently, but we see it getting bigger as we go ahead. We will be looking to promote the website in the near future.

What is the brand’s retail presence? How is it growing?

We sell through seven to eight verticals, one of which is traditional multi-brand outlets. We have got three types of exclusive outlets – The Carlton Store, VIP Lounges and a VIP Industries store. We’ve got more than 600 exclusive stores. We also sell through lifestyle stores, hypermarkets, army canteens and wholesale networks. So, almost every possible point of sale is covered.

Are people moving towards premium bags?

They are not exactly moving to premium bags, but are moving to branded bags for sure. We have tried to do a lot of correlation between sales data and travel data. We find that the growth in airline travel and the sale of branded luggage sales are directly interlinked. The correlation coefficient for this is almost 0.95.

Along with growth in airline travel, international exposure and a lot of innovative work with branded goods has helped the industry grow.

How big is the children’s segment for VIP?

We had a brand called ‘Buddy’ till 2007-‘08. We had tried to tap the young kids’ school bags market through this. The segment is a different ball game altogether, for us to participate in currently. We will look at re-entering this market at the right time. We may evaluate something which is for the long haul travel of the kid instead of school bags. This has more adjacency for the brand.

What are the marketing plans over the next year?

We are looking to launch a lot of new products, which cannot be revealed currently. We recently launched a niche eco-friendly bag called Acura. People are getting conscious about carbon footprint. Our Acura range in partnership with Du-Pont is very eco-friendly. We are also launching new polycarbonate range under VIP and Skybags. Advertising will continue on the brands this year as per our regular marketing calendar.

Quarter three is a big travel season coming. We are also looking to launch a range of luggage for women called Diva, given the rise in women travellers. These are lightweight bags specially designed for women travellers. As a market leader, we are looking to enter more niche markets and in due course make them bigger.

VIP Industries' 'Happy Journey' BTL campaign

Shahid Kapoor in VIP's advertisements

VIP Skybags' association with John Abraham to associate with the youth

    

 

Some of VIP's print advertisiements from 2000 onwards