Saturday, January 19, 2008

Samsonite on a come back prowl

On a balmy night this October, Samsonite’s chief executive officer Marcello Bottoli threw a hip party for the swish set at London’s Gymkhana Club. The occasion: the launch of Samsonite’s black label line, a chic collection of Samsonite’s latest luggage offering designed by well-known designer Marc Newson (whose many achievements, incidentally, include the renovation of the posh Lever House restaurant in New York). The London party and the premium black label collection symbolise one and the same thing — Bottoli, the former president and CEO of Louis Vuitton who joined Samsonite in March 2004, is going whole hog repositioning the 95-year-old, $1-billion luggage brand, rescuing it from the slightly dowdy image it had acquired by burnishing it with a touch of class.

That Samsonite was in need of an overhaul is something that struck Bottoli fairly early. Though a very strong brand in the luggage segment, the strain of multiple changes in ownership ever since the Shwayder family first sold Samsonite in 1973 had begun to take its toll. And with the aftershocks of the 9/11 bombings hitting the travel industry, the brand, naturally, took a beating — in 2001-02, global turnover dropped by 4-5%, while the plunge in the US was as high as 10%. Bottoli came on board the Denverheadquartered company when the three equity partners — Ares Corporate Opportunities Fund, Bain Capital and Teachers’ Merchant Bank, who had bought Samsonite from LVMH — appointed him as successor to long-time CEO Luc Van Nevel. “It is a great brand that’s been around for a long time; it has just got fat and tired. We’re trying to make it pretty, slim and young,” says Bottoli, adding, “The DNA of the Samsonite brand is innovation, passion, history and people. This is a very dynamic time for the brand. In fact, the new tagline — ‘Life’s a Journey’ — embodies the brand’s transformation and future."

Bottoli’s aggressive rejig plans, not surprisingly, include foraying into the ‘affordable luxury’ category, adding markets, diversifying the Samsonite bouquet as well as reaching for more sales abroad for the company’s value label, American Tourister. And to stop relying on suitcase sales. "The fortunes of a luggage company has direct co-relation with travel, and with prices coming down quickly as more production has been sent to China, we need to make the brand more resilient by diversifying the portfolio," he explains. “Also, we are planning to provide total travel solutions — and shoes, eyewear, watches etc form a part of it.” Bottoli claims Samsonite has had considerable success with its line of shoes in Italy. “Around 20% of our revenues ($15 million) comes from our shoe business in Italy. We plan to extend the Samsonite brand to eyewear, watches et al,” he says. Interestingly, while luggage accounted for 90% of Samsonite’s revenues five years ago, with the addition of backpacks, that component came down to 75% last year. “In five years, luggage will be only 50% of Samsonite’s business; the rest will be made up by other categories,” Bottoli is confident. And yes, Bottoli has been able to not just arrest the slide but give Samsonite sales a boost. While the company’s global turnover grew by 14% in 2004 (as opposed to the more sedate 8-9% growth seen in preceding years), turnover in the Asia-Pacific region went up 24%, while that in the Middle East, South East Asia and India region jumped 34%.

With the region showing robust growth, it’s only natural for Samsonite to see India as a significant market. “Though the US happens to be our largest market, followed by Italy, Germany and China, India is growing 30-35% every year, and it’s a very important market for us. The other big and emerging markets include the Middle East, Japan, Russia and Turkey, and we are eyeing them aggressively. What gives India an edge is good technology, affordable labour and superb logistics, making it an ideal manufacturing hub,” says Bottoli. While Samsonite already has a manufacturing unit in Nashik, Maharashtra, set up with an investment of Rs 85 crore, it is looking at adding two more units — one each for hard and soft luggage — in the near future. The company is targeting a compounded growth rate of 32%, year-on-year, for the next three years, and to this end plans to introduce the black label line (priced locally between Rs 20,00 and Rs 45,000) in the country by April 2006, with an aim of setting up six exclusive black label stores by December 2006. Plans are also afoot to test market shoes in India by the end of next year.

Meanwhile, internationally, Samsonite is clearly betting big on the black label line — the company will launch four new collections early next year under the premium line, developed by Bottoli and the company’s global creative director, designer Quentin Mackay (who has worked at British handbag-and-shoe firm Tanner Krolle and Spanish handbag company Loewe. “The new Samsonite will move into the world of style and design,” says Mackay. “We are creating collections and products that build on Samsonite’s technical expertise, trust, quality and functionality with more contemporary and fashion-forward aesthetics. We want to begin to emotionally engage the traveler with their travel pieces throughout use, making the items stylish and seasonal, to complement ever-changing trends and consumer tastes.”

Mackay’s job is to make luggage exciting enough for customers to shell out anything between $350 and $800 for a carry-on bag. And one can well figure out the shape of things to come when one sees the black label line: for what’s being retailed here is not luggage but unadulterated vanity.

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