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From luggage to lifestyle brand

Samsonite to launch shoes in the middle of next year

Marcello Bottoli, President and Chief Executive Officer, Samsonite

IN WHAT is seen as a major move to expand and de-risk its business, Samsonite, a global leader in travel goods and accessories, has charted out a major diversification plan across products, brands and geographical locations.

As a step towards this, the company has decided to transform Samsonite from a luggage to lifestyle brand by getting into the manufacture of travel accessories such as shoes and other lifestyle products such as eyewear and timepieces. Over a period, Samsonite wants the lifestyle products to become as large as its luggage business.

In an interview with The Hindu, Marcello Bottoli, President and Chief Executive Officer (CEO), said the company had already successfully test-launched shoes in Italy. The company would soon replicate this success in India and Korea. Samsonite, he said, was gearing to launch these shoes in India under Samsonite and Black Label brands, designed by Italians. The shoes for the Indian market would initially be sourced from Eastern Europe. Eventually, these would be sourced from India itself, preferably from Chennai, he said. "We will have a full national launch of our shoes in the middle of next year,'' he added.

During 2001, the luggage segment contributed to 90 per cent of Samsonite business. By 2006, this had come down to 70 per cent, with the addition of accessories such as belts, personal leather pieces, gloves and umbrellas. "This was not done by cutting the core business, but by increasing the businesses of other products,'' he said. In 2001, the company's turnover was $750 million and by 2006, it became $ 1.6 billion. "One should create a balanced portfolio. The products which are launched should be relevant and coherent to our other business," he said.

Success in Italy

Mr. Bottoli said Samsonite had done its homework in Italy, where it had done test marketing of shoes for three years. So much so, the shoe business in Italy was in excess of $20 million, he said. "Around 30 per cent of our business in Italy comes from shoes,'' he pointed out. The success it had seen in Italy had given Samsonite confidence to enter the shoe business in India and Korea, he added. On the diversification into eyewear and time-pieces, he said, "We are looking at these.'' He, however, would not like to set a time frame for entry into these areas.

Samsonite, he said, was consolidating it manufacturing globally into three centres in India, Hungary and Belgium. And, it planned to supplement them with outsourced contract manufacturing wherever needed. This would help reduce the time to break even, especially in new products, he said. The company-owned plants would facilitate the design and development of new products and only mature production processes would be outsourced, Mr. Bottoli said. Mr. Bottoli saw Asia as a potential market for its products. Samsonite, he said, had divided the entire Asia region into two parts — West Asia and Asia-Pacific. Both would have Indians as Presidents. The re-organisation would come into force from January 1, 2007. During 2003, the total turnover from Asia was $ 52 million. This year, this would scale up to $ 250 million.

The company, he said, had acquired a couple of companies and brands — one each in Australia and Thailand. It also created its own company in Japan, he added.

From India to China

Samsonite would service China from India, he said. Mr. Ramesh Tainwala, who is the President of Samsonite and head of the Indian operations, would also take care of the China business. Asked to elaborate the reasons for this, Mr. Bottoli said, "China and India are growing at the same pace. The only difference is that the retail businesses have grown and evolved much faster in China than in India." Mr. Bottoli said that his company was not interested in entering into low-end products. It would like to stay in mid, premium and luxury segments. Under the luxury segment, the company had launched `Black Label'. Samsonite Black Label was contemporary, exclusive and innovative with aesthetic designs and inspirational styles across the range.

He said, "All our products are trans-continental and imbibed the latest technologies such as shock absorber, high-end plastic and eight wheel luggage." Mr. Tainwala said Samsonite India had a market share of 34 per cent in the Indian organised luggage market and had over 60 per cent share in the segment in which it operated. The turnover of India business was around Rs.350 crore and it grew by 28 per cent annually.

Mr. Bottoli said the company had one design centre in London and three competent centres in India, Hungary and Belgium. The company so far had 1,000 patents and spent nearly one per cent of turnover on the research and development.

Shanthi Kannan and
K. T. Jagannathan

in Chennai

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