GST Impact

How GST has Changed the game for Organised Players in Luggage Segment

Introduction of GST, has been a boon for the industry which is witnessing a good growth after its coming into play
How GST has Changed the game for Organised Players in Luggage Segment
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Contributor
Founder and MD, High Spirit Commercial Ventures Pvt Ltd
4 min read
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The hustle and bustle post the announcement of GST (Goods and Services Tax) had and continues to leave many businesses perplexed on their way forward. Introduction of GST in the country changed the way businesses are run. It has really brought the much-required change in logistics, billing and need for a centralised warehouse. The centralised warehousing for storage of the stock has saved overhead costs for corporates to run their businesses.

For the luggage industry, which has been seeing a boom since its shifted gears from being just a utility item to lifestyle statement owing to disposable incomes and increasing business and travel. Introduction of GST has been a boon for the industry which is witnessing a good growth after its coming into play. The Indian luggage industry is estimated to be at Rs. 20,000 crores.

The Indian luggage industry has been dominated by unorganised players for a long time have come to face the heat of the new taxation regimen. After the introduction of GST, the organised market has grown from 15per cent to 25per cent and is expected to grow to 50per cent in the next three years. The organised players in the market are going to have good growth rates for the coming years as the new taxation laws have ensured quality and competitiveness for the future.

Soft luggage is another segment where all organised and unorganised players are growing aggressively as it commands huge demand with regards to handbags, vanity, backpack, trekking, travel, school bags and another day to day luggage.

The rural market which was a major consumer for the unbranded products in the segment as they were easily affordable and available, may not see the light of the day for a long time as the impact of GST will eventually impact the entire unorganised industry segment and in competition allow the organised players to reach out to these pockets with affordable pricing and products that are unique of use to this segment on a day to day basis.

Serous Investments

For mature players in the segment the way forward is expansion of their portfolio which will include diversification of product line, innovative products for travellers, business requirements and the youth, keeping in mind the potential target groups and their requirements alongside a competitive edge in terms of pricing, in order to balance the growth and profitability of the brand. These strengths of the brands also draw in investors’ confidence towards the brand with the aim of long-term investments that will be profitable.

The key trends that the domestic luggage industry is witnessing are the shift from unbranded products towards branded products due to their pricing, easy availability, the proliferation of products through distribution channels, retailing of products both through offline and online channels. The biggest game-changer for the sector is the rate at which bags are replaced by consumers, which has dropped to about two to three years now from around four to five years earlier. This represents an interesting proposition for the organised domestic players to ramp up their presence by tapping into the emerging trends.

No Looking Back for the Industry

Since Indians are largely on an outbound travel this industry is only set to grow with no sign of ebbing anytime soon, which is a good thing for both the domestic players and the ‘Make in India’ campaign which directly puts the domestic manufacturing capability at par with international one meeting their standards and choice. Besides this, luggage is more like a lifestyle accessory than just a necessity and the trends has also altered in favour of one person having multiple bags for both leisure and work than previously where a household had few luggage items for multiple members in the family to carry.

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