[ad_1]
Neetu Kashiramka, MD, VIP Industries, says VIP has lost quite a lot of market share in the last three to four years but is geared up to get back the lost market share. A lot of work has been undertaken around products. Kashiramka says: “Our product will now compete directly with the new players as well as the existing premium players. The other thing is that I am also looking at focusing more on the channels which are doing well. E-commerce has been doing very well for this industry for the past few years and therefore, will focus on that too. In fact, in the next three to four months, we will be the largest brand in e-commerce. ”The luggage industry is seeing a bit of a shift from the unorganised to organised players. How fast is this in your opinion and how do you look at growth for the industry over the next one to two years?
Neetu Kashiramka: You are absolutely right. There has been a shift from unorganised to organised. Pre-Covid, it used to be 60-40, 60 in favour of the unorganised sector. Today, as we speak, it is 55% in favour of the organised sector. So, it is a big shift and we are looking at 14% growth, which is based on the Euromonitor and other experts, who are assuming that the industry will grow at 14% next year. Also, the organised will grow 3-4% better than the unorganised.But you still have a long road ahead. Of late, the data points which have come from VIP, for shareholders do not look impressive. The inventory levels are high, the market share loss has been there and a lot of startup brands have started. The whole unorganised to organised market seems to be moving towards new brands rather than traditional brands like VIP. What is your strategy in place to revamp all aspects of concerns?
Neetu Kashiramka: I totally agree. VIP has lost quite a lot of market share in the last three to four years. But we are all geared up to get back our lost market share. We have undergone a lot of work around products. Our product will now compete directly with the new players as well as the existing premium players. The other thing is that I am also looking at focusing more on the channels which are doing well. For example, e-commerce has been doing very well for this industry for the past few years and therefore, our focus is also there. In fact, in the next three to four months, we will be the largest brand in e-commerce. That is what I look forward to. And yes, definitely a lot of new products will make a difference in our strategy and growth. In fact, from Q4 onwards, it will be double digit growth. So, you will start to see some market share gain starting from Q4 itself.
I understand that you are working towards getting the market share back and I am sure you will achieve it. But what would be the unique strategy that suddenly you will be able to gain market share back? Are you launching new products? Are you coming up with a new distribution network? I am just trying to understand the whole thought here.
Neetu Kashiramka: Our distribution network is the best in the industry. We have 13,000 touch points as we speak and therefore, I do not need to revamp my distribution to gain market share. In fact, the thing which we were lacking was the right product for the right consumer at the right time. That is something I am working on and it is already on the trajectory. We are launching 27 new ranges at the end of March plus April first week and that will help me gain market share.
There is a slump in demand for soft luggage. How much room for innovation does that leave for you that you are going to target ex of soft luggage market?
Neetu Kashiramka: Soft luggage cannot do more innovation because you can have only more pockets and you cannot even play with more colours. However, in hard luggage, there is more opportunity for innovation. We can have a lightweight. We can have multiple colours. We can have metallic colours and different shapes. We can do more innovation in hard luggage compared to soft luggage.
I had a conversation with Mr Piramal. He said that his manufacturing is focused in China because India is difficult when it comes to supply chain and the dependability of the supply chain. Have the supply chains moved from China to India?
Neetu Kashiramka: Yes, definitely a lot has changed. In fact, today, I would say 95% of our hard luggage we are manufacturing in-house in Nashik, between Nashik and Sinnar. Earlier pre-COVID, a large part of the imports was actually soft luggage and not hard luggage. Hard luggage always remained in India for us. The other piece, in hard luggage, does not need so much labour. It is less labour intensive and therefore, easy to do in India versus soft luggage which is difficult where one needs a lot of manpower.
A report from Nuvama Institutional Equities says VIP has affected many changes at the management level. As a result, half the management is either new or has been assigned new roles, which means there is a serious revamp in the managerial roles. What are you trying to achieve because of it?
Neetu Kashiramka: I am trying to bring in fresh blood and fresh thinking across and also by retaining some of the people who have a lot of knowledge of the travel industry. I can give you a few examples. I have actually moved the marketing head to the sales head. He has been with VIP for 15 years. He knows all the nuances and therefore, he is the sales head now.
I have hired new blood for the marketing head role, who has worked with HUL and Philips and is now with us. I have done these kinds of things so that I can achieve the growth I am looking for . Also, some of these people that I have hired are more passionate and in that age group where they want to show something in their life. That is for getting fresh ideas.
Where do you see VIP in the next three to five years? What is going to be the scalability, the size, numbers if you will?
Neetu Kashiramka: I would say that as an organisation, we have to see that we do not lose market share. First, I will see that there is no drainage happening and then start gaining market share. Today our market share is 37%. I have ambition to take it to 45% in the next five years’ time with a CAGR growth of between 15% and 20%.
The market share would be a combination of new product launches, new innovative thinking and perhaps distribution?
Neetu Kashiramka: Yes. What will happen today I have huge distribution but some of the shops are buying from me once in six months, now that is something which I need to change. Which means that I need to monetise my already existing distribution which I have not been doing.
I want to understand the entire luggage industry really from the side of the customer. Every time you do air travel, you are allowed 15 kgs. But every time I put my bag up, it weighs 2.5 kgs to about 3.5 kgs. Please do something about it. At 3 kgs for a normal handbag, you have to pay airlines extra. Can you solve this problem for us? It is a serious problem.
Neetu Kashiramka: Yes, we are doing a lot of work around it. A lot of my innovation is lightweight baggage. In the innovation category, we are working on three major themes and the biggest one out of that is the lightweight. In fact, my newest luggage which we have recently launched weighs is 1.85 kg. So that will be quite light. A lot of work is happening around that. As I said, there are three themes. One is weight, the second one is use of technology, and the third one is luxury. 50% of the new ranges will be lightweight.
What is the average replacement cycle of a VIP bag?
Neetu Kashiramka: The replacement cycle definitely has come down. In the past, it used to be five to seven years. It is now looking at two to three years and not because luggage cannot be used, but luggage is moving towards more fashion oriented as opposed to utility. So, it is becoming more fast fashion and therefore people want to change.
Give us a sense of raw material pressure, that is raw material as percentage of total sales and how are you looking to address that?
Neetu Kashiramka: At this point of time, we are very comfortable in the raw material piece. Currently, it is around 46% to 47% of our revenue which is comfortable and for FY25, we do not foresee it going up. In fact, because I am launching a lot of premium products, it tends to come down.
Please allow me to go back to that point of peer comparison. While you have lost market share, if I do a comparison of VIP versus Safari. In last three quarters, you have clocked in 7% growth followed by 6% growth and a 5% growth. Safari has clocked in a 45% growth, 18% growth and a 28% growth. There seems to be a serious gap there.
Neetu Kashiramka: I have understood that gap. As soon as I took over as the managing director, I visited 20 markets to realise what is wrong with VIP and some of the problems which I saw had mainly to do with the product. I am happy to see that VIP has a great brand recall. People are giving us a chance but it is because of our internal things. A customer is going to my store but not finding the right product relevant for him or her and are moving out. So, my actual challenge would be to keep that customer into my store by giving him a relevant product and that is what I am trying to solve. As I said, in Q4, I will be growing at least equivalent to industry if not better.
You had a great or a big dependence on this entire army canteen network. How has that relationship over the years evolved?
Neetu Kashiramka: Relationship is good. However, it is not growing a lot. As a percentage of revenue of our business from being 17 to 18, it is currently hovering around 10% to 12%. So, it is being a flat kind of a business for us.
You try to rebuild the VIP brand with new brands. You are addressing the youth now. You are addressing the so-called millennial travellers with fancy Skybags. How big is that business for VIP?
Neetu Kashiramka: The youth appeal product is basically a brand called Skybags and that is definitely doing well for us for quite some time and it is close to a Rs 500 crore plus brand now
[ad_2]
Source link
