Luggage Makers look for new growth paths

Bobbin, Dec, 1999 by Jules Abend

Facing increasing price pressures and lengthy consumer purchase cycles, makers of luggage, bags and continually update their products and selling strategies stay at the top of the game.

The U.S. luggage and leather goods market, like the apparel market, is growing at about 3 percent to 4 percent annually at retail, where the sector accounts for about $7 billion, including sales of five major product groups -- luggage, casual bags, backpacks/daypacks, business and computer cases and men's and women's accessories.

Also reflecting trends in the apparel industry, makers of luggage, bags and cases continue to send more production offshore. Whereas international sourcing accounted for an estimated 60 percent to 65 percent of their production two years ago, it now makes up closer to 65 percent to 70 percent of the overall manufacturing picture.

In fact, the industry's leading trade group, the Luggage & Leather Goods Manufacturers Association (LLGMA), changed its rules several years ago and no longer requires potential members to have U.S. production facilities. Now mandating only that members have an office in the United States, the association has attracted new companies to its ranks, notes Anne L. DeCicco, president of the LLGMA.

There's no doubt that the industry is operating in a rough-and-tumble environment. Its modest retail sales growth has come, in great part, because of large increases in the number of units sold, say observers, even as the market becomes more price competitive. To some extent, that situation is a result of the dramatic growth of big box, price-driven superstore and warehouse operations, although department and specialty stores still own about half of the luggage business.

That's not to say there aren't lucrative new distribution channels for new products. For instance, there has been strong growth in sales of computer bags and accessories cases to consumers as well as the computer industry's original equipment manufacturers, and an increasing number of travel agencies are selling luggage.

A Closer Look at the Industry

The luggage, leather and accessories industry is fragmented. There are many small firms -- although there has been consolidation -- sharing the $3.5 billion wholesale pie. The LLGMA alone has more than 300 members, some of which are expanding into allied travel products, i.e. luggage makers entering the briefcase business. And there are scads of other suppliers that aren't even on the radar screen.

By all accounts, the 90-year-old, $700 million, publicly held Samsonite Corp. is the big fish, with an estimated 30 percent of U.S. market share. Insiders point to JCPenney's Jaguar line as having the second-largest market share, raking in 7 percent of overall sales, followed closely by Atlantic Luggage Co., which captures approximately 6 percent of the dollars.

After that, the remaining players account for smaller, single-digit percentages of the pie. Still, name recognition is high for those at the top of the list, including Hartmann, Tumi, Boyt, Trayelpro and others.

Innovation Is Everything

In an industry in which consumer sales are counted in years rather than seasons -- about every seven years consumers get the itch to buy new bags -- innovation and style are king.

So, how do you top the invention of wheeled luggage that revolutionized the industry a decade ago? Short of having luggage that packs and transports itself, maybe you don't. But the makers are sure trying.

Michele Marini Pittenger, the LLGMA's vice president of communications and editor in chief of the association's Showcase International magazine, stresses: "Consumers want, more than anything, to have their travel go as painlessly as possible. And they're looking for luggage makers to ensure that."

Among other strategies, the manufacturers are working to consolidate luggage by merging two bags into one. For instance, a garment bag might be combined with a large pullman suitcase, yielding a single piece of luggage with a garment bag section on one side and a pullman section on the other. "It's one of the ways the industry is addressing people's need to pack more but carry less," Marini Pittenger notes.

The industry also is striving to improve the ease with which luggage can be transported, targeting ergonomic issues, such as handle design, not only in suitcases but also in backpacks and business cases.

As for style, there's a trend to both vibrant and earthy color palettes, albeit black continues to be, and will probably always be, the No. 1 seller. Tapestries are still being seen, but to a lesser degree. For soft-sided bags, the fabrics of choice, by far, are ballistic nylon and ballistic nylon/DuPont Cordura(r) nylon blends. There also are some nylon/polyester blends going into luggage, as well as some of the more durable microfibers, which offer a softer hand. Looking to the future, LLGMA's DeCicco says she's encouraged because "lifestyles today require folks to be the owners of more and more different bags. I wouldn't call them luggage; but we're all bag owners today. And I think that bodes well for the industry."