Samsonite CEO: “no reason” Samsonite can’t be a $10 billion business in a decade
Samsonite CEO Ramesh Tainwala knows a thing or two about luggage. Specifically, he knows how not to sell it. Early in his tenure at the venerable luggage giant, Tainwala presided over Samsonite’s attempts to capture more of the market through expansion into other price points. The company created Samsonite “black label” (a high-end range) and Samsonite “blue label” (a lower-priced offering) to sit astride its more familiar bags, which occupied a high-middle price point. The results were catastrophic.
Tainwala recalls: "Samsonite Black Label stayed in our imagination and our internal communications -- but whenever the customer was seeing 'Samsonite Black Label,' he was seeing 'Samsonite.'"
Samsonite’s black and blue labels failed to differentiate themselves successfully, leading to a muddled mess of a brand that struggled to justify the different price points on its luggage. To consumers, a Samsonite bag was a Samsonite bag – why pay $300 instead of $100? Worse still, this effect meant that Samsonite’s brand overall was harmed – the “blue label” entrance point was the one customers remembered, and Samsonite began to look like a cheap brand (with a couple of incredibly expensive products) because of it.
Luckily for Tainwala, Samsonite, and investors, that is not where the story ends. In an exclusive interview, Tainwala boldly proclaimed that he would “own the failure” for the failed expansion, and vowed to do things differently. Applying the lessons learnt he has, in the years since, pushed the brand to consecutive years of outperformance, and a $6.5 billion market cap.
Over the last year, Samsonite’s share price has risen by 61%
SOURCE: Yahoo Finance
In 2016, Samsonite made a second play for the top end of the international luggage market. And this time, it got it right. The company made the biggest acquisition in its history, buying Tumi Holdings, a luxury luggage maker, for $1.8 billion. Since then, Samsonite has used its incredibly powerful distribution network – Samsonite stores can be found in practically every airport you care to name, not to mention online and the high street – to take that brand global. The results have been incredible.
Not only does Samsonite now own the high end of the market, thanks to Tumi’s aspirational, leather-finished, luggage, but it owns a stable of suitable brands all across the spectrum to let it gobble up market share. American Tourister is a “family brand” of luggage at an “affordable” price point, and Kamiliant is a budget brand aimed at backpackers and first-time travellers. A number of “other” labels, like Speck, have seen Samsonite diversify into related areas (like computer and phone cases).
Tainwala says: "When you are close to death, every truth of your life is glaring on your face. I like to believe that crisis is one of the best times for men and women to do an honest roll call of what worked and did not work." He has put that ethos into practice, with impressive results.
In the company’s future, he says: “the center of the gravity of the world is moving towards Asia”. Once, that would have pegged Samsonite as a brand that had to learn how to do business in the region, but now, it is practically a native. Despite being originally founded in Denver, the company now boasts a Hong Kong headquarters and an Indian CEO. If investors feel that this is a strong point for the company going forward, Tainwala is unlikely to put them off. Describing what comes next, he says:
"I see no reason why we should not in the next 10 years be a $10 billion business. It is my responsibility to create enough legs for this business to continue to grow for the next 10, 20 years, 100 years."
Dominion holds Samsonite in its Global Trends Luxury Fund.
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