Taking Flight: Luggage Report
Few things make a middle seat bearable, but a shiny new piece of luggage that fits with ease into the overhead compartment does ease some of the (knee) pain. In fact, the luggage industry is getting increasing attention from consumers and investors alike, as technology and updated designs are revitalizing our favorite two-wheeled category. Today we’re looking at the take-off of the luggage industry, but first, we ask that you put your seat in the upright position.
Industry Outlook
Where there is travel, there is luggage. But what will be the impact to travel with the current global geopolitical climate? In fact, it doesn't look bad, as a GO Group survey showed that despite this, 21% of travelers plan to do more leisure travel in 2017. It’s certainly becoming easier to go to far-flung locations, as technology makes travel more cost-effective and accessible to business and leisure travelers alike. And research continues to show that experiences, particularly travel, are increasingly prioritized over other discretionary spending categories. The luggage industry stands to directly benefit from these factors.
CAGR of global luggage sales was over 5% between 2010-2015, with sales estimated to reach $43B by 2020. While Samsonite, American Tourister, and Tumi are household names, there are new brands worth taking note of, with disruptive distribution models and designs.
The first of those is Away Travel, which sells through its own site and utilizes state-of-the-art materials and features, including a built-in USB charger, at price points south of $300 USD. Another recent entrant is Bluesmart Luggage; their models have built-in location trackers, digital scales, and remote locks for today’s digitally-connected traveler. There is sure to be more entrants, as well as additional offerings from established brands entering this space in the near future, as the market continues to heat up.
What Else Do You Need To Know About Luggage?
We looked at thousands of luggage SKUs to help you understand the overall trends of what’s selling online right now.
There is quite the spectrum of prices on luggage, from a value set at Walmart for $35 to the status-symbol Louis Vuitton Zephyr model which clocks in at $4,650. Our analysis of the e-commerce market showed that 86% of luggage models are priced under $500, with the average price being $241.
While luggage isn’t immune from discounting (41% of SKUs were discounted), the average discount amount was a modest 23%, and Mid-Tier and Luxury stores saw the highest percentage of SKUs on discount. A positive correlation does seem to exist between discounting and what’s selling out, particularly for the Off-Price, Affordable Luxury, and Premium sectors. It’s also worth noting that these rates have outpaced sell-through of other store categories we've observed.
Opportunities in Luggage
As a close cousin to luggage, the handbag category has faced increasing disruption from pure play e-commerce brands in recent years, and we think this trend will spill over into the luggage category and play out in several different ways. First, the market for Smart luggage will continue to grow, as new and existing players jump into the mix and the internet of things evolves and connects us all. Second, we’ve noticed retailers like Zara dabbling in luggage offerings of late, and it seems a savvy experiment considering the demographics of their shopper base. To counter this, legacy brands will need to double down and make certain they are addressing the needs of younger consumers through both their product mix and marketing efforts.
Ever grabbed someone else’s bag at the carousel? There’s a reason for that, as our color wheel analysis shows that the majority of the category is still dominated by grey, blue, and black tones. We see this as the designer’s perfect challenge: more innovation in color, print and material.
Hope you enjoyed your flight and stay tuned for next week's End of the Year Report!