Indian Ladies Handbag Report

Reevolv Advisory Services

Private Limited

Indian Ladies Handbag Industry Report

For any queries or detailed information:

Contact us on +91 – 22 – 6002 2001 or e-mail at [email protected]

August 2014


2

Table of Contents

Particulars Page Nos.

1. Executive Summary 4

2. Ladies Handbag Industry Overview

2.1. Market Opportunity 6

2.2. Growth Drivers 7

3. Business Dynamics

3.1. Business Model 9

3.2. Buying Criteria 12

3.3. Key Success Factors 14

3.4. Key Challenges 17

4. Competitive Mapping

4.1. Market Segments 19

4.2. Spread of Brands across Market Segments 20

4.3. SKU concentration of Brands across Market Segments 22

4.4. Brand Positioning and Distribution 24

5. Select Interviews 27

6. Consumer Survey

6.1. Overall 35

6.2. Market segments 40

6.3. Region wise 45

6.4. Tier I Cities 53

7. Equity transaction

7.1. Hidesign 60


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Particulars Page Nos.

8. Indian Market Player Profiles

8.1. Adamis 61

8.2. Major Brands (Aldo, Charles & Keith, Guess) 65

8.3. Alessia 74 74

8.4. Baggit 77

8.5. Blue & Blues 82

8.6. Caprese 87

8.7. Da Milano 90

8.8. Esbeda 94

8.9. Fiorelli 98

8.10. Gucci 101

8.11. Hidesign 106

8.12. Holii 112

8.13. Lavie 117

8.14. Lino Perros 122

8.15. Louis Vuitton 127

8.16. Peperone 132

8.17. Rhysetta 135

9. International Players

9.1. Brief Overview of International Players 140

9.2. Case Study - Prada 145

10. Annexure 149


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1. Executive Summary


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2. Ladies Handbag Industry Overview

2.1. Market Opportunity

The market opportunity for Ladies Handbag as derived in this report extends to urban consumers from Tier

1, Tier 2 and Tier 3 cities. Below is the tabulation of the market size across urban Tier 1, 2 and 3 cities:

No. Urban Conglomeration No of Cities Market Size (Rs. Mn)

1 Tier 1 Cities

NCR

MMR

Bangalore

Pune

Kolkata

Ahmadabad

Hyderabad

Chennai

2 Tier 2 Cities

3 Tier 3 Cities

Grand Total

Source : Reevolv Consumer Survey, Reevolv Research, Mckinsey Global Institute - India’s urban awakening report

Tier 1: Delhi-NCR, MMR (Mumbai Metropolitan Region – Mumbai, Navi Mumbai, Thane) Kolkata, Bangalore, Chennai, Hyderabad,

Pune, Ahmadabad (cities with population of more than 5 million).

Tier 2: Agra, Allahabad, Amritsar, Aurangabad, Bhopal, Coimbatore, Chandigarh, Dhanbad, Durg-Bhilainagar, Vishakhapatnam,

Gwalior, Indore, Jabalpur, Jaipur, Jamshedpur, Jodhpur, Kannur, Kochi, Kanpur, Kollam, Kota, Kozhikode, Ludhiana, Madurai,

Malappuram, Lucknow, Meerut, Nashik, Patna, Nagpur, Raipur, Rajkot, Ranchi, Srinagar, Surat, Thiruvananthapuram, Thrissur,

Tiruchirappali, Vadodara, Varanasi and Vijaywada. (Cities with population of 1 to 5 million).

Tier 3: Ajmer, Aligarh, Amravati, Asansol ,Bareilly, Belgaum, Bhavnagar, Bhubaneswar, Bikaner, Bokaro, Cuttack, Dehradun,

Durgapur, Erode, Firozabad, Gorakhpur, Gulbarga, Guntur, Guwahati, Hubli-Dharwad, Jalandhar, Jammu, Jamnagar, Jhansi,

Kolhapur, Malegaon, Mangalore, Moradabad, Mysore, Nanded, Nellore, Puducherry, Rourkela, Saharanpur, Salem, Sangli, Siliguri,

Solapur, Tiruppur, Ujjain, Warangal (cities with population of 0.5 to 1 million).


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2.2. Growth Drivers


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3. Business Dynamics

3.1. Business Model

The graphical representation of the prevalent business model in Ladies Handbag industry is depicted

below:

3.2. Buying Criteria

3.3. Key Success Factors

3.4. Key Challenges


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4. Competitive Mapping

4.1. Market Segments

The graphic representation of the segments is as under:

4.2. Brand Spread across Market Segments

Leather Handbags:

The leading leather handbag brands as populated in the table below with the products across market

segments.

Brand Mass

(<Rs 2500)

Semi Premium

(Rs 2501 – Rs 4500)

Premium

(Rs 4501 – Rs 7000)

Luxury

(>Rs 7000)

Adamis

Blue and Blues

Da Milano

Gucci

Hi-design

Holii

Louis Vuitton


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Non-Leather Handbags:

The number of brands in non-leather segment is considerably higher compared to leather. For analysis

purpose, only leading brands have been considered. The same brands are covered under the company

profiles section of this report.

Brand Mass

(<Rs1500)

Semi Premium

(Rs1501–Rs3000)

Premium

(Rs3001–Rs4500)

Luxury

(>Rs4500)

Aldo

Alessia74

Baggit

Caprese

Charles & Keith

Esbeda

Fiorelli

Guess

Lavie

Lino Perros

Peperone

Rhysetta


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4.3. SKU concentration of Brands across Market Segments

Leather Handbags:

The SKU concentration of respective brands across market segments can shed further light on the target

segments of the brands. The graphical representation of SKUs across brands and market segments is

shown below:


0%

50%

100%

1 2 3 4

0%

50%

100%

1 2 3 4 5 6 7 8


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4.4. Brand Positioning and Distribution

Leather Handbags:

The table below populates the various brands with their brand position, target customers and distribution

mechanisms, along with the segments their respective products cater to.

Brand Positioning Target

Customer

Significant

Presence Distribution M SP P L

Adamis

Blue & Blues

Da Milano

Hi-design

Holii

M - Mass Segment (<Rs 2500), SP - Semi Premium (Rs 2501 – Rs 4500), P - Premium (Rs 4501 – Rs 7000), L - Luxury (>Rs 7000), EBO – Exclusive Brand Outlet, MBO – Multi Brand Outlet, CECP – Company owned E-com Portal ,OEC - Other E-Com Portals, TC – Traditional Channels of retailers and wholesalers, NS – Not Specific, NA – Not available


Brand Positioning Target

Customer

Significant

Presence Distribution M SP P L

Aldo

Alessia 74

Baggit

Caprese

Charles & Keith

Esbeda

Fiorelli

Guess

Lavie

Lino Perros

Peperone

Rhysetta

M – Mass(<Rs 1500), SP - Semi Premium(Rs 1501 – Rs 3000), P – Premium(Rs 3001 – Rs 4500), L – Luxury(>Rs 4500) EBO – Exclusive Brand Outlet, MBO – Multi Brand Outlet, CECP – Company owned E-com Portal ,OEC - Other E-Com Portals, TC – Traditional channels of retailers and wholesalers, NS – Not Specific, NA – Not available

Key Takeaways:


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5. Select Interviews

Store Manager , Luxury Brand

Questions Answers

What is the change in customer profile for luxury handbags?

What are the buying criteria of an individual who buys luxury handbags?

What is the buying process of luxury hand bags in India?

What are the key attributes of sales team in luxury?

What is important while selling luxury handbags?

How important is training for your sales team?

Who are your target consumers?

Is there any seasonality?

What is your branding strategy in India?

How do the luxury brands choose location for store?

Do you believe that there is market in Tier II cities?

What is the impact of E-Commerce?

How does your distribution network work?

How do they deal with counterfeits?

What is the difference between luxury brand and fashion brand?

COO of Leading Brand

Questions Answers

What was the premise on which you launched brand “Lavie” for handbags in India?

What are the challenges faced?

What is the idea behind brand extension to footwear?

What is the differentiation of brand “Lavie”?

Do you see ecommerce as a challenge?

How different is the global handbag consumer vs. Indian consumer?

Do you have in-house production?

What are the critical factors?


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Brand Manager , Leading Leather Handbag Brand

Questions Answers

What are the key buying criteria of customers?

How often do customers buy handbags in a year?

What do customers look for in leather handbags?

How important is sales / discounts season for your brand?

What is the profile of your target customers?

What are the changes you have incorporated in product to increase your customer based?

What are the challenges faced by you in the handbag industry?

Is handbag purchase an impulsive decision?

What is the impact of e – commerce in Indian handbag industry?

What according to you is the difference between shopping experience in department stores and e- commerce portals?

How do you plan to address the challenges from the e-commerce portals?

How often do you come out with a new collection in a year?

How important is the role of sales executive?

What is your company outlook on brand extension?

Owner of Retail Shop

Questions Answers

What kind of store you have?

What kind of products do you offer to your customers?

What is the price range of the products?

What kind of material product do you sell?

What is the demand for synthetic and leather goods?

What kind of customers you have?

What do these categories look for in a product?

What is the share of customers buying for utility and for fashion?

How many handbags do your customers buy per year?

What is the average sales price for your products?

From where do you source your goods?

From where do players procure handbags?


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What is the kind of customer base you have?

Do you think there is competition from malls etc.?

What do you think about handbags sold by hawkers?

What is the product life for normal usage?

Is there any warranty policy?

How many of your customers demand products from specific brands?

What are the brands that customer are aware of?

What do you feel is the reason for the same?

Which are the Indian brands that customers are aware of?

What are the key buying criteria for handbag?

How does a woman typically buy a handbag?

How important is quality?

What is the area of your retail outlet?

How many sales person you have and what is the salary?

Owner of Handbag Brand

Questions Answers

How different is the northern handbag market to western, southern or eastern handbag market across India?

How do you think the handbag industry will pan out in India?

What are the critical success factors in the handbag industry?

What are the gaps/challenges in the handbag industry in India?

What are the consumer buying criteria across the segments such as house wife, working women, students etc.?

Is handbag purchase an impulsive decision? Do customers in India have a tendency to wait for a sale/ discount season before making a purchase?

On what parameters are companies differentiating their products?

What is your target customer profile in India?

How often do you come out with a collection?

What is your distribution strategy?

What according to you are the advantages of having owned stores/exclusive brand outlet in India?

How do you think the ecommerce platform will affect the industry? Does having your ecommerce platform better


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than listing in general websites – Flipkart, Amazon etc.

What are your future plans?

How do you differentiate yourself from the brand clutter on e-com websites?

How do you deal with touch and feel needs of the customers, especially when selling the products on e-com websites?

Designer - Ladies Handbag

Questions Answers

What are the key considerations while designing a handbag?

What is the business model adopted by companies?

What are the advantages of outsourcing production to Southeast Asian countries? Why are the companies not sourcing the products domestically?

What are the sales channels adopted by the companies?

Is there any seasonality in the handbag sales?

What are the key buying criteria across consumer segments?

How many times do brands launch their collection?

What according to you are consumer preferences for Leather and Non Leather Handbags?

What are the typical gross margins across value chain in ladies handbag?


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6. Consumer Survey

Below are the results of the primary survey of women customers across age groups. The respondents are

from tier 1, 2, 3 and other cities across India. The sample size is xxx. The results of this survey are in four

parts as under:

6.1. Overall

1. How many handbags does she buy?

2. From where does she prefer to buy handbags?

3. At what price does she buy handbags and how long does she use it?

Casual vs. Formal vs. Party / Evening / Special Occasion Handbag

4. What does she look before buying handbags?


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5. When does she buy handbags?

6. In handbags which are the top brands does she buy? And Why?

Brands Awareness Usage Pricing Variety Quality

Baggit

Caprese

Hidesign

Lavie

Esbeda

7. Does she struggle to find a handbag? What according to her are the gaps in the handbag

industry?

8. Does she buy handbags online and from where? If No, is she willing to buy in the future?


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6.2. Market Segment

The handbag market can be mainly be categorized into three broad segments – Students, Housewife and

Working woman.



Branded shops

Malls/ Dept. stores

Local shops

Hawkers Exhibitions Hotels Online

Housewife

Student

Working Woman


Housewife Student Working Woman

Casual

Price (INR)

Duration of Usage (Year)

Formal

Price (INR)


Party/ Evening / Special Occasion

Price (INR)




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5. When does she buy handbag?


Usage Awareness Price Variety Quality

Baggit

Housewife

Student

Working Woman

Caprese

Housewife

Student

Working Woman

Hidesign

Housewife

Student

Working Woman

Lavie

Housewife

Student

Working Woman

Esbeda

Housewife

Student

Working Woman

Consumer Views on Top Brands :

Baggit


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Caprese

Hidesign

Lavie

Esbeda

7. Does she struggle to find a handbag? What according to her are the gaps in the handbag industry?


Housewife

Students

Working Women


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6.3. Region Wise


North East West South

Overall

Housewife

Student

Working Woman


North South East West

Malls/ Dept. Stores Comparative preferences across regions

Segment preference for the channel

Branded shops Comparative preferences across regions


Local shops

Comparative preferences across regions


Exhibitions Comparative preferences across regions


Hawkers Comparative preferences across regions


Online Comparative preferences across regions



Price Duration

Causal Handbag

Formal Handbag

Party / Evening / Special Occasion Handbag

4. What do I look before buying handbag?


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5. When does she buy handbag?

North

East

West

South


Rank as per Usage

Brands Usage Awareness Price Variety Quality

North

Baggit

Caprese

Hidesign

Lavie

Esbeda

South

Baggit

Caprese

Hidesign

Lavie

Esbeda

West

Baggit

Caprese

Hidesign

Lavie

Esbeda


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East

Baggit

Caprese

Hidesign

Lavie

Esbeda

Top Brands Highlights

North

East

West

South

7. Does she struggle to find a handbag? What according to her are the gaps in the handbag

industry?

Sometimes Never Always Sometimes or Always

North

East

West

South


North

East

West

South

Women who have bought handbags online


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6.4. Tier I Cities


Tier I Cities No. of handbags bought

(per annum)

Price - Casual Handbag (INR)

Duration for which handbag is used (Years)

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad


Tier I Cities Branded shops

Malls/ Dept. stores

Local shops

Hawkers Exhibitions Hotels Online

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad

Comments Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad


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Casual handbag Formal Handbag Party/Evening/Special

Occasion Handbag

Price (INR)

Duration (Years)

Price (INR)

Duration (Years)

Price (INR)

Duration (Years)

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad

Casual handbag - Formal handbag - Party/Evening/Special Occasion Handbag -


Durability/ Quality Price Brand Style/ Design Comments

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad

5. When does she buy handbags?

Tier I Cities Sale /

Discount

New designs/ Patterns/ Colour

Want to match with current

trend’s

Impulse purchase

Whenever you need them

Comments

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad


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Rank as per Usage

Brands Usage Awareness Price Variety Quality Comments

Mumbai Baggit

Caprese Hidesign Lavie Esbeda

Delhi Baggit


Pune Baggit


Hyderabad Baggit


Bengaluru Baggit


Kolkata Baggit


Chennai Baggit


Ahmadabad Baggit



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7. Does she struggle to find handbags? What according to her are the gaps in the handbag

industry?

Tier I Cities

Struggle to find handbag Gaps in handbags

Sometimes

Never Always Variety Design/ Colours

Price Quality Availab

ility None

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad


Tier I Cities Percentage of women who

have bought online

Percentage of women who have not bought online but

are willing to buy Top Websites

Mumbai

Delhi

Pune

Hyderabad

Bengaluru

Kolkata

Chennai

Ahmadabad


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7. Private Equity Deal - Hidesign India

Month & Year

Investor

Investor Company Name

Instrument 1

Instrument 2

Amount invested – Instrument 1 (Rs. Mn)

Amount invested – Instrument 2 (Rs. Mn)

Total Amount invested (Rs. Mn)

Instrument 1 – Equivalent stake (%)

Instrument 2 – Equivalent stake (%)

Total equivalent stake (%)

Primary stake %

Secondary stake %

Cumulative stake %

Source : Company Filings and Reevolv Research

Month & Year

(Rs. Mn)

Pre-money

Debt

Cash and cash equivalents

Net Debt

EV

Post-money

Revenues

EBITDA

PAT

ROCE %

ROE %

EV/ Sales (x)

EV/EBITDA (x)

PE (x)

Source : Company Filings and Reevolv Research

Note :

Enterprise Value has been calculated based on Pre-money valuation as we have assumed that the funds invested will take at least a year to yield profitability

*** - Enterprise Value has been calculated based on Gross Debt assuming that funds raised have not been fully deployed


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8. Market Player Profiles

8.1 XXXX

8.1.1. Overview

Description

Company Name

Founder

Year of Inception/

Incorporation

Inception –

Incorporation –

About Company /

Brand

Brand(s)

Total no. of Outlets

Production Facilities

Raw Material

Types of Handbag

Distribution

Online Sales

Future Plans

Source – Company Website and Reevolv Research


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8.1.2. Location

Tier I Cities Tier II Cities

State Wise Presence Region Wise Presence

Source – Company Website and Reevolv Research

8.1.3. Product Mix

Type of handbags No. of SKU's Price Range (in Rs.)

Source – Company website and Reevolv Research

0

2

4

6

1 2 3 4 0

1

2

3

4

5

1 2 3 4

0

1

2

3

4

5

1 2 3 4


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8.1.4. Financials

Profit & Loss Account for the year ended 31st March (Rs. Mn)

FY2009 FY2010 FY2011 FY2012 FY2013

Revenues from Operation - - - - -

Other Income - - - - -

Total Revenues - - - - -

Cost of Materials Consumed - - - - -

Rent, Rates and Taxes - - - - -

Administrative and General Expenses - - - - -

Employee Expenses - - - - -

Selling and Distribution Expenses - - - - -

Other Expenses - - - - -

Total Expenditure - - - - -

EBITDA - - - - -

Depreciation - - - - -

EBIT - - - - -

Interest - - - - -

Profit before Prior Period Items and Tax - - - - -

PBT - - - - -

PAT - - - - -


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Balance Sheet as at 31st March (Rs. Mn)

FY2009 FY2010 FY2011 FY2012 FY2013

Share Capital - - - - -

Share Application Money - - - - -

Reserves & Surplus - - - - -

Shareholders’ Funds - - - - -

Secured Loan - - - - -

Unsecured Loan - - - - -

Loan Funds - - - - -

Deferred Tax Liability - - - - -

Total Liabilities - - - - -

Gross Block - - - - -

Net Block - - - - -

Capital work in progress - - - - -

Investments - - - - -

Inventories - - - - -

Sundry Debtors - - - - -

Other Current Assets - - - - -

Total Current Assets & Advances excl. Cash & Bank

- - - - -

Current Liabilities - - - - -

Provisions - - - - -

Total Current Liabilities & Provisions - - - - -

Net Working Capital excl. Cash & Bank - - - - -

Cash & Bank - - - - -

Net Working Capital incl. Cash & Bank - - - - -

Total Assets - - - - -

Source: Company Filings, Totals may not tally due to rounding off errors


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Key Ratios FY2009 FY2010 FY2011 FY2012 FY2013

Expenditure Ratios

Cost of material consumed as a % of Total Revenues

Rent, Rates and Taxes as a % of Total Revenues

Administrative & Other Expenses as a % of Total Revenues

Employee Expenses as a % of Total Revenues

Selling and Distribution Expenses as a % of Total Revenues

Profitability Ratios

EBITDA %

EBIT%

PBT %

PAT %

Return Ratios

ROCE %

ROE %

Financial Ratios

Total Debt / Net Worth

Secured Debt / Net Worth

Total Debt / EBITDA

Turnover Ratios

Working Capital Turnover Ratio

Net Fixed Assets Turnover Ratio

Inventory Days

Debtors Days

Source: Company Filings and Reevolv Research


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9. International Players

9.1 Brief Overview of International Players

9.1.1 XXXX

Description

Company Name

Brand(s)

About Company/Brand

Popular Products

Target Market

Market Strategy

Geographical presence

Source : Company Website and Reevolv Research


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9.2 Case Study - Prada

XXXX

The Origin/Start

Management Transition

Key Business Challenges and the way out

No. Challenge Prada Strategy

The Growth engine

Current status

Future plan:

Impressive last three years growth of Prada

Learning’s for peers


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10 Annexure

10.1 Ratios

Key Ratios

Cost of Material Consumed % Cost of Material Consumed

Total Revenues X 100

Employee Expenses % Employee Expenses


Selling & Distribution Expenses % Selling & Distribution Expenses


Administrative Expenses % Administrative Expenses


EBITDA % EBITDA


EBIT % EBIT


PBT % PBT


PAT % PAT


ROCE % EBIT

Capital Employed X 100

ROE % PAT

Net Worth X 100

Capital Employed Total of Asset / Liabilities

(Liabilities = Shareholders funds + Loan Funds + Deferred Tax + Minority Interest)

Working Capital Turnover Ratio Total Revenues

Net Current Assets excl Cash Bank

Net Fixed Assets Turnover Ratio Total Revenues

(Net Fixed Assets excl Capital Work in Progress)

Inventory Days Inventory

(Cost of Material Consumed) X 365

Debtors Days Debtors



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10.2 Abbreviations

Description

Bn Billon

CAGR Compound Annual Growth Rate

CCD Compulsory Convertible Debentures

CCPS Compulsory Convertible Preference Shares

CECO Company owned E-Commerce portal

CY Calendar Year

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation and amortisation

EBO Exclusive Brand Outlet

EV Enterprise value

FY Financial year

L Luxury

LFR Large Format Retail

M Mass segment

MBO Multi Brand Outlet

MMR Mumbai Metropolitan Region

Mn Million

NA Not available

NCR National Capital Region

NM Not meaningful

NR Not relevant

NS Not specific

OEC Other e-commerce portal

P Premium

P/E Price to earnings

PAT Profit after tax

PBT Profit before tax

ROCE Return on capital employed

ROE Return on equity

SP Semi premium

TC Traditional channel


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You can also email the research analyst at

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Kaustubh Kulkarni

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Indian Ladies Handbag Report

Data & Analytics

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