What’s in Your Luggage?
What your perfect travel companion has to says about design innovation…
Samsonite International S.A. started out as a trunk manufacturer, but has since become one of the world’s most well known and respected travel luggage brands. Over time, Samsonite expanded its manufacturing to include business and computer bags, outdoor and casual bags, and travel accessories, in addition to growing its travel luggage product lines. The company’s unrelenting focus on “quality, durability and innovation” has proven to be successful at keeping it at the forefront of meeting travelers’ changing needs.
Interestingly, Samsonite complimented its organic growth strategy by acquiring complimentary businesses that enabled it to create synergies between existing and newly acquired resources, capabilities and customers. In 2012, Samsonite acquired High Sierra to expand into the outdoor and sports luggage market and Hartman Brands to expand its footprint in the high end luggage and leather goods market both in the U.S. and abroad. In 2014, the company acquired Lipault to reach a more function and fashion conscious, largely female market and Speck to gain exposure to the fast growing market for smartphone and tablet protective cases. (4) Samsonite is an example of a highly effective business that has achieved alignment and harmony between its business model and operating model.
Business Model
Samsonite creates value for its customers by offering a wide variety of quality travel luggage and accessories that are durable and dependable. Their brand delivers a consistent product that customers believe will always provide the quality necessary for their business travel needs. Customers can travel at ease knowing that their belongings are safely secured from point A to point B. Samsonite’s travel luggage retails between $35 for a boarding bag to $600 for a Firelite 30” Spinner (see pictures below). Customers are subject to premium pricing in exchange for “perfect travel companion[s] that combine strength and lightness with unique sport shape[s], dynamic colors, sporty wheels and water resistant zipper[s].” (2) The company has adapted its designs to incorporate customers needs for added security by including a three-digit TSA lock for secure travel and enhanced durability through its use of “Curv® material, enabling a strong and extremely light suitcase.” (2) Staying on the cutting edge of luggage design and innovation is one of Samsonite’s core competencies.
Operating Model
Samsonite has effectively managed its supply chain and logistics, global distribution networks and channels for vertical integration in order to organically grow its travel luggage business. In addition, the company continuously evaluates acquisition opportunities to expand its current growth model into “highly fragmented markets, less-represented product categories, and under-penetrated channels”. (3) As Samsonite’s customer base further expands beyond the traditional business traveler, the company continues to invest heavily in R&D and Marketing & Sales. For instance, innovations such as the cosmolite material and patented Curv® material for use in creating carry-on luggage enables the company to maintain its competitive advantage in the production of hardside luggage. Investing heavily in direct-to-consumer sales, including e-commerce, retail and omni- channel helped the company achieve strong growth sales in all regions including Asia (16.1%), North America (8.3%), Europe (22.4%) and Latin America (5.7%). (5) The company effectively leveraged regional preferences and buying behavior to create country-specific product offerings and focused targeting efforts on regional markets to further increase demand for travel products.
Samsonites operating model allows it to capture many benefit-based advantages driven by the physical characteristics of their products including durability, quality and ease of use. In addition, its complementary goods, such as its warranty offering, is an additional reinforcement to their value add to customers. As Samsonsite continues to grow through acquisitions, they are able to leverage the resources and cumulative experience of the combined firms to increase their cost-based advantage during manufacturing. These factors sustain the companies market share, competitive advantage and high performance overall.
(1) (http://samsonitedesigner.com/in/design-innovations/)
(2) (http://shop.samsonite.com/sitewide-exclusion-list/samsonite-black-label-firelite-30%22-spinner/545371198.html)
(3) (http://www.samsonite.com/investors/annualreports.do)
(4) (http://www.samsonite.com/investors/home.do;jsessionid=D232D978BFDDEC3E0604F6E5F13FF833)
(5) (http://www4.samsonite.com/_investordocs/20150316222955_Samsonite%20FY14%20Results%20Investor%20Presentation%20FINAL%202015-03-17.pdf)
I agree that they have done a good job with the technology to make sure they have solid luggage but I do not think they differentiate themselves this way from competitors. You mention vertical integration and how they are using this to branch into other markets however it seems to me that their luggage is still pretty consistently geared toward the business traveler. When they bought for example, High Sierra, did they continue the relationship with the pre-existing manufacturers and distributors? Did they leverage the existing pieces that made those companies efficient? It’s unclear to me what part of their operating model really adds value to the customer. the several acquisitions they have I believe could be very useful for their business but am not sure at this present moment how those companies create something for the customer as opposed to just more options for the business.
Samsonite is a very interesting company. I recently bought some new luggage and I had no idea how expensive these things could be. I wonder what COGS are for Samsonite and how that compares to their competitors. I decided to go with luggage with a bit more of a reputation for quality and durability than I think Samsonite has and that came at a higher price tag, but I wonder if Samsonite might be just as high quality but better operations allows them to offer lower price?
When I was traveling a bit for work and looking to buy luggages which are functional,durable and look fashionable a few brands come to mind: Samsonite, Tumi, Rimowa- which all offers revolutionary lightweight materials, attractive designs and premium brand image.While Samsonite invests in its R&D and marketing, how do you think it is winning market share vis-a-vis its competitors?