The Heavy-Hitters Band Together

Samsonite~TumiOver the past two decades, it has been without a doubt an incredible time for the airline industry. Thousands of flights are commencing every single day, with millions of passengers travelling for both business and pleasure across the globe. Analysts speculate that flights will only proliferate even further in the coming years.

The airline industry however, is not the only positively affected player from this trend. For travelers, this increase in travel means many more flights, and consequently a need for more better travel luggage, particularly carry on luggage.

This type of luggage is by far the most popular among frequent fliers to its flexibility to have with you the entire time, as well as its compact nature that makes it ideal for small trips, which is what most travelers are embarking on.

When travelers are searching for what carry on luggage to purchase, they are not looking for a cheaply made piece of luggage that will break down due to simple wear and tear within the first couple flights. Consumers are typically willing to pay premium for products that are premium in return; products that will stand the test of time, and hold up to the frequent bumps and scuffles that occur in the airline travel process.

For many consumers, when asked about brands that they would apply the above description to, they think typically of only two brand manufacturers; Samsonite and Tumi.

Tumi is known for their premium materials and attention to detail in the manufacturing process, and hand making much of their luggage. Samsonite products are known across the globe for their lifetime warranties, quality craftsmanship, and most notably, their durability. Samsonite carry on luggage products have shown themselves to stand the test of time and millions of frequent flier’s journeys, not just surviving by a thread, but maintaining their structure and aesthetic appeal throughout.

With these two brand manufacturers bringing very important yet different characteristics to the market, many consumers and investors for decades now have wondered if they would ever bring their vision together and become one company that creates ultra-premium products that are built to last and has a rock solid reputation.

To many investors and customers’ delight, this will indeed be happening in the very near future. Samsonite has announced that they fully intend to purchase and take under their influence, the company of Tumi Luggage.

The $1.8 billion deal is Samsonite’s largest financial move ever since putting their company up publicly. What remains to be seen is how successful this relationship is. But the popular prediction is one of great success, as both companies have seemed over the past few decades to grown to incredible heights and put out incredible products that consumers love to use on a daily basis.

Rationale

Many begin to wonder when looking at this acquisition whether or not this deal had been in the works or theorized in the past by either of the companies. As it turns out, both Tumi and Samsonite have been extremely interested in creating a relationship for over 15 years, according to Samsonite’s CEO Ramesh Tainwala.

The rationale behind this acquisition is largely due to catering to each other needs. Samsonite has incredible brand recognition however is seeming to fail to keep current with cutting edge modern design and the younger demographic. Tumi is just the opposite, has incredible design loyalty among consumers in all age groups, however lacks the global footprint that Tumi has in the luggage market.

As they come together to make products, the companies believe that this synergistic relationship will allow these lacking and strong suit characteristics to exchange between the brands and ultimately create product lines that are as close to being the ideal products for the modern day traveler.

What’s to Come

While the merging of these two companies is now common knowledge to those in the know, what remains to be seen is the specific type of products that the conglomerated company will begin to release with their newly acquired business partner.

Many believe that Samsonite will continue with their chosen materials however take many ideas from Tumi regarding product design and aesthetic/outer quality language in order to better capture the market while maintaining current customer base loyalty. What will remain a mystery until product launch is the price of the new Samsonite’s products. Tumi’s price points are typically extremely high, especially for carry on luggage, with the starting price typically being around $500.

This is a great contrast to Samsonite’s entry level and mid-range products that range from $100-$300. Many believe that the price of their products will rise slightly to compensate for their new and improved design language with higher quality materials and more fashionable outer aesthetics. By how much, no one truly knows.

While many see this as a potential customer loyalty danger for Samsonite, others believe that the seasoned company will bank on its years of experience and equity in consumer’s minds to allow the price increases to justify themselves. In general, most consumers and investors believe that this move was extremely intelligent of a business move for both companies, and really was simply a matter of time before the Tumi and Samsonite, both giants in the world of luggage, would bring their heads together.

The deal has not been without its criticism however. Many believe that Tumi’s US operations that have generally been regarded as extremely strong in terms of quality will be hindered by Samsonite’s typical outsourcing of manufacturing to facilities in Asia. That being said, Samsonite has recognized the fact that Tumi has been leading the curve when it comes to quality of materials and will probably be following their philosophies to ensure that they don’t lose market share of the industry.

What About the Consumer?

The most important question being asked by the general public about the conglomeration of Tumi and Samsonite is how the deal will affect their daily lives. Analysts expect to see higher quality products come out of Samsonite, that are modern, yet rugged and durable just as typical Samsonite products are.

That being said analysts also believe that the industry will see a large diversification of product lines, starting from entry level Samsonite carry on luggage, all the way up to full size premium leather suitcases for business professionals.

In general, many believe that this move by Samsonite is a positive one, and that the luggage industry, like the airline industry will continue to grow in record numbers, as well as continuously bring incredibly well made and innovative products to the market.

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