Samsonite is the world’s largest luggage company founded in 1910, and generating approximately $4 billion in sales with its Samsonite, American Tourister, eBags, Hartman, High Sierra, Lipault, and Tumi brands. We sat down with Charlie to see what inspires him, new tech he’s thinking about, marketing, media and, what else, Amazon.
Marie Driscoll: What are the important trends in retail today?
Charlie Cole: First it’s the rapid change in advertising and media. You can’t deny the importance of Google, Facebook, and Amazon as advertising channels in North America with their direct access to your customers. They have all the power and all the eyeballs — first.
Second, I feel like certain technologies have had their wave of mindshare and crested, such as virtual reality. I think two areas that remain promising are artificial intelligence and augmented reality, although people don’t fully understand either one. There is a place in the marketplace for AI and AR, they aren’t just trends. That said, the number of applications is limited at this point.
I think people are questioning omnichannel, a wave that started before Amazon Prime. Customer expectations have changed so rapidly: How many times have you used buy-online-pick-up-in-store? It’s still hasn’t entered the ethos that people thought it would. Delivery date expectations have shortened and people want convenience.
Finally, the big open question, and it’s not a matter of if but when, is voice. Something that we struggle with as we think about voice relative to our ecosystem is what does voice look like when you are buying something that you hope to use for seven years? It is very different than something you consume in seven days. Voice will be a massive advertising channel. Amazon, $5 billion in advertising revenue; Facebook, their entire business; Google, their entire business. That makes me excited.
MD: Amazon and Google and Facebook have all the eyeballs in North America as advertising channels and, increasingly as sales channels as well. How does a brand navigate that?
CC: What do we do to differentiate our direct-to-consumer channel? The first question a retailer/brand must ask themselves is ‘Are we going to be on Amazon?’ In the face of data that suggests about 60 percent of searches begin on Amazon, to say no is a big risk. We talk about differentiating our DTC offering with things like product personalization, better warranty servicing and being able to offer superior after-sales service like repair. We must be able to offer better service everywhere, and we can, because we can leverage our global ecosystem because we have stores everywhere. If your bag breaks and you bought it an online-only luggage company, you’re out of luck.
MD: But Tumi has a brand promise to consumers regardless of where they purchase their Tumi luggage.
CC: We need a threshold of trust that we execute globally. But we can offer the consumer something better if they bought it direct from Tumi.
MD: How would consumers know about it if they are stuck in the Amazon ecosystem?
CC: They will never see it. Only about 40 percent of Tumi products are sold on Amazon. We have a very active product segmentation strategy. To your point, it is a bit of a marketing challenge. How do we communicate that without using the biggest channel there is — Amazon? That’s where we rely on Google and Facebook, to show differentiation and exclusive products, where we do our dedicated brand marketing. Once you get there, it’s our job to tell you why to buy directly from us, as opposed to going to Amazon.
The way we think about it is the customer journey, and then we aide that person through the funnel to purchase. If someone types in luggage on Amazon, I’m not interested in getting them to just come to our site, I want to provide the best possible experience on that channel, period.
Imagine two customer journeys. Both start on the internet somewhere; Amazon, Google, Facebook doesn’t matter. One person types in Tumi and the other, luggage. If the search for luggage begins on Amazon, I need to provide everything to win that customer and end their search. I want them to buy from Tumi on Amazon, and yeah, I don’t make as much margin, but who cares, it’s our opportunity to enter their consideration set. If they type in Tumi, I will do everything in our power to get them on our website. And then we need to convert them to loyal customers. If you register for Tumi Tracer, we help you find your lost bag. It accomplishes two things. First, we can offer a differentiated service and second, it gives the customer a reason to engage directly with Tumi, even if they purchased at Amazon or Nordstrom. We can’t just differentiate by service offerings, we must differentiate with product. Only 40 percent of Tumi product is on Amazon, and for the Samsonite brand, its 20 percent to 30 percent. Product segmentation is a big deal for us.
MD: How the Amazon customer is different?
CC: Do this fun exercise. Go to Amazon and do a generic non-brand modified product search for toothbrush, luggage, t-shirt, running shoe. What you will find in North America is really bargain stuff. The answers don’t lie. Find me a generic keyword where a premium product shows up. Ultimately Amazon is optimizing all its algorithms to allow for the highest sales possible. You need a bit of a reality check if you are selling on Amazon. If we are trying to curate our product to Amazon’s customer and Amazon’s algorithm, we have to be playing at that price point, which is why Amazon is not a strategic channel for Tumi but probably is one of the most strategic channels for American Tourister.
If you are trying to build a premium brand, what is the purpose of being on Amazon? You could argue, to leverage Amazon as an advertising channel. Amazon gets a double-dip, they get some of your margin and some of your advertising spend. Otherwise, premium brands just don’t appear on a natural search. It goes back to the stat that if 60 percent of North Americans are starting their first product search on Amazon, maybe I should be there. Whether or not I show up isn’t entirely in my control, but I can increase the odds by advertising.
MD: Who is the Tumi shopper at your own DTC stores versus a department store such as Nordstrom?
CC: We don’t get a lot of data back from Nordstrom or any wholesale account. That’s always the fundamental problem. Candidly we don’t get anything back in data from wholesalers. Everyone is protecting their own turf. For every single multi-branded retailer, whether they will admit it or not, the question is, are you merely cannibalizing margin. If I didn’t sell X product in Y store, would shoppers just buy from Tumi.com? We try to mitigate this with product segmentation efforts, marketing buys, co-op buys, email suppression. We try to give the brand the appropriate presentation based on channel, so if you only have 30-40 percent SKUs to work with at Amazon, 60-70 percent at Nordstrom, 100 percent at Tumi.com, obviously the brand might be represented a little bit differently. But we do make sure to collate assets and deliveries, so the brand presence is consistent.
We get a hell of a lot of more data from the foreign wholesale players, particularly in China from Alibaba and JD.com. If you think about, if you are a marketplace and you truly have customer satisfaction as your goal, then sharing some data helps to reinforce that. That’s the hypocrisy of Amazon. They aren’t truly trying to make an open marketplace, they are trying to make a one-sided marketplace to their advantage. It makes me wonder if Alibaba and JD will have some success penetrating other markets.
MD: Sometimes the wholesale strategy is the visibility a brand derives from the retailer, and brand adjacencies. Not getting data is just the price you pay.
CC: Maybe that’s the quid pro quo. We benefit from the retailer’s brand, they hopefully get some ethos from ours and nobody gets any data. I don’t share our customer data either. Our distribution strategies are different based on brand. For Tumi, we aren’t interested in just adding doors, we want the right doors. For American Tourister, we are looking at more doors and more channels.
MD: What else has come from the merging of the Samsonite and Tumi wholesale and DTC customers with the merger.
CC: Samsonite, the holding company taught Tumi product segmentation strategy. You don’t have to sell everything to everyone. You can create exclusives. And Tumi has helped the organization think about the brand at the consumer level. When you are relying on wholesale, Macy’s and Walmart are your customers, not Charlie and Marie. I think that’s key, having the consumer perspective is huge. You get feedback on products, more importantly, it’s the best way to move forward. In a world of consolidation and differentiation, how do you differentiate if you don’t have a direct relationship with your customer. We shouldn’t be relying on Amazon and Nordstrom to differentiate for us. If you see two pieces of luggage online, differentiation through brand and marketing is tough. With our direct consumer relationship, we can differentiate via customer service, aftersales service, and relationship building that reinforce our heritage. I don’t think we’d be nearly as strong without it.
We continue to focus on identifying synergies across the portfolio. The Tumi deal closed August 2016. We still contemplate moving factories around. Customer service is an obvious and tricky area where we can learn from each other. How do people respond to broken luggage, it doesn’t matter what brand. How we service it can vary. Aftersales service in our industry is really complicated.
MD: What are the drivers of new luggage purchases.
If we do our job right, our luggage should last seven to 10 years. It’s really hard to standardize someone’s buying journey. Think about what truly catalyzes a purchase; it’s anecdotal, random and specifically personal. One of my favorite stories is when I got married. I travel more for work than anyone I know, always with a carry-on. So now I’m getting married in Italy and need to bring my wife’s wedding dress from Seattle to Sardinia. That was my catalyst for a different piece of luggage. Another anecdote. My aunt was having shoulder problems and couldn’t carry her bag anymore, so she was in the market for a new luggage. Ironically, broken luggage is easy, it’s the lifestyle changes that are hard. I hate to say it, Amazon should know better than us. They have a leg up on everyone with behavioral targeting and it’s why we truly need to be able to differentiate our offering.
MD: What’s exciting for you?
CC: Globally the internet is catching up. Think about retail 10 years ago and the online shopping experience. Distribution no longer differentiates your brand. It’s awesome that everyone has access to everything. Theoretically, brands must try harder. It’s so much fun to sit with my colleagues and say, if you can get everything everywhere, what do we have to do to make a better offering? If you were an internet-only brand, you were a new and novel brand. I don’t think anyone really cares about that anymore. It isn’t necessarily product, it could be consumption, or service. I don’t think Dollar Shave Club ever said we have the best razors, rather, they offered a modern way to consume them and it entirely changed the industry and consumers won.
MD: Let’s talk about new brands, Away and your acquisition of eBags, what was the impetus there?
CC: eBags did two things for us: it gave us a multiband platform, not immaterial, and we inherited 30 years of digital experience. Away is brilliant brand marketing. The Warby Parker/Luxottica Away/ Samsonite analogy is probably fair. Does Warby Parker make better glasses than Luxottica? Who knows and who cares? They’ve done a really good job of brand marketing. As a corporation we need to get better at direct-to-consumer marketing. It’s one of the reasons Samsonite acquired Tumi. DTC marketing is the next big battlefront. Away doesn’t differentiate their product, where its manufactured, the materials story—nothing is new. Away isn’t a product story, it’s a representation story. We can learn from that.
Ultimately luggage is a hard business. Away will start to get a lot more warranty claims and repairs. Will they be able to meet the service expectation we’ve been meeting for more than 100 years? The core thing they taught us is how to make a remarkable niche targeted product marketing story. Can we do that with our existing brands, or do we continue to innovate, acquire, or build new brands to target very specific niches? If you ask a 35-40-year-old businessman or businesswoman who’s the greatest luggage on earth, most will say Tumi, if you ask a 22-year-old, good question. Can Tumi become that millennial brand?
MD: Acquire or build, your thoughts?
CC: There are arguments for both. Historically, Samsonite has grown via acquisition. Acquire, you go from 0 to 60 fast, you get a team, a story, it’s much easier. The acquisitions of Tumi and eBags injected innovation into Samsonite’s culture. We can innovate internally and decide if we can touch niche demographics with our core offerings. Where we can make scale part of our advantage is our day job. We have about $4 billion in global sales and points of distribution in about 110 countries. Geographic expansion also provides opportunities for brand renewal. Look at Lipault, a Parisian brand founded in 2005 and acquired by Samsonite in 2014. It’s new to the U.S. market and we’re figuring out that niche market– colorful and Parisian, and is in now.