COVID-19 ends 65-year-old journey of luggage retailer Witco

Besides luggage, Witco also sold school bags, handbags, and office bags. Sales of all these products  have also been ravaged by the pandemic.

A Micro, Small and Medium Enterprise (MSME), Witco’s yearly turnover stood at Rs 50 crore in the pre-Covid times, according to industry estimates.

Harris said while the initial three months of the last financial year during the lockdown were a complete washout, the company was able to recover only 25-30 percent of business after the economy reopened. “Given our rentals, employee salaries, and other expenses, we would have not been able to survive even if we did 50 percent of our pre-Covid business,” he said.

It all began with GST and demonetisation  

Witco’s downward spiral began with demonetisation announced by the government in November 2016.  While reeling under the impact of demonetisation, , the government announced the implementation of the unified goods and services tax, which further impacted our sales, said Harris.

As a result, the company, which employed over 50 people before demonetisation and GST, was forced to downsize to 35 employees.   The pandemic and lockdown were the nail in the coffin for the retail chain.

Witco, which operated out of 11 locations in Chennai, did not get rental concessions after the lockdown from its landlords and malls. “While some had offered rental rebates of up to 50 percent during the lockdown, later we were expected to pay full rentals,” informed Harris. Unlike old businesses, Witco’s lease contracts with landlords were recent as they had opened several new stores.

It also tried the e-commerce route for a while and registered on Amazon and Flipkart but that too did not work out.

Since the company was not doing any business, it became difficult to pay rentals and employees. Anticipating that even worse days were ahead, Harris decided to close the retail chain, which was started by his father in 1951.

Harris had taken over the reins of the business in 1975 along with his brother after his father died in a car accident.

At a standstill  

The $247 billion travel and tourism industry is one of the most badly hit segments due to the pandemic. While most sectors are hopeful to see a recovery by the end of this financial year, according to industry experts, travel would take at least three-four years to come back on track. The impact on the industry is so severe that British Airways has indicated that it will reach its pre-Covid business only by 2026.

And hence the outlook for related sectors such as luggage, too, remains grim. According to Euromonitor International, the luggage market in India was valued at Rs 7,205 crore in 2017 and grew to Rs 8,495 crore in 2019.

“Luggage market has been deeply impacted and it is expected to struggle for a while as the way ahead for travel remains uncertain,” said Pinakiranjan Mishra, Sector Leader – Consumer Products and Retail, EY India.

The large companies in the luggage segment such as Samsonite and VIP, according to the sources, have closed down at least 100 stores each in the last one year. VIP Industries reported a net loss of Rs 3.78 crore in the fourth quarter (Q4) of FY21 as compared to a net profit of Rs 9.52 crore in Q4 FY20.

While large companies still have the cash reserves to tide over this situation, medium and small businesses find it tough to stay afloat.

“Retail is becoming a very unviable channel for luggage business and smaller businesses like Witco who are entirely dependent on offline retail will find it challenging to survive,” says industry veteran Sudip Ghose.

According to experts, though the demand for products will come back, it all depends on the pandemic’s movement and with the second wave which has again impacted the retail chains, several more MSMEs could shut shop.