Luxury Bag Maker Creates Competitive Advantage with Niche Strategies

D’Luxe Bags Philippines, Inc., a manufacturer and exporter of Coach luxury bag collection, is undertaking a buyer-focused selling system and engineering techniques to maintain its competitive edge.

“We are trying to be very, very competitive despite the fact that the baseline is not cheap -electricity, water, labor. So the trick and the technique of the business is to focus on productivity in the shop floor to really minimize your cost,” said Ma. Teresita Jocson-Agoncillo, Executive Director of Confederation of Garment Exporters of the Philippines (CONGEP).

Jocson-Agoncillo noted that utility costs in the Philippines are still expensive compared to Cambodia, Vietnam and Bangladesh. However, these are lower compared to China whose costs have started to increase for the past two to three years.

To address this, she said the “cut-to-box” system has been employed in the business. This has enabled the company to meet 80 to 85 percent of its production target and gain lower profit margins.

Kevin Lee, the company’s senior operation manager, explained that under the system, the first in the Philippines, all processes to produce Coach luxury bags take place in the firm’s facility in Tarlac.

“All contents and materials involved (in making bags) are done in the Philippines. So full facilities are here; we just export the finished products. It’s a concept working with Coach bags,” he said.

Apart from such system, Jocson-Agoncillo bared that D’Luxe is adopting a “buyer-focused” marketing strategy.

“The factory is operating mainly for (the production of) Coach bags. When Luen Thai sets-up factories, it is specific to a brand. There is a major difference in the way the company, the factory and the lay-out are set-up,” she added.

Aside from D’ Luxe Bags Philippines, Luen Thai Group is also operating the Adidas factory in Mactan, Cebu, and the Ralph Lauren factory in Clark Freeport, Pampanga. The Group operates multiple industries in China, Micronesia, the United States, and the Asia-Pacific region.

Meanwhile, Evelyn Sison-Jose, general manager, said that D’Luxe is producing 1.7 million pieces of bags for export yearly. Its product lines also include handbags and the so-called mani kits or the small wallets.

“The company is still expanding. We are expanding with another building; it will be operational within the (Tarlac facility’s production building) premises,” she said.

D’Luxe Bags Philippines, considered the largest clothing and accessories in the country, was incorporated in December 2010 and was registered with the Board of Investments in January 2011.

The company was awarded as one the 32 top performing exporters by the Department of Trade and Industry during the culminating program of National Export Congress last month.

The award recipients were chosen based on their recorded sales with the National Statistics Office and their nominal contribution to the Philippine economy.

Reposted— Danielle Venz, PHILEXPORT News and Features

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