Heys International forced to innovate in competitive luggage industry

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If imitation is the sincerest form of flattery, Emran Sheikh has just about had it with all this flattery.

Wherever he goes in the world, Sheikh sees his company's designs. The problem is, they're not all made by Sheikh's Heys International, Canada's largest luggage maker. Counterfeiters in Asia have ripped off its designs and lion logo. Unscrupulous overseas factories have leaked its blueprints to rivals. Its trademarks have been infringed upon in Australia, its web domains squatted upon in Korea, and its products out-and-out counterfeited right here in Canada.

"It's because of the growth," says the company's 43-year-old president and CEO, sitting in the main showroom at Heys's head office–a polished white boardroom lined with suitcases that form a Stonehenge-like circle around the meeting table.

In just 12 years, Heys has gone from a small, family-run business in Mississauga to a global force in brightly coloured, hard-sided luggage. Using lightweight plastics in flashy tones and prints, Sheikh's company has helped redefine an industry that had fallen into a rut of boring, black, soft-sided luggage, and helped make hard-sided suitcases cool again. When Heys arrived on the scene, it transformed luggage into fashion, and you didn't need to spend Louis Vuitton dollars to make a personal statement in the airport security line.

If you've shopped for a suitcase any time in the past decade–and many of you have, since the highly fragmented global luggage market is expected to be worth nearly $50-billion (U.S.) in 2015, according to Silicon Valley-based Global Industry Analysts–you know Heys. Sheikh jealously guards his private company's financials, but he confirms that Heys does considerably more business here in Canada than Samsonite, the world's No. 1 luggage maker, based in Hong Kong, which reported Canadian revenue of $32.1-million (U.S.) last year. And even if you don't know the brand, it's likely that the luggage you do own was influenced by it, since most of the world's top brands–including Tumi and, yes, Samsonite–have all followed Heys's lead into the hard-case market.

It's not just legitimate competitors that have tried to emulate Heys's success. The more luggage it sells, the more it becomes a target for copycats. "To become an overnight success has some great advantages, but it has some disadvantages–because everyone sees that success," says Sheikh, who is soft-spoken and talks with the bright optimism of an entrepreneur who refuses to be beaten down.

Heys is now involved in 13 litigation cases in six countries, and those are just the battles Sheikh has chosen to fight. "My legal fees alone this year will be $1-million to $1.5-million–just in legal fees," he says with exasperation.

But Sheikh's long-term plan isn't limited to simply suing everyone who rips off his company's intellectual property. The luggage industry is in an arms race for the next big thing–the lightest suitcase humanly possible, GPS trackers to help consumers find lost bags, and other paradigm-busting inventions the travellers of tomorrow won't be able to live without. And Sheikh wants to get there before his rivals do.

The last truly great innovative leap in the luggage business came in 1970, when Bernard Sadow, a vice-president at a Massachusetts baggage company, stuck four castors on a heavy old suitcase, added a strap and invented the rolling bag.

Inside Heys's luggage laboratory, Alden Evangelista and his team are trying to come up with a game-changer of their own. The designers' desks are crowded with monitors and tablets. Behind them, there's a cabinet filled with swatches of potential new materials (from nylon to polycarbonate) and colour samples. Scale models and components created using a 3-D printer are waiting to be tested for ergonomics and mechanics. They also regularly receive models from the company's Asian factories. "At times, it looks like the airport baggage claim area around here," says Evangelista, the company's 28-year-old product design manager.

Evangelista would know. In 2006, he was an industrial design student at Humber College in Toronto, paying for school by working as a luggage handler at Pearson International Airport. At school, he designed everything from sleek retail displays to an emergency survival raft for floods. But suitcases started to capture his imagination–standing, as he did, at a conveyor belt all day. "You see all sorts of luggage when you work down there, and I guess I was fascinated by theway they look, the way they go from one part of the world to the other with this stuff inside," he says.

That summer, Evangelista noticed a lot of Heys bags making their way to Pearson's luggage carousels. It was a relatively young brand he knew nothing about. He did some research online and was surprised to find out that Heys was a local company, with a head office just minutes from where he worked. On a whim, he applied for a job, and Sheikh called back and offered him an internship. The boss soon realized Evangelista had a talent for designing hip luggage and eventually handed him a full-time gig.

Evangelista and his team–four designers dedicated to luggage, four more for children's lines and two for handbags–spend their time fixated on how to make luggage better, more convenient to pack and easier to lug. Evangelista pioneered one of Heys's recent and best-selling innovations, called Smart Luggage, a hybrid between soft and hard cases. The idea came to him when he was packing and wanted to access the bag from the front, not just by opening it in the middle, like the typical Heys clamshell. The carry-on model has a front laptop pocket that flips out for easy retrieval in the security line.

The challenge for Heys–and for the industry as a whole–is how much innovation is actually left to do on suitcases. In its basest form, a suitcase is little more than a box on wheels; get too far off track and you might create something no one wants. "When we design, it's form that follows function, because at the end of the day, you're putting stuff inside of it, so you want to maximize the volume the suitcase can take in," says Evangelista, who admits he travels just once or twice a year. "Thinking of something that can genuinely improve how one travels is pretty difficult. It just doesn't come out of nowhere."

Some ideas prove to be hits, like Smart Luggage; others turn out to be flops. In an attempt to design a hard-sided case geared specifically to men, for example, Heys produced the Stealth line, modelled after the radar-defying Stealth bomber, with angular lines and a sleek shape. But the innovation flew under the radar of consumers–with good reason. In an effort to make the cases slim, the designers had cut back on packing space, a textbook case of form not following function. "I loved it," says Sheikh with a laugh. "But it didn't sell."

Another strategy the design team is employing to battle the luggage giants is speed. Because Heys is small and nimble, Sheikh says it can experiment more with trendy prints, including displaying famous artists and designers, and can produce 20 or 30 new models in a year. (A couple of recent hits include a Canuck-themed collage of iconic images like lumberjacks, beavers and Tim Hortons cups by Brazilian-born illustrator Fernando Volken Togni, and bright colourscapes created by Canadian designer Karim Rashid.) Heys uses a variety of factories throughout Asia–more than two dozen in China and one in Taiwan–so if a trend hits, the company can drop a new design into its production run and have a prototype in a couple of weeks to shop around to retailers.

In the case of floral prints and map designs–two patterns that have sold well–Heys was able to get into stores faster than other luggage makers, winning customers on trendiness alone. Still, the company can sometimes move too quickly for its own good. A few years ago, Sheikh says Heys noticed camouflage was a hit on runways, and brought out various colours of camo gear. Much to its surprise, the bags went unsold for months; Heys eventually began giving away the excess inventory as prizes. Then, a year later, stores began calling up and begging for the camo line–which was now depleted. "We sometimes find that we're too far ahead," Sheikh says.

Heys's innovation isn't limited to prints; Sheikh knows that looks alone won't defend the company against its rivals. It has been experimenting with location devices built into its luggage, a project that has proven difficult, since it means striking deals with wireless carriers in multiple countries, and signals can't always penetrate deep into airport cargo holds. Evangelista and his team are also playing around with suitcases that weigh themselves when you lift them, doing away with the need for an external scale.

Those could be a hot seller in these days of astronomical extra-baggage fees, so you can bet Heys's competitors are working on the same idea. "It is pretty frustrating," says Evangelista. "There are only a few big players out there in luggage, and everyone is aware of what everyone else is doing."

Hard-sided luggage wasn't an easy sell in Heys's early days. Sheikh remembers sitting down with buyers from the Bay in 2005 to discuss getting the brand into stores, and being met with puzzled looks: Hard-sided luggage had gone out in the 1970s, when lighter, soft-sided bags came along. At the time, hard-sided bags represented just 1 per cent of the market–yet Heys had invested in a massive, nationwide billboard campaign advertising its product. The Bay's buyers wanted to know why.

Quite simply, Sheikh wanted his company to do something different.

The roots of the business go back to Sheikh's childhood. When the family immigrated to Canada from Sweden in 1974 (they'd moved to Scandinavia from Bangladesh when Sheikh was just a baby, and spent three years there), his mother, Raisa, worked as a clerk at Zellers, while his father, Yahya, worked in the finance department of the Ontario Provincial Police. On weekends, the family sold a wide range of goods (from leather jackets to cleaning supplies to silk flower arrangements crafted by Raisa) at mall kiosks. Eventually, that business–often staffed by Emran and his older brother, Haroon–branched out into imported leather handbags and other travel-related items.

The company was officially founded in 1986, when Emran was 16. The name is a nod to the family's names: Haroon, Emran, Yahya and Sheikh (with the Y doing double duty, representing their father's given name and their mother's middle name, which are the same). "Back when normal kids were out partying and having fun, I was driving to Kitchener-Waterloo and doing all these kiosks," says Emran.

The travel goods did so well that Heys expanded into luggage, at first by importing soft-sided suitcases from overseas. By the late 1990s, Emran, who went into the business full-time right out of high school, began designing his own soft-sided wheelie-bags. But the industry was ripe for a reboot. "We'd noticed the slow deterioration of the luggage industry," he says. "The same people were doing the same things. Nothing innovative was happening. It was all black, and there was so much soft-sided luggage." He remembers seeing signs for Samsonite bags at Bentley, a mall-based luggage chain, for $49.99. How could an unknown brand like Heys compete?

In a word: plastics. The industry was going through a bit of a technological renaissance at the time, with the development of lightweight polycarbonates that were stronger, more flexible and easier to work with than anything that had come before. That meant Heys could offer customers the same protection and durability of the old hard-sided suitcases, with their rigid hides, but using much thinner materials.

The designs of the disco era would not do, however. The Sheikh brothers rounded off the hard edges for a more modern look, and made their cases far deeper. They replaced metal clasps with zippers, giving the suitcases more flex for people who like to stuff their bags. And there was no limit to the ways in which the new plastics could be coloured, textured and buffed. They could make luggage look like jewellery or candy or ice cream–and they did. Each one was emblazoned with the Heys logo, sketched by Emran's wife, Fariha: a lion on a shield, signifying strength.

At about the same time, German luxury travel brand Rimowa, which pioneered silver aluminum suitcases in the 1950s, was also moving into high-tech plastics. But for most of the mainstream luggage industry, polycarbonate cases seemed like a waste of time. "Back then, there was no such category as lightweight luggage–which is amazing, when you think about it, because that's all that matters now," Emran says.

Two events helped solidify Heys's status in the market. First, it landed a spot in the swag lineup at the 2003 Toronto International Film Festival, which got its bags into the hotel rooms of some of Hollywood's biggest stars. When several of them–including Madonna–were later seen tugging a white Heys behind them at the airport, the brand was suddenly launched into must-have status, with its under-the-radar ascent only adding to the mystique.

Then oil prices began to climb toward $100 a barrel. Suddenly, the airline industry was scrambling to find new revenue as fuel prices thinned margins. Passenger luggage became the universal target, and carriers around the world began charging for any bag weighing more than 50 pounds. The surtax was a scourge for flyers, but a gift for Heys. Suddenly, how much your suitcase weighed mattered more than it ever had before. People began shopping for luggage with a different objective. "We were ahead of the curve," says Sheikh.

There was just one tiny–or huge–problem. Samsonite, which holds about 10 per cent of the global market and has roughly $2-billion (U.S.) in annual sales, also began transforming itself into a hard-sided goliath, with its own array of coloured, curvaceous suitcases. "The big ship steered toward us," Sheikh says.

When Samsonite raised $1.3-billion (U.S.) in a 2011 IPO, analysts at HSBC conducted a study of the luggage sector that highlighted how hard it is to succeed. "The luggage market is probably not a great industry to be in," the report said, citing "low barriers to entry" and "limited pricing power." Just as Heys could come in and redefine itself as a hard-sided luggage leader, so could Samsonite–or anybody else, really, if they put their mind to it. And they have: Today, Sheikh figures hard-sided luggage accounts for 35 per cent or 40 per cent of the overall market.

Sheikh was so busy building out Heys in North America that he admits he didn't spend enough energy policing its trademark claims on other continents (while North America is the company's largest market, it also has a big following in the Middle East and Asia, followed by Russia and the European Union). The extent of his blunder hit home in 2010, when Heys decided to open retail stores in China. "When we registered our logo, we were told it had already been registered by some unknown Shanghai company," he says.

This is a familiar challenge for Canadian companies, says Douglas Reid, a professor of strategy at Queen's University in Kingston. From Canada Goose parkas to BlackBerry smartphones, companies expanding outside North America can count on their products being ripped off overseas. "You have low-end players out of China who are fairly sophisticated and who can probably fend off your legal challenge for four or five years and make a pile while you're fighting it in court," says Reid. "My guess is that a few of these companies actually say, You know what? If we can stall this game long enough, then we'll just simply pay something out later. In the meantime, we'll make out like bandits."

The simple fact of being Canadian only makes matters worse. Sheikh says he and his fellow Canucks are often viewed as bit players, because they're not American. Sometimes, Heys uses its U.S. division, based in Chicago, to represent itself in Asia, just to send a different message (though he insists the company is proudly Canadian).

Sheikh takes little comfort in knowing his company isn't alone. He has walked into production facilities in China and been asked by factory operators if he wants to see the blueprints and product specs for rival luggage brands that also manufacture there. To them, it's business-as-usual. "That's not the factory you work with, I can guarantee you that," says Sheikh, who spends 12 weeks a year in Asia overseeing manufacturing operations and meeting with distributors.

Mostly, these intellectual property cases are nothing but a distraction for Sheikh. He and Heys took a big risk that hard-sided luggage would be a hit, and the gamble proved genius. Now, everyone else has figured out the same thing. "The competition has caught up," Sheikh says. It's his job to make sure that Heys can once again move ahead of the pack.

"I can't talk about everything we're working on," he says with a nervous laugh. "The goal is to do something so cool, so unique, that no one has thought of it before."