The luggage industry is feeling a pinch as Americans scale back on travel and spend cautiously.

But Mounir Badaan, a real estate developer and entrepreneur, has found a winning formula for his luggage company, Badanco Enterprises, by focusing on fashionable bags and not being afraid to deviate from the traditional travel market.

In catering to niches that don't involve vacationers - such as bags for day trips - Badanco has profited while smaller companies slip.

"It's a market that's not about travel," said David Katz, senior vice president who has been at Badanco since its inception.

"We've done a very good job of exploiting beauty cases or doctor's bags and weekender styles, what the industry normally calls more casual products. With our brands and our styling, we've been a powerful player."

Revenue for the Totowa-based business grew approximately 30 percent in the past two years, said Badaan, a Kinnelon resident. With about 100 employees, the luggage wholesaler and design firm earns $50 million to $100 million annually.

They've cornered at least a 75 percent share of the direct market (selling in catalogs, online, and on television) and a 15 percent to 20 percent share of the department store market (clients include Macy's, J.C. Penney, and Sears), Katz said.

At the retail level, the industry generated $10 billion in 2000 (the last date for which figures were available), according to a study by Ron De Marines of Georgetown Economic Services for the Travel Goods Association.

Sales have declined about 50 percent in the months following Sept. 11, the association says.

A report in The Denver Business Journal. quoted TGA's Anne DeCicco as saying retailers and manufacturers reported about a 50 percent decline in sales in the weeks following Sept. 11.

Badaan, a real estate developer and entrepreneur, started his career selling handbags. He switched to luggage in 1978 and operated Badanco International. In 1989 it merged with Henry Rosenfeld Luggage, and Badaan became vice president. Three years later, he bought the business and incorporated it as Badanco Enterprises.

Badanco has an exclusive North American license for the brands Pierre Cardin, Gloria Vanderbilt, and Diane von Furstenberg. It owns Ventura, Travel Gear, Pegasus, and Frequent Traveler, and is a private label manufacturer for DKNY, J.C. Penney's Protocol, Brookstone, and Federated Department Stores' Metropolis and Charter Club brands.

The Record met with David Katz recently to discuss Badanco and the outlook for the industry.

Q. What is going on with the luggage industry?

There's somewhat of a bifurcation of the luggage industry right now in that the middle is being squeezed the most. The low end is picking up ... But the high end of the business continues to be strong and the customers who are less affected by this are affluent business travelers.

Q. What trends are you seeing in the design of luggage?

More casual bags. Multifunction bags that can open up and have compartments that hold and organize things. You can use them for weekends. You can use them for crafts or camping or sports activities. That's a big growth area. Another trend is toward more fashion, particularly as you start seeing the bags ... Ø used more frequently. Styling becomes more critical. If you've got to live with this piece like you would a handbag or a watch, it's got to have a certain personal flair to it.

Q. What has the economic slump meant for Badanco?

Actually for Badanco, it hasn't been entirely negative. I mean obviously, we'd rather see business strong, but because we're well capitalized and because of the niches that we work at and because of cost controls and the way that we market, we're less affected on a balance sheet basis than most of our competition. We've seen a number of competitors go bankrupt over the last years or so. We've seen a number enter extremely weak conditions where they can no longer do some of the things they could do before, where we have gained market share because of that. For example, Samsonite, the largest and only public company in the industry, was delisted Jan. 14 by the Nasdaq Stock Market because its stock dropped below $1 from a 52-week high of $4.90.

Q. Why is luggage well-suited to a direct market?

There's a pretty high trust factor, particularly when you put a brand on it. And it's very easy to expound on features and benefits in mail-order in a way that you can't in the store. We can really tell you about the zippers, the pockets, the wheels.

Q. What sets Badanco apart in the industry?

We do 100 percent internal design and engineering, but it's the fact that ours is so sophisticated and the fact that we have so many designers. We actually will design hardware. Most people in this business will buy market hardware, a zipper pull or a handle or a wheel, that's already available. We'll actually design hardware. Since we use fashion and style as a differentiation from what we consider to be a commodity industry, it's very critical to us that all those little details be unique to us.

Q. What are your plans for the future?

To continue to focus on fashion and to really see if we can shorten the time from development to market. Luggage has never really been something where you have more than one season of product a year. We're already at two. We're looking to see if we can get three turns out of luggage a year.