FABINDIA OVERSEAS PVT.

LTD

By,
Medha Saha
Rohit Kumar Shaw

Fabindia An Overview
Established in 1960 by John Bissell
Indian chain store retailing garments, furnishings, fabrics and ethnic
products handmade by craftspeople across rural India
Started as an exporting home furnishings company
In 1976, opened its first retail store in Greater Kailash, New Delhi
No. of Stores Over 170 across India and abroad

1. What are the reasons behind Fabindias

growth?
What role does Fabindias social mission play
in the strategy and performance of the firm?

Reasons for growth

Macroeconomic indicators - gradual opening up of Indian economy, changing
consumer behavior patterns (more disposable income & lifestyle choice)
Collaborative nature Partnering with suppliers
Gradual increase of presence in the retail market
Stores - premium, regular, concept & online, to cater to specific customers, age &
income ranges
Significant change in product mix with passage of time, like inclusion of ready made
clothes, furniture, organic foods, body care products etc. One of the first retailers to
provide complete home furnishing solutions for household.
Aggressive Vision Plans - Planned growth with dynamically revised targets

Reasons for growth (contd.)

Innovative store locations (heritage sites) shops more like destinations
Mantra of focusing on the product and its uniqueness, rather than focusing solely on
its social mission
Trendy handloom designs & authentic traditional fabric captured imagination of young
buyers (FabIndia look)
Customer experience in shops with distinct ambience, natural feel and ethnic store
personnel attires.
Employees encouraged to be entrepreneurial ensures management of stores with
accountability.

Role played by social mission in strategy

and performance of the firm
Started as a export firm to bring traditional Indian craftsmanship to the forefront and
provide livelihoods to rural skilled artisans.
Preserving the traditional weaving and printing skills of rural India.
The social mission helped FabIndia create a niche for itself.
Positioning as a socially responsible business organization, results in a lot of goodwill.
Skilled artisans had a synergistic growth including being shareholders, and became
constant, trusted and reliable suppliers.

 Suppliers governed by trust (not contracts).

Accommodative nature No-return policy and a leniency in order fulfillment.
Micro-financing arranged for suppliers to ensure reliability and 100% produce was
consumed.
Direct fabric procurement done from suppliers as per specifications, proper guidance
provided to craftsmen & weavers by experienced designers, significant cost savings and
exact requirements met.
Pan Indian presence the best fabrics and variety of traditional designs available with
FabIndia, diverse collection.
Cons
Cases of supply side irregularity of fabrics- quantity and time, opportunity losses
due to inventory issues.
Transport, storage and shelf life of organic eatables.

2. Can Fabindia grow further?

How?
What will be the effects of growth?

Can FabIndia grow further?

YES

Organized retail Only 3% of the total retail market in India (USD 230 billion).
Expected CAGR 18%
Also the disposable income with the middle class is ever increasing.
Therefore, there is a huge growth potential awaiting to be tapped in the retail sector.
Hence, customer retention cannot be the only way, customer acquisition will be an
important strategy going forward.

How?

Organic foods
Need to capitalize significantly
Products appreciated by customers
FabIndia already has the rural network, goodwill and reach to source these products.

Fresh produce and diary, as well as baked goods

Online presence Tie ups with major online retailers and marketing its brand across
different customer segments.
Mobile Apps
Fabindia's unique position as an organization with CSR as a driving force
Introduction of premium series of products

 Raising money through External funding or IPO

Opening new stores, preferably mini stores in Tier 2 and Tier 3 cities
Overseas markets More no. of stores promoting the uniqueness of Indian handicrafts

Change in the organization structure:Dedicated brand management and marketing department needs to be created
Use external market research agencies, tie-ups with rural training institutes and colleges
IT and software to be strengthened to enhance online presence
More decentralized management structure is required, with more powers vested in the
regional heads to manage the expansion
Advertising

Effects of Growth
I. Increase in profitability
II. Importance of excessive professionalism over trust while dealing with rural suppliers
III. Challenges faced in preserving the ethos of the company in line with its social mission.
So the growth has to be balanced, keeping in mind the larger ideology of FabIndia of
providing sustainable employment to craftsmen.
The positive aspect of growth will be the revenue generated which needs to properly
channelized into investments where the organization can not only flourish its
expansions but also diversify further.

3. What should be their priorities?

Priorities
Ironing out the supply chain issues Supply side irregularities can be resolved by
greater co-ordination and decentralization of processes
Recruitment of manpower Especially in the middle management and staff positions
Building the brand image aggressively, with focus on its social mission and diverse
product mix, showcasing growth potential to prospective investors before going for an
IPO or Private Investments.
Expansion plans for the organic foods sector as it has deep roots and pan India
presence in the rural sector.
Blueprint for entering tier 2 and 3 cities more aggressively, especially starting with the
furniture division. Tie ups with real estate chains including apartments and natural
resorts/hotels can provide the starting direction.

4. Should businesses have social goals?

Is growth their best contribution to society?

Should businesses have social goals?

Businesses exist within societies, and societal values expressed formally
(through laws and regulations) and informally (through values and culture)
affect all aspects of a companys operations.

(Fig 1)

(Fig 2)

Is growth their best contribution to society?

Inclusive Businesses It
maintains the for-profit nature
and contributes to poverty
reduction through the inclusion
of low income communities in
its value chain.

Social upliftment
Livelihood generation
Training and skill development
Women empowerment
(Fig 3)

Bibliography
Fig 1 - GEMI Metrics Navigator
(http://www.gemi.org/metricsnavigator/eag/Are%20Social%20Goals%20Relevant%20to
%20Business.pdf)
Fig 2 & 3 - tejas@iimb
(http://tejas.iimb.ac.in/articles/Tejas_September%20Edition_Article%202.pdf)

THANK YOU