The Hindu Business Line : With plans just Fab

Fabindia the brand stands for much more than ethnic chic; it represents a sustainable retail model. Read on to find out more about its future plans..

— K. Ramesh Babu

A Fabindia store

Bindu D. Menon

At a time when brands are looking to bring more products and lines under their own labels, Fabindia has chosen to market an existing brand of Westernwear called East. The brand will be sold through its own exclusive outlets. “The reason for hav ing a different identity is to retain the essence of each (brand) even as we make a retail splash. There are clear indications that the women’s Westernwear business is growing in India. East will retail skirts, trousers, dresses and tops besides jewellery and accessories sourced from across the globe,” says Sunil Chainani, Director, Fabindia.

The company, which picked up a 25.1 per cent stake in East earlier this year for an undisclosed amount, said it may weigh the option of hiking its stake in the brand.

“Everything depends on the market response to our products. We have the option of hiking our stake in East during the next two-three years. This would be a natural extension, following our strategic investment in the brand. We would like to gauge customer reaction to the Western line of clothing. East has established itself as a distinctive brand in the UK with over 77 outlets,” said Chainani.

East, which already has a sourcing arrangement from India, said the retail potential in India is huge.

“East cannot afford to be left out of the growing market in India. For India, we have cut the price of our merchandise by nearly 40-50 per cent to be competitive in the local market. Our target consumers will be women who are looking at Western and fusion wear,” said Clive Pettigrew, Chairman, East. He said the company would be opening four East stores — two in Delhi and one each in Mumbai and Bangalore.

Fabindia is one of the largest private retail platforms for handcrafted products in the country — second only to the Government-owned Khadi and Village Industries’ Commission. It is a profitable model that is based on sustainable development. The product line includes garments, home furnishing, organic foods, jewellery and furniture.

Fabindia has over 106 outlets across 40 cities in India, with six stores abroad and a growing presence in West Asia. The company also provides online B2C shopping facilities to customers across 33 countries, including India. As Fabindia’s products have gained acceptance among the masses, the local shopkeepers have cashed in on its popularity by hawking their wares as ‘similar to Fabindia’ so much so that it has became a generic term.

“Our products are easily identifiable. However, the uniqueness comes from our intrinsic craftwork that makes up the DNA of each and every product,” says Chainani.

For Fabindia, creating a market for quality craft-based products and generating employment in the rural sector, has been as much a mandate as profitability and growth.

Artisans in association

Set up in 1960 by American John Bissell, the company links contemporary urban markets with traditional crafts-based, largely rural producers. It hawks merchandise and products that emphasise an alternative to the mass-produced and offers a livelihood to village artisans.

Interestingly, it is this ability to create jobs in the rural sector even while making profits that led the company to make it a Harvard Business School Case Study in 2007.

According to Willam Bissell, Managing Director, “Some artisans and their families have worked with the company for generations. The unique nature of the supply chain takes it beyond a business process; it forms the core of the business.”

While looking at an incremental one lakh sustainable jobs in rural India, the company’s plans for the future contemplate not only exponential growth in the number of stores but also artisans who would be associated with it.

Fabindia has set up a subsidiary company, Artisans Micro Finance Pvt Ltd, to facilitate community-owned companies, with 26 per cent artisan share-holding in the rural areas that it sources from: 17 have already been incorporated.

“In addition to making profits, our aims are constant development of new hand-woven products, a fair, equitable and helpful relationship with our producers, and the maintenance of quality on which our reputation rests,” says Bissell.

According to analysts, Fabindia has come to be associated with a shift in the definition and attitudes concerning the production of goods that derive from hand-based processes and the creation of sustainable jobs. Multinational production, sourcing and marketing systems, branded goods and the similarity of products, the non-standardised and multi-cultural is no longer a niche market — it has succeeded in establishing itself as a viable alternative in an evolving market-place.

Last year, the company had planned to open 80 stores to bring the total number of its outlets to 158, but the slowdown put the brakes on its expansion plans.

Its revenue rose to Rs 300 crore in 2008-09 from Rs 257 crore the previous year but growth more than halved to 17 per cent from 40 per cent a year ago.

“We are hoping to grow at a decent rate in the current fiscal as well,” says Chainani.

Structured Growth Approach

Both Bissell and Chainani agree that easing supply chain bottlenecks is a challenge that the company is addressing. “The growth momentum of the company is to a large extent dependent on the development and strengthening of the supplier base, which essentially comprises artisans and craft workers spread across 21 states,” they note.

The sourcing model that taps into the traditional skills base of craftspersons while contemporising it for relevance with design inputs and quality control best practices is one of the strengths of the company, as is the ability to translate the needs of the urban market for the rural producer.

He also notes that one of the success parameters for the company stems from the structured approach to store formats and the strategic location of the stores.

“From standalones stores, to high streets to malls, Fabindia uses a combination approach to maximise its reach. The four store formats have been developed to effectively cater to the markets.”

Fabindia’s operations have been divided into nine market regions each comprising stores, market region warehouses and supply region companies that are partly community-owned. While effectively consolidating the company’s supply base, these companies maximise reach and access to the crafts, and make artisans partners in the retail opportunity.

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