fabindia (medha rohit)

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    FABINDIA OVERSEAS PVT. LTD

    By,

    Medha SahaRohit Kumar Shaw

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    FabindiaAn 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

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    1. What are the reasons behind Fabindias

    growth?

    What role does Fabindias social mission play

    in the strategy and performance of the f irm?

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    Reasons for grow th

    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

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    Reasons for g row th (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.

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    Role played by social m iss ion in s trategy

    and performance of the f irm

    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.

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    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.

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    2. Can Fabindia grow further?

    How?

    What wi l l be the effects o f grow th?

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    Can FabInd ia 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.

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    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

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    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

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    ffects of Growth

    I. Increase in profitabilityII. 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.

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    3. What shou ld be their pr ior i t ies?

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    Prior i t ies

    Ironing out the supply chain issues Supply side irregularities can be resolved bygreater 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 anIPO 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 thefurniture division. Tie ups with real estate chains including apartments and natural

    resorts/hotels can provide the starting direction.

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    4. Shou ld bus inesses have social goals?

    Is g row th thei r best contr ibut ion to soc iety?

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    Shou ld bus inesses 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)

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    (Fig 2)

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    Is g row th thei r best contr ibut ion to society?

    Inclusive Businesses Itmaintains 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)

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    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)

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    THANK YOU