... Weaving Bharat Into India
... Weaving Bharat Into India
... Weaving Bharat Into India
Weaving
...Weaving Bharat
Bharat into
into
India
India
Dr Amit Rangnekar
Case
How does Fabindia, committed to protect
traditional Indian weaving and printing
skills, continue their growth and profit
trajectory, while maintaining their
commitment to rural development?
Fabindia 2008
Indias most well known brand of ethnic chichandloom garments, linens and handicrafts
Commercially successful adaptation of
handloom fabrics to urban tastes
Sales Rs 3 Billion
CAGR 40-50%
85 retail outlets
Committed to nurture Indias artisans,
profitably
Mission
In addition to making profits, our aims are
constant development of new handwoven
products; a fair, equitable, and helpful
relationship with our producers; and the
maintenance of quality, on which our
reputation rests.
John L. Bissell, Founder of Fabindia
Founding Ideology
A vehicle
to market
the vast
and
diverse
craft
traditions
of India
Provide
work &
employme
nt to
Indias
skilled
rural
artisans
Protect
and
sustain
traditiona
l weaving
and
printing
skills
Policy
I dont believe in charity or giving things
out free. I believe that the only way to
alleviate rural poverty is to generate
sustainable employment, and the only way
to do that is if we run our business in a
profitable manner. Yes, it seems
contradictory that we pursue both a social
goal and profit, but I believe this is the
only way to do it. William Bissell, MD,
Fabindia
Genesis
1958- John Bissell , US delegate, in India to
advise Indian government on Cottage Industries
Worked with Macys, understood the demand for
novel, high-quality cotton fabric in the US market
Traveled extensively across India
Artisans- rich in talent and skill but with little
market knowledge or ability to access consumers
Envisioned an entrepreneurial opportunity to to
enable artisans to find markets
There is heart in India.
Evolution
Founded 1960, Delhi, as an export house
Export of hand woven soft home
furnishings
Upholstery fabric, rugs & bed linens
1965, revenues Rs. 2 million ($44,444)
Committed to nurture scores of weavers
and artisans who depended on Fabindia
for their livelihood
Progress
1976- Fabindia Overseas Pvt. Ltd.
Opened first retail store in Greater
Kailash, Delhi
Merchandising- ad hoc
Whenever John Bissell saw something he
liked, he invited the weaver or
craftsperson to display and sell his or her
merchandise from the store
1990s
1992- Fabindias main customer, Habitat,
acquired by a larger firm- long
relationship abruptly ended
1993- John Bissell suffered a paralytic
stroke, son, William Bissell, stepped up
1994- Second retail store in Delhi
1998- John Bissell passed away
1999- 32-year-old William Bissell, MD of
Fabindia
Classificatio
n
People
(Mn)
Household
Income
$ US
Deprived
783
78
<600
Aspirants
140
14
1000-3000
Climbers
48
4.8
3000-6000
Strivers
27
2.7
6000-12500
2.18
0.22
>12500
Rich Total
Near Rich
1.55
12500-25000
Clear Rich
0.44
25000-50000
Sheer Rich
0.14
50000125000
Super Rich
0.03
>125000
Total
1 Billion
Expansion
Strategy- Eschew exports, expand retail
Liberalisation, changing macroeconomic
climate
Our internal rigor, depth and breadth of
management, and clarity in planning
process would contribute to our ability to
grow. William
Fabindia
Value
Chain
g
cin
r
u
so es
ng iliti
o
r
St pab
ca
Co
rm
o
nf
ce
n
a
o
Pr
22,000
Traditional cotton & silk-weavers & printers
Weavers
& Artisans
Fabricators
t
c
u
ng
a
r
155,000
SKUs
Availability
85
Fabindia
Outlets
Reach, width, depth
Sourcing system
Key to success
Network of 22,000 artisans, scale up to 1
Lakh by 2010
Back-to-the-grassroots approach
Fabindias success lies in getting small
handloom and craft units scattered across
remote villages to develop products that
appeal to urban consumers. Well continue
to develop our supply chain the hard way
rather than take the easy way of using millmade fabrics Sunil Chainani, Director,
Fabindia
Statewise
Sourcing
Supply Chain
Artisans- Weavers, printers and fabricatorsRural India
Designers interact on specified weave,
color & print
Combine knowledge of customer tastes,
aesthetics & weaver capabilities
Range- Weave X color X print- 4,000+
combinations
Occasional designs from artisans, scaled
up, if approved
No written contracts with suppliers
Suppliers as Shareholders
Supply-Region Companies
Supply-region companies, will streamline &
strengthen our supply chain, eliminate
middlemen, provide jobs to rural artisans,
and giving our suppliers ownership in this
business. These companies, manned by locals
across Indias handloom & craft-rich regions,
will gradually take over design, distribution,
quality control, warehousing, and some
processes like dying from the parent
company Prakash Tripathy, Director
Aggregating fragmented handloom weavers
can ensure steady supply, enhance range &
enable retail scale up
Impact of Suppliers as
Shareholders
They now have a sense of ownership of the
company. They now understand when we
tell them not to raise their labour costs as
the higher profits will come back to them as
dividend as well as capital appreciation
Fabindias evolving supply chain is
responding to the need for large
investments in enhancing product quality
and sophistication. So, well provide better
quality and designs to our customers
William Bissel
Supplier Selection
Referrals from existing suppliers
Interviewed and assessed for potential
Team visits production facility to get a feel
of capability
Given a trial order
Regular orders if performance is
satisfactory
Work on trust and understanding
Supplier Management
Bank loans against buying commitment from
Fabindia
Buy almost 100% capacity, captive consumption
Understand supplier limitations, social sensitivity
Never return goods for delayed delivery, even if
summer collection fabrics are delivered in August
For variations- reprocess / reprint fabric or find
alternate uses- coasters, covers, binders
The weaver and his family have perhaps put in 2-3
months worth of labor into this, and if we return the
goods they will have to incur heavy debts till they
complete the next order. So we make a noise about
the delay . . . but accommodate them.
Stock Management
Weavers deliver fabric in 20 & 50 metre rolls
(thaans)
Difficult to predict quantity & frequency of
delivery
Thaan- colour coded for print, weave & length,
formally stocked, entered in database
Fabric sorted and stored
Tailors issued fabric depending on design &
quantity of garments ordered by the warehouse
Trust embedded in supply chain reduces
problems
Stocked in individual store bins for despatch
Crafts
Bagh
Ajrakh
Ikat
Chanderi
Indigo
Block Print
Kalamkari
Chikankari
Bandhani
Applique
Indian Retail
Historic /
Rural
Reach
Weekly
Weekly
Markets,
Markets,
Village
VillageFairs
Fairs
Melas
Melas
Source of
Entertainm
ent
Traditional /
Pervasive
Reach
Convenience
Convenience
Stores,
Stores,
Kiranas
Kiranas
Neighbourh
ood
/Convenienc
e Stores
Govt
Supported
Modern
Formats/
International
Exclusive
ExclusiveBrand
Brand
Outlets,
Outlets,Hyper
Hyper&
&
Super
SuperMarkets,
Markets,
PDS
Outlets,
PDS Outlets, Department
Department
Khadi
Stores,
Khadi Stores, Stores,
Stores,
Cooperatives.
Cooperatives. Shopping
ShoppingMalls.
Malls.
Availabilit
y/ Low
Costs /
Distributi
on
Shopping
Experience/
Efficiency
Geographic
Tier
distributio
n
Total
Stores
85
58
03 04 05 06 07 08
03 04 05 06 07 08
Tier 1
Tier 2
Tier 3
Store formats
Premium
Wide product
range
Significant
inventory of
high-end items
Regular
Concept
Wide product
range
Lower
inventory of
high-end items
Test stores in
new markets
Fewer stock
keeping
units (SKUs)
Retail
Retail
Spiralling real estate prices slowing down
retail expansion
Try to be first mover in new markets to
get cheaper prices
Fabindia has decided not to expand
through the franchisee route in the
domestic market because we do not want
to dilute our brand, adds Shilpa Sharma,
Head, Marketing
Store Management
Store managers allowed to be entrepreneurial
Store wise budgets for order goods & expenses
Store budgets based on location, previous years
sales, and other macroeconomic indicators
Stock planning- Store specific, based on
knowledge of available merchandise & local
tastes
Merchandisers at HO keep store managers
abreast of new styles and other developments
Mystery shoppers- monitor and control quality of
the sales process and customer service
Store Staff
Encouraged to wear clothes that fit Fabindias
ideology
Wearing machine-made, synthetic fabrics
doesnt quite convey our ideology; managers may
have a quiet chat with executives who
consistently wear synthetic clothes. Staff
members wear uniforms that we provide, Store
Manager, New Delhi.
Routinely sent on field visits to supplying
weavers
Training programs in New Delhi, to Fabindias
ideology & share John Bissells passionate
commitment to handlooms and rural
development
Distinct Ambience
We pick our store locations carefully and
choose buildings to create a unique
consumer experience. For instance, in
Bangalore we opened our store in the home
of the famous architect Charles Correa. We
chose the Ilford House in Chennai and
Jeroo in Mumbai. All these buildings are
heritage landmarks that have a charm of
their own. Our stores are destinations.
Chainani
Inside store aesthetics, highlight connection
to all things natural
Communication
No advertising
We are promoting an alternative vision for the future. It
is collaborative [with the suppliers] in the true sense of
the word; it is participatory [with the customers that
share our views], and our products have an intrinsic
value proposition as opposed to an imposed value. It is
due to this intrinsic value of our products that we have
never felt the need to advertise. While we will announce
the opening of a new store in the local newspaper, we
never spend any money on ads per se. Bissell
"Our constant endeavour is to resist the temptation of
going `mainstream' which is more of a commodities
game, and develop and widen the niche markets in
which we are the dominant player" Bissell
Handlooms- Government
Support
Lackluster support program to promote handlooms
Handlooms (khadi) symbols of self-reliance &
Indianness
1957- Khadi & Village Industries Commission
(KVIC) to create commercial khadi products,
increase rural employment
Strong government interest- 7,050 khadi outlets,
significant sales (Rs. 5.8 billion, or $129 million)
Poor shopping experience- badly lit stores,
unenthusiastic salespeople & merchandise- neither
modern nor youthful
Fabindia Distinctiveness
Products convey a sense of youth & quality
Perceived as trendy yet traditional, affordable,
distinct ethnic chic
Garments- Simple, functional & style conscious
Emphasis on utility & contemporariness
Varied and more upscale product mix, class appeal
Better, brighter stores
Informed & eager salespeople
Sourced from all across India
Key product requirement- Should have at least 1
handmade element- handwoven fabric or block
printed by hand or finely hand embroidered
Standardisation
Original crafts- a niche market
Larger market- increasingly full of fake
handloom products
Fabindia has to constantly educate
customers
Fabindia products bear Craftmark,
industry certification for original
handmade products
Product Mix
Home furnishings
Upholstery & curtains
(30%)
Garments (70%)
Womens wear
Indian (30%)
Western (20%)
Mens wear (28%)
Accessories (15%)
Infants, kids, teens (7%)
Maternity wear
(30%)
Bed linens (30%)
Table & bath linens + floor
coverings (20%)
Furniture, lighting, home
accessories (20%)
Range
Body care
Body wash
Shampoo
Soap
Oils
Skin care
Organics
Cereal
Honey
Preserves
Jams
Relishes
Coffee
Garments (70%)
Range
1981
Launched mens shirts, khadi not fashionable
Sold through upholstery stores
Mens- 1 shelf, 4 shirt sizes, 20 pieces / size
Womens- 1 shelf, then 1 store corner, then two
Garments- men, women, children, infants,
maternity wear & accessories
2004- Premium line @ Rs 2,500 ($55-plus), huge
success, expected to generate 30% of revenues
Policy
Segments
Home
Pre
1990s
Post
1990s
Custome
rs
Customised- linens,
upholstery &
Founding Business
cushions from local
Largely unorganized
showroom, few
furnishings sector,
organized outlets
carpenter crucial
Few local renowned
fabric showroomstarget affluent
Indians, stock silks
and brocades
Up market
customerstowels and bed
sheets from
abroad
Middle-classpurchase
unbranded
home
furnishings
Fabindia
Complete home
solution- one-stop
shopping experience
for home needs
Western model of
standardized off-theshelf home furnishings
Home (30%)
Home
furnishings
Target
2007
Furniture (2004)
Material
Design
Products
Organic
Products(2004)
2006
Target
Organics
Organic products suppliers- small-scale
corporations & individual farmers, or notfor-profit organizations
Challenge- 150,000 SKUs, inconsistent
quality & supply, spread out supply chain
Transport, storage & shelf-life issuesendemic to food products & organics
No two stores order alike
Solution- work only with reliable and
proven suppliers
Op
po
r tu
s
e
i
it
ts
a
re
h
T
Competitive landscapeFurnishings
Most sell a mix of synthetic and cottons
pe
om
on
i
t
ti
t
r
o
pp
tie
i
un
Competitive landscapeOrganics
Domestic market in infancy, limited competition
rt
o
pp
s
e
i
it
n
u
p
m
o
et
n
o
i
it
Finance
Grown with little outside funding, healthy internal
accruals
Bissell family stake- 58%
Reportedly, PE firm WCP Mauritius Holdings, invested
$11 million (Rs 44 crore) for a 6%
Fabindia valued at $183 million (Rs 732 crore)
Can growth plans be sustained without further funding?
We have been ploughing back profits into expansion on
an ongoing basis. Well invest several hundred crores
over the next few years. Options like IPO & private
placements will be considered only when an
extraordinary need arises. Chainani
Financials
Net Profit
Sales
Rs Million
2002
2003
2004
2005
1294
2006
Customer
Like the
shopping
experience,
one stop shop
for ethnic
needs
Sales 8.6 bn
(2011)
Foods
focus
More
uses
More
usage
More
users
Challenges
Intensifying
competition
Supply Chain
Vagaries
Executing
the Vision
Finances
Growth
Commitment to
Founding Mission
Talent
Reach
82 outlets India
3 abroad- UAE, China,
Italy
33 Online stores abroad
Institutions & Heritage
hotels
Textiles
Garments- men,
women, children &
infants
Garment accessories
Home furnishings
bed, bath, table &
kitchen linen, upholstery
fabric, curtains, floor
coverings
2008
Sourcing
22000 Artisans
across India
2008
Non Textiles
References
Fabindia is now a Harvard case study- The
Hindu Businessline 15 April 2004
http://www.thehindubusinessline.com/2007/04/15
/stories/2007041502740100.htm
Meera Mohanty
Fabindia Overseas Pvt. Ltd, JUL Y 0 9 , 2 0 0 7
Harvard Business School Case Study, MUKTI
KHAIRE & PRABAKAR PK KOTHANDARAMAN
Weavers to become shareholders of Fab India
subsidiaries 6 May, 2008,
http://economictimes.indiatimes.com/Weavers_to_
become_shareholders_of_Fab_India_subsidiaries/a
rticleshow/3013640.cms
Fabindias Fabulous March, Kapil Bajaj,
October 3, 2007 Business Today